HUDSON'S

BUILDING
AND ENGINEERING
(: CONTRACTS
Including the Duties and Liabilities of
ARCHITECTS, ENGINEERS AND SURVEYORS

ELEVENTH EDITION

BY
I
-\
I.N. DUNCAN WALLACE Q.C., M.A. oxoN.
of the Middle Temple, Barrister-at-Law

VOLUMEl
GENERAL INTRODUCTION AND PREFACE

My own acquaintance with construction law started when I was invited

to join the chambers of the late E. J. Rimmer in Lincoln's Inn in 1952, and
improved later as joint editor with him of the Eighth Edition of Hudson
published in 1959, when the task of modernising Hudson was begun, and
later when I continued that task and began extending its range into the
Commonwealth jurisdictions as editor of the Ninth Edition published in
1965.
The Tenth Edition of Hudson was published in 1970, with a Supplement
in 1979. In the event, therefore, the Eleventh Edition has taken a further
fifteen years to emerge ( or nearly 25 years since the Tenth Edition), and
I am grateful to Sweet & Maxwell for their patience in tolerating my
idiosyncratic and largely self-extended timetable.
A part of the reason for the delay was my desire to make at least a
superficial examination of the mountain of reported construction case law
available in the United States, which I felt sure could supplement gaps in
the relatively small factual coverage of the case law reported in England
and the Commonwealth at that time, and for this purpose I have spent two
months of every year since 1977 as a Visiting Scholar enjoying the unique
facilities and library of the Boalt Hall School of Law in the University of
California at Berkeley, surpassing even in its Commonwealth range most
libraries currently available in England.
A second reason for the delay was my growing belief that the proper
interpretation of construction contracts required much more analysis and
rethinking, particularly of the underlying practical and commercial real-
ities of construction projects generally, and of the relationships and skills
of the parties to those projects in particular- often insufficiently under-
stood or expressed in misleading language by the draftsmen of the con-
tracts themselves, or indeed by the professions or narrower vested
interests variously instructing those draftsmen, so that in the event much
more than might have been expected has traditionally had to be left to the
interpretation or implication of terms by judiciaries (who would them-
selves be far less familiar with the much more complicated background of
construction contracts than, for example, with contracts for sale of goods
or houses, of which they would have had the very important advantage of
some personal experience). Nor, to put it mildly, have the draftsmen of
construction contracts been very competent even where their instructions
have been clear.
As a result, quite apart from continuing with a series of detailed com-
mentaries on the standard forms, which since 1970 have included com-
mentaries on the FIDIC Third and Fourth Editions and the English Fifth

vii

viii GENERAL INTRODUCTION AND PREFACE
Edition ICE Civil Engineering Contract, I have produced during the
intervening years a series of papers, usually published in the form of arti-
cles, principally in the Law Quarterly Review and later in the Construc-
tion Law Journal, I.C.L.R. and A.C.L.R., where I have examined current
developments in the case law of contract and later of tort, insofar as they
might affect construction problems, in much greater detail than would
normally be possible in a text book like Hudson. Some 20 of these, with 10
additional chapters and a linking narrative, were collected and published
by Sweet & Maxwell in 1986 in Construction Contracts: Principles and
Policies (referred to throughout this Eleventh Edition as "C.C.P.P.").
Another development which has influenced my thinking since the
Tenth Edition was the task of drafting a wholly new building contract for
the Singapore private sector which was published in 1980, with some very
minor later revisions, and which I undertook for the Singapore Institute of
Architects. In this, I was probably uniquely fortunate in being given a far
freer hand by the SIA Contracts Committee to develop my own ideas, in
the light of Singapore local conditions, than is normally accorded to a
draftsman. Nor was I troubled by the stultifying process of negotiation
(and attrition) between essentially conflicting interests (giving the power
of veto, in effect, to the least reasonable party) which is the prime reason
for the very poor quality and policies of the English standard forms, since I
made it a condition of undertaking the task after earlier experience with
the drafting of the 1955 ICE forms with E. J. Rimmer Q.C., that only the
professional body, and no other organisation, should be responsible for
and in the last resort decide the contents of the contract. I shall always be
specially indebted to Mr. Sim Hong Boon and his predecessor as President
of the SIA, Mr. Albert Hong (who was later to be a tower of strength in
overcoming oppositori. to the contract) for the way in which I was allowed
freedom to override even considerations of short-term convenience and
interest of the SIA's own professional membership in order to secure a
firm but fair contract between owner and contractor. The result was a rela-
tively sophisticated and lengthy form of contract, with attempted sol-
utions to virtually all those anomalies and problems leading to doubt or
dispute in construction contracts which my own previous experience at
the Bar up to 1980 had enabled me to identify.
Consequently, while much of the Eleventh Edition, like its prede-
cessors, has inevitably had to be written in the immediate context of the
English building and civil engineering standard forms, which tend to
dominate our own case law, this Singapore contract, and the solutions it
has attempted or adopted, has been available for comment and compari-
son. Since the SIA 1980contract, with its Guidance Notes,is also set out in
extenso in the appendices to C.C.P.P., reference to the SIA contract by
readers who have C.C.P.P. available will be to that extent facilitated, and
is made fairly frequently in the text of the Eleventh Edition; by reference
to the relevant C.C.P.P. pages as well, at appropriate points Qfdifficulty or
for comparison with the traditional English draftsmanship.
-~
i
GENERAL INTRODUCTION AND PREFACE ix
This brings me to the English standard forms. They have always, of
course, been discussed, in many instances critically, at many points in
recent Hudson editions. In the case of the RIBAfJCT forms, the· 1963
forms current at the time of the Tenth Edition (with a number of
Revisions continuing up to 1977) were in 1980 replaced by an entirely re-
written contract, which continued and refined still further the substance of
the policies and financial claims against the owner's interest of its prede-
cessor, but which now employed an entirely new and different numbering,
together with frequently unexplained cross-referencing which, whether
deliberately or not, often serves to obscure its purpose and make compre-
hension exceptionally difficult, even to the informed eye, on a first read-
ing. In the case of the ICE conditions, the Fourth (1955) Edition, current
at the time of the Tenth Edition of Hudson, was replaced by the Fifth
Edition in 1973. This, although with a much closer affinity of structure and
language to its predecessor, now opened the door to a series of sweeping
new financial claims against the owner, including particularly a global
claim for unexpected expense under Clause 13(3); claims for omitted
items and higher prices on measurement under dauses 55(2) and 56(2);
and a comprehensive series of liabilities for nominated sub-contractor
default under Clause 59. I will return to this subject of the standard forms
later in this Introduction.
Whep considering the text of the Eleventh Edition, it may be helpful to
note that whereas the 1963 R!BA/JCT and 1955 ICE Fourth Edition
forms of contract current at the date of the Tenth Edition exerted enor-
mous influence on domestic standard forms outside England, particularly
in countries with a recent colonial background, such as Malaysia, Singa-
pore, Hong Kong and the West Indies, and also on the international
FIDIC contracts, it may be speculated that the free-ranging claims so posi-
tively encouraged by the ICE Fifth Edition and the unforgiving and
impenetrable style of the 1980 RIBA/JCT forms, as well as their policies,
proved too much for foreign owners and governments; with the result that
it is their respective 1955 and 1963 predecessors which continue to serve as
the often closely followed basis of many overseas contracts. Indeed, the
1963 RIBNJCT contracts, in spite of sustained and organised pressures
for the use domestically in England of their successor RIBNJCT 1980
forms (which eventually appear to have succeeded in persuading many
local government and public bodies such as hospital boards), are still
nevertheless being widely used by private or better informed public
owners in England, as reference to the reported cases in the Eleventh
Edition will show. For this reason, a policy of continuing with references
to the 1963, as well as to the 1980 R!BA/JCT counterparts with their
different numbered paragraphs, has been followed in the text.
I have already mentioned a number of in-depth papers written since the
Tenth Edition, mostly in the form of articles published in the L.Q.R., the
Construction Law Journal, l.C.L.R., A.C.L.R. or elsewhere, and that
some 20 of these are reproduced-as chapters in C.C.P.P. References to
 x GENERAL INTRODUCTION AND PREFACE
these articles are footnoted in the text of the Eleventh Edition in the usual
way, but with an alternative reference to the relevant C.C.P.P. chapter
which reproduces them where appropriate. Since C.C.P.P. was published
in 1986, however, I have written approximately 30 in-depth articles on
construction topics, published in similar quarters. For convenience, as an
Appendix to this Introduction, there are two lists, the first of the various
earlier papers and articles referred to in the Eleventh Edition, together
with the appropriate chapter number where reproduced in C.C.P.P., and
the second a list of the later papers similarly referred to written and pub-
lished since 1986.
Changed Background since the Tenth Edition
Recession, paradoxically, has always favoured the "business" of con-
struction litigation. Contractors in recessions price down to secure busi-
ness and survive, find their key men relatively unemployed before new
contracts can be obtained, and so have both the skilled personnel avail-
able and a pressing incentive to re-examine the history of their completed
contracts in order to squeeze the last possible drop of additional remuner-
ation which the claims mechanisms of those contracts and legal ingenuity
can provide. Equally, owners and developers, under the financial press-
ures of recession, and often seeing falling markets for their commercial
projects, may endeavour to minimise or postpone payment by any means
available, however irresponsible. This is apart altogether from opportun-
istic terminations of the contract by either side in such conditions in order
to avoid its consequences.
Coincidentally with the world-wide recession and collapse of projects
and property markets stemming from the Arab oil embargo in the early
1970's, solicitors in England, who lost their conveyancing monopoly at the
same time as the major recessionary reductions in the conveyancing work
which had previously often subsidised other legal departments of their
,. firms, began to take a quite different look at litigation as a source of profit,
i\,, and at construction litigation as a particularly profitable sector for
expanding their activities. These were in my view the two driving factors
behind the undeniably huge increase in construction litigation which has
taken place both domestically in common law countries as well as inter-
nationally since 1970. In its wake specialist judiciaries have been formed
or expanded; almost every major commercial firm of lawyers now pro-
fesses construction expertise; construction specialist law reports (and
indeed over-reporting) and seminars on claims presentation have pro-
liferated in most western countries; and a veritable construction litigation
industry of its own has come into being, with various classes of prac-
titioner, legal and otherwise, offering their services as claims'consultants,
expert witnesses, arbitrators, conciliators or experts in "dispute resol-
GENERAL INTRODUCTION AND PREFACE xi
ution", together with mushrooming new bodies in many countries offer-
ing facilities for arbitration or dispute resolution, and for the appointment
of arbitrators or conciliators.
In these developments many governments have tended to collaborate
enthusiastically, often motivated by a desire to attract international "busi-
ness" of this kind to their shores. In the domestic field, much of the liti-
gation and reporting has, under recessionary pressures, concentrated
excessively on tactical or procedural matters, such as summary judgment
or the raising of procedural obstacles (such as binding certification or limi-
tation defences) or else on the minutiae of interpretation of current stan-
dard forms, often poorly drafted and frequently subject to change in
response to the interests of the more powerful influences on their nego-
tiating bodies ( although exhibiting extreme rigidity when anomalies
affecting the interests of weaker influences become apparent). For ex-
ample, in a development reminiscent of the "battle of the forms" between
offer and acceptance documentation and counter-documentation in other
areas of commerce, a surge of new draftsmanship, particularly in sub-con-
tracts or so-called "managed" contracts (where in both cases producer
interests will be on each side of the table) has endeavoured to accord
finality on interim payment even to the uncertified accounts of a contractor
or sub-contractor who has carried out work on the one hand, or to the
uncertified cross-claims for damages for delay or disturbance by owners or
main contractors on the other, in some cases complicated by provisions for
adjudication by persons other than the final arbitrator, with varied powers
to intervene or make temporarily binding orders pending full arbitration
or litigation. 1
In both the domestic and international fields governments or govern-
ment-influenced judiciaries, in the apparent belief that more arbitration
"business" would be attracted to their domestic jurisdictions, while at the
same time unwilling for budgetary reasons to provide an adequate
judiciary for the purpose, have combined to restrict appeals from, and so
inevitably to reduce judicial control over, arbitration and arbitrators,2 and
also, in one very important Court of Appeal obiter dictum, to discourage
direct access to the courts in cases, where that would previously have been
allowed, based on very widely used arbitration clause wording in the two
principal standard forms in England for close on a century. 3
Predictably, this climate of abandonment of judicial control over arbi-
trators, constantly if not vehemently advanced and supported by con-
tractors' organisations and by virtually every international institution
associated with arbitration (including UNCITRAL and its Model Law)
must inevitably militate seriously against a just resolution of the dispute in
I
See Chap. 6, Section 6(7).
2
See B. T.P. Tioxide Ltd. v. Pioneer Shipping Ltd., The Nema [1982] A.C. 724, and see (1990)
6 Arb. Int. 253 where its policy is doubted and criticised.
l See the doubtful but potentially very damaging dicta in the Court of Appeal in Northern
Regional Health Authority v. Crouch Construction [1984] Q.B. 644, discussed in Chap. 6
Section 4(2), and see C.C.P.P., Chap. 17.
xii GENERAL INTRODUCTION AND PREFACE
many instances and, equally predictably bearing in mind the absence of
4
publicity and self-co-opting nature of many appointing bodies, more and
more serious cases of genuine arbitrator misconduct and incompetence
are beginning to reach the reports 5 ( at least partly perhaps because loss of
rights of appeal is likely to re-direct advisers of aggrieved parties to exam-
ination of the possibility of removal of the arbitrator).
In this confused and not very attractive climate, less and less interest
seems to be shown by participants, whether in litigation or arbitration, in
the substantive law of the interpretation of construction contracts, which
must be the background against which transient standard form vagaries
and claims mechanisms and unbalanced contract policies must be
assessed, and with which Hudson is primarily concerned. However, it can
be predicted (and indeed already observed) that informed domestic own-
ers and their advisers will be increasingly likely to remove arbitration
clauses from their contracts, as the impartiality and experience of the
specialist judiciaries, such as the Official Referees in the High Court in
England and the judges of the Commercial Division of the New South
Wales Supreme Court, for example, become more widely understood and
appreciated by litigants and in particular by the owner/consumer parties
to construction contracts who have so evidently been losers in these recent
developments.
The Law since the Tenth Edition
Since 1970 there have been unusually rapid and important changes in
the law affecting construction contracts.
(a) The Hedley Byrne v. Heller liability in tort. The combined impact of
the decision of the House of Lords in Hedley Byrne v. Heller in 1964, and
of the new damages liability for innocent misrepresentation in the English
Misrepresentation Act, 1967, had not yet been felt by the time of the
Tenth Edition, which was compelled to speculate on the likely conse-
quences of these liabilities in the construction field. 6 These subjects now
occupy no less than 60 pages of text in Chapter 1, in addition to the closely
related subject of the owner's obligation in relation to the state of the site
in Chapter 4. In this context, it was stated in the Preface to the Tenth
Edition that perhaps the single most widespread and damaging misunder-
standing of the background of construction projects by judiciaries and
others (often assisted by misleading "cosmetic" language and descriptions
in the contracts themselves) related to the alleged "captain of the ship"
role and superior expertise of the owner's A/E in supervision or construc-
tion methods, and also to the very limited nature of the NE's powers of
intervention or control over temporary works or methods of working, and
4 See Kirby P's eloquent protest in a dissenting judgment in the New South Wales Court of
Appeal in Warley Ltd. v. Adco Constructions Ltd., quoted in Chap. 18, par~.)8·024.
5 See Chap. 18, Sections 4 and 5; and (1990) 6 Arb. Int. 253, and (1991) 7 Arb:-lnt. 149.
6 Tenth Edition, pp. 66-67.
GENERAL INTRODUCTION AND PREFACE xiii
to the consequential obligation of the contractor, independent of fault, to
complete the described work undertaken by all necessary means under
the "inclusive price principle." 7 With the advent of a potential liability of
owners' A/Es to contractors in tort under the Hedley Byrne principle, the
extremely important and welcome English Court of Appeal decision in
Pacific Associates Ltd. v. Baxter (and in particular Ralph Gibson L.J.'s
outstanding judgment in that case), made clear (in the context, there, of
interim certification and of the engineer's preliminary ruling upon a con-
tractor's claims under Clause 67 of the FJDIC contract) that within the
general "contract setting" of a construction project there was no room for
any such duty to safeguard the contractor from economic loss. 8
Pacific Associates was followed by the British Columbia Court of
Appeal in what seemed the entirely satisfactory case of Edgeworth Con-
struction Ltd. v. F. Lea &Associates in 1991. 9 There (this time in the con-
text of an engineer's design duties) a duty to safeguard the contractor's
economic interests was similarly rejected on a preliminary point of law,
and two cases in first instance in Ontario (reported in Canadian B.C.L.)
not followed. Unfortunately, in one of the few really unsatisfactory Com-
monwealth decisions of the period under review, the Edgworth case was
recently overruled in the Supreme Court of Canada in 1993, in a case
which it may be predicted will return to haunt that Court. Due to the ob-
scurity of its facts and its being decided on a preliminary point of law, it is
difficult to know what practical conclusions engineers or architects or
their advisers should draw from it in what has been, apparently, some area
of design preparation of the contract documents by a firm of engineers on
behalf of the owner prior to tender. Nearly six pages are devoted to analy-
sis and discussion of this case in Chapter 1. Meanwhile, the Court of
Appeal in Ontario in 1992, in Auto-Concrete Curb Ltd. v. South National
River Conservation Authority, 10 has held that the engineer was liable in
tort to dredging contractors for failing to make inquiries at the tender
stage and to warn them that one particular method of dredging (not called
for or described in the contract documents but which the contractors had
indicated in their tender offer that they proposed to use) might require
permission or be prohibited by the regulatory authoritieS. This case, with
respect, seems to have lost touch with all realities of the engineer/contrac-
tor relationship and with a century of owner/contractor case law under the
inclusive price principle, as well as imposing a serious and impractical con-
flict of interest on the owner's engineer.
Coupled with two earlier difficult economic loss cases in 1979 (then in
the context of supervision and temporary works, where engineers had
been held to owe an economic loss duty to contractors11 ) and in spite of,
7
See Chap. 4, Section 1.
s [1990] 1 Q.B. 993.
9
[1991] 4 W.W.R. 251.
!O [1992] 89 D.L.R. (4th) 394.
u Demers v. Dufresne [1979] S.C.R. 146 and Trident Construction Ltd. v. Wardrop [1979] 6
W.W.R. 481, both discussed and doubted in C.C.P.P., Chap. 5, with contrary Canadian
cases cited.
 r-
xiv GENERAL INTRODUCTION AND PREFACE
not surprisingly, other conflicting decisions in the Supreme Court of Can-
ada and elsewhere, the law in Canada in this area now seems confused and
to have imposed generalised economic loss duties owed by owners' A/Es
to contractors in tort which other jurisdictions would be wise not to follow.
(b) Interim Certificates and Set-off. The years 1971-1973 saw no less
than seven Court of Appeal decisions, applying what became known as
"the rule in Dawnay's case," in which owners or main contractors were
held to be precluded from raising defences of defective work or delay
against main contractors or sub-contractors suing for work done on archi-
tects' interim certificates under the traditional wording in the English
RIBNJCT contracts. 12 Here, leave to appeal was consistently refused by
the Court of Appeal, and on a first occasion by the House of Lords itself.
However, the meteoric rise and fall of Lord Denning's "cash flow" prin-
ciple was finally brought to an end by the Gilbert-Ash case in the House of
Lords in 1973.13 An invaluable by-product of these aberrations, however,
lay in a welcome and now seminal statement of principle by Lord Diplock
in the Gilbert-Ash case, which greatly clarified (if it did not revolutionise)
the interpretation of certification provisions generally by requiring
explicit wording, leaving of no doubt, if loss of the right to pursue ordinary
common law remedies (that is, a binding intention) was to be achieved by
the draftsman. 14 In the previously difficult and complex field of binding
certificates in construction contracts, Gilbert-Ash must rank as the most
important and valuable case since the last Edition, and has been applied to
great advantage by the lower courts in later cases. 15
(c) The "Crouch" View. Mention has already been made of the obiter
dicta in the Court of Appeal, not at present seriously challenged in
England, to the effect that arbitrators alone, but not the courts, have the
power to re-open and review the decisions or opinions of an A/E where an
arbitration clause with the traditional "open up, review and revise" word-
ing is present in the contract ( as in the case of both English standard forms
for nearly a century). 16 If correct, this view must be tactically damaging
and unjust, particularly to unpaid contractors seeking summary judgment
in the Courts, or to parties seeking the courts as a preferable tribunal for
proceedings involving third parties. The Crouch interpretation flies in the
face of a near-century use of this wording in arbitration clauses, as well as a
formidable line of contrary authority in England, Australia and New
Zealand, and makes no contribution to justice, except for the openly
avowed objective of Sir John Donaldson M.R. that it should discourage
parties from access to the official Referee's courts, where the lists were
becoming too long. 17 The Crouch view has been mentioned on a number
of occasions in England but never seriously challenged, and remains an
12 See C.C.P.P., Chaps. 14, 15, and 16.
iJ [1974) A.C. 689. For this history, see Chap. 6, Section 6(7).
14 See Chap. 6, Section 1(1) and Section 6(7).
1> See Chap. 6, Sections 3, 4, and 6(7).
16 See Chap. 6, Section 4(2).
11 See Chap. 6, Section 4(2) and C.C.P.P., Chap. 17.
GENERAL INTRODUCTION AND PREFACE xv
embarrassing anomaly discouraging access to the courts in what had pre-
viously been considered proper cases (from a justice-driven viewpoint)
for review.
( d) Arbitration. Many countries have introduced new legislation on
arbitration since 1970, much of it concerned to foster and attract the new
wave of international arbitration, and to reduce control over arbitrators
by the courts in accordance with current climates of opinion to that effect
in international circles. In England there have been two extremely import-
ant Acts of 1975 and 1979 superimposed on the "parent" Act of 1950, and
the latter Act became the vehicle for what are now known as the "the
Nema Guidelines" laid down by Lord Diplock shortly thereafter in the
House of Lords. These had the effect of severely restricting rights of
appeal from arbitrators by comparison with appeals previously effectively
allowable as of right under the 1950 Act. There has also been a confused
and apparently inconsistent case law in England of recent years with
regard to refusals of stay in tripartite proceedings, "step in the action"
refusals of stay, appeals from arbitrator's orders on costs outside a normal
judicial discretion, and appeals generally on points of law from arbitrators
awards or decisions. Occasionally this case law has been "justice-driven",
but more frequently not. 18 Chapter 18 on arbitration occupies 156 pages,
which it is hoped will be of assistance as a "mini-textbook" alongside other
works (principally, of course, Mustill & Boyd) with particular reference to
construction disputes.
(e) Insolvency. Here again, many countries have introduced new insol-
vency legislation. In England massive Acts in 1985 and 1986, replacing the
Bankruptcy Act of 1914 and the Companies Acts of 1948 and 1985, have
been drafted in two stages in accordance with the parliamentary conven-
tions distinguishing between consolidating and innovative legislation, but
which unfortunately make the task of tracing the earlier law of personal or
company insolvency, so as to compare it with its new counterpart and
determine whether substantive change has taken place, one of maximum
difficulty. On the whole, there appears in fact to have been comparatively
little substantive change in regard to the position of third parties in con-
tractual relations with an insolveilt party (with which Hudson is princi-
pally concerned), save in regard to the new process of administration,
which does not seem likely to be involved very often in the case of con-
struction contracts. Here again, Chapter 16 will, it is hoped, prove of some
assistance as a compressed "mini-textbook", and occupies some 37 pages.
( f) Guarantees and Bonds. A principal new development here has been
the emergence in the construction field, mainly but not exclusively in
international contracts, of "on demand" performance bonds. Uncon-
ditional guarantees of the payment obligations of a debtor (that is to say
letters of credit) have, of course, been a common feature in commerce for
centuries. Equally, due performance bonds, equivalent only to a guaran-
tee of the financial ability of the debtor to meet his performance obli-
18
For the inconsistencies, see the review in Chap. 18, Section 6.
 .r---
xvi GENERAL INTRODUCTION AND PREFACE
gations, have been a century-long feature of construction contracts. The
new "performance" bonds, not conditioned on proof of failure to perform
(as in the case of traditional bonds), but merely on demand or on some
other arbitrary stipulated event, have caused problems of interpretation
which the courts have appeared to have found difficult. 19
In addition, and perhaps more seriously, the-English courts have failed
to apply sensible pro tanto doctrines of both interpretation and measure of
damage in order to defeat persistent and frequently unmeritorious exploi-
tation by the bonding industry of old and rigid doctrines evolved by the
courts in the nineteenth century to protected gratuitous "accommo-
dation" sureties, but wholly inappropriate to the interpretation of docu-
mentation used by commercial sureties for profit, and usually drafted by
them.
However, the English Court of Appeal has recently professed a new
interest in (and an apparent surprise at) the archaic "negative" wording of
the English bond to which commercial sureties appear to be so attached,
and has very recently arrived at a startling "on-demand" interpretation of
such traditional wording, 20 apparently based upon alleged cash-flow exi-
gencies in construction contracts and bearing a striking resemblance to
the earlier Dawnay reasoning and interpretation (also based on alleged
;I "cash-flow" exigencies) of interim certificate provisions. However, the
valuable and logical American pro tanto doctrines and rules of strict
interpretation in favour of giving effect to the bond in the case of commer-
cial sureties have to date regrettably not been applied in England. These
had evolved as early as the 1920's in America and have been applied to
failures of compliance with notice requirements in bonds, to their general
interpretation, and to the rules of release due to alterations of the debtor's
obligations, however trivial, under the Holme v. Brunskill principle from
which bondsmen have so unmeritoriously profited in the past. The Amer-
ican rule requires proof of real prejudice to the bondsman, and permits
release only pro tanto to the extent of proven loss. 21 The American rules
,' and principles were expressly approved and followed by the Supreme
Court of Canada (in a case of failure to give a notice resulting in no poss-
ible prejudice to the bondsman), in a very welcome decision in 1983. 22
It seems inevitable that the English judiciary will eventually begin to
make use of these sensible and necessary rules of interpretation to defeat
the widespread and persistent evasion of their responsibilities by bond-
smen, which to date the English courts have done little or nothing to resist.
Chapter 17 dealing with Bonds and Guarantees represents an almost
total departure from the Tenth Edition and, making use of earlier and
independent research undertaken for Chapter 19 of C.C.P.P. in 1986,
19 See Chap. 17, Section 3.
2llGeneral Surety and Guaranty Ltd. v. Trafalgar House Constructions Ltd. (1994). C.A.
Report awaited.
21 See paras. 17·033, 17·040, and 17-047-8 in Chap. 17.
12 Citadel Assurance v. Johns-Mansville Canada [1983] 1 S.C.R. 513.
GENERAL INTRODUCTION AND PREFACE xvii
endeavours to provide a "mini-text-book" on this subject occupying some
65 pages of text. One particularly gratifying result of this research, given
my new address in Chambers and respect for a great English judge, was
my discovery and resurrection into the text-books of a particularly valu-
able and trenchant passage of Lord Atkin on the use of the traditional
English negative form of bond by commercial sureties.22a
(g) Interpretation of Construction Contracts. In the Preface to the Tenth
Edition, I noted a tendency of the English courts to adopt strict and "liter-
alist" interpretative attitudes {the expression is Lord Diplock's), more
appropriate to a statute than to a commercial document, when consider-
ing standard forms of construction contract, and identified a number of
"difficult" interpretations apparently arising from this cause, mentioning
specifically Gloucestershire County Council v. Richardson, Bickerton v.
N. W. Metropolitan Hospital Board, and the then recently decided
decision of Megarry J. in Hounslow L.B.C. v. Twickenham Gardens
Development (not yet reported in 1970). Since 1970 I regret to have to
record a surprising number of cases where extraodinarily legalistic
interpretations "offending business common sense" have, as it seems to
me, been arrived at, including a number in the House of Lords itself, which
I have found difficult if not in some cases impossible to explain or justify.
Leaving aside marginally controversial decisions, such as Jarvis v.
Rockdale Housing Association,23 these include in chronological order
Hounslow L.B.C. v. Twickenham GardenDevelopments;24 Kayev. Hosier
& Dickinson;25 Trollope & Calls v. N. W. Metroplitan Hospital Board;26
City of Manchester v. Fram Gerrard;27 William Sindall v. N. W Thames
Regional Hospital Board;28 Rayack Construction Ltd. v. Lampeter Meat
Co. Ltd.;29 E.R. Dye Ltd. v. Simon Build/Peter Lind Partnership; 30 North
RegionalHealthAuthorityv. Crouch; 31 Mitsuiv.Attorney General ofHong
Kong; 32 Scott Lithgow v. Secretary of State for Defence;33 and General
Surety & Guarantee Ltd. v. Trafalgar House Constructions Ltd.;34 and
Caledonia Ltd. v. Orbit Valve Co.34a
It should be noted that these are decisions of the English higher
judiciary and not of the often more experienced Official Referee judges. It
is in fact a characteristic of the modem higher judiciary in England, par-
ticularly those with a Commercial Law background, that frequent and
lhSeepara.17.008.
a (1987) 36 BLR48.
24
(1971) Ch. 223 (Megarry J.).
25
[1972] 1 W.L.R.146 (H.L.).
20
[1973] 1 W.L.R. 601 (H.L.).
27
(1974) 6 BLR 70 (Kerr J.).
ZR [1977] 4 BLR 154 (H.L.).
29 (1979) 12 BLR 30 (Vinelott J.).
lll (1982) 23 BLR 23 (Nolan J.).
Ji [1984] Q.B. 644 (C.A.), dicta only.
32
(1986) 33 BLR 1 (P.C.).
33
(1989) 45 BLR 6 (H.L.).
"(1994) 66 BLR 42 (C.A.).
34
' [1994] 1 W.L.R. 221 (Hobhouse J.)
xviii GENERAL INTRODUCTION AND PREFACE
almost effusive tribute is paid to the alleged priority of what is called
"business common sense" in interpreting commercial documents, and
also to Cardozo J.'s famous "genesis and aim of the transaction" phrase
when interpreting commercial documents, 35 while simultaneously arriv-
ing at extraordinarily strict and legalistic constructions of commercial
documents.
In the Preface and Introduction to the Tenth Edition I cited a number of
criticisms made by the judiciary of standard form draftsmanship in
England. Later comments by Parker L.J. in England in 1980 and by Smart
J. in New South Wales in 1989, as well as an excoriating passage by
Menzies J. in the High Court of Australia about a long-used public auth-
ority contract used for at least 60 years in Australia, are cited in Chapter 1
of the Eleventh Edition, where a new section has now been included deal-
ing solely with the question of interpretation of contracts in general and of
construction contracts in particular,36 but on the whole judicial criticism at
the present day seems, for whatever reason, more muted (see the further
discussion infra). It should be added that, even when not assisted by clear
instructions or, as call happen, instructions are given to leave in place ex-
isting unsatisfactory draftsmanship, in spite of being pointed out by the
draftsman ( usually because agreement between opposed influences on
the drafting body cannot be reconciled) standard form draftsmanship is
nevertheless frequently distinguished by sheer incompetence- how else,
for example, could a recent new provision included in the ICE conditions
giving contractors a right to interest on unpaid interim certificates fail to
make clear whether certified sums remaining unpaid were only intended,
or whether undercertified sums should also qualify?37 These consider-
ations increase the need for a well-informed understanding of the practi-
cal background to construction contracts if correct interpretations of the
contracts themselves are to be arrived at, and for this reason the degree of
exposition and explanation of the technical and commercial background
to construction contracts has been consciously expanded in the Eleventh
Edition.
The English Standard Forms
In the last edition, and in my Preface and Introdu<;:tion to C.C.P.P. in
1986, I expressed my continuing surprise that the British Government, as
direct (if not indirect) providers of :finance for such a vast field of public
construction, appeared to show little or no interest in its various depart-
ments to the value-for-money aspects of the private sector standard forms,
which have been allowed progressively to penetrate the English public
bodies generating major construction such as, first, local and highway au-
thorities, and later the hospital boards) in spite of the existence in England
15
Compare the passage from Lord Diplock in The Antaios, and from Lord Wilberforce in
Prenn v. Simmonds, quoted in Chap. 1, para. 1-217.
Jo See Chap. 1, Section 9. .,
31
See Secretary of State for Transport v. Birse-Farr Joint Venture (1992) 62'.BLR 36, para.
8·100.
GENERAL INTRODUCTION AND PREFACE xix
of the government's own GC/Wks/1 contract, which did give reasonable
commercial protection to the budgetary interests of the owner. Increased
budgetary constraints over recent years seem to have made no difference
whatever in this respect, in spite of the fact that the RIBA/JCT and ICE
standard forms have themselves progressively increased, with almost
every revision, the exposure of owners to post-contract claims for
additional payment of uncertain extent carrying no counter-balancing
commercial advantage for the owner, destroying budgetary cetainty, and
damaging the industry in the long-term by placing a premium on claims
rather than on construction skills. No private owner, properly advised,
could afford to give producers such :financial protections against pricing
risk, nor expose himself to the price manipulation permitted by the stan-
dard form and standard method measurement systems; but it seems that
public owners and government departments have been content to fill any
gap left by departing private users of the forms.
A summary of deficiencies, from the owner's point of view, of the
RIBA/JCT and ICE standard forms is now indicated at some length in
Chapter 2, under the (by no means accidental) rubric of the duty owed by
A/Es to their clients ·when recommending an appropriate form of
contract.38
In my view advisers, both legal and technical, who allow the use of
either of these two major current standard forms in England by their
clients without either drastic amendment, or at the very least sufficient
warning of the budgetary and other financial risks to which they expose an
owner, must themselves be incurring risk in modern increasingly litigious
climates.
Objectives of Hudson
Since becoming editor, it has been my main object to produce a book on
the law and interpretation of construction contracts which is, first and
above all, comprehensible to architects, engineers, contractors, construc-
tion owners and public officers of government departments alike, many of
whom will not be lawyers, as well as for lawyers who may be unfamiliar
with construction contracts and, perhaps more importantly because of the
poor quality of their draftsmanship, with the practical and commercial
background of the projects and of their various participants on which the
contracts are intended to exercise control.
Construction law is now also beginning to attract the attention of uni-
versities and academic institutions and centres of construction law in
many countries. Both from the point of view of academics and students as
well as of judiciaries, and also of those legal practitioners in need of valid
arguments where their clients find themselves in difficult or anomalous
situations under existing forms, as well as in a growing number of cases
where ad hoc and not standard form contracts are involved, it is in my view
38 See Section 6(2)(j), paras. 2· 167 et seq.
 xx GENERAL INTRODUCTION AND PREFACE
very important that discussion of the law should not become too domi-
nated by the contents of what may often be inadequately drafted current
standard forms which themselves are, in any event, subject to frequent
change and to the shifting influences of the interested parties concerned in
their formulation. There is a real danger, moreover, that the continued
prevalence of particular provisions in a standard form over_ many years
will eventually begin to acquire an unanalysed respectability and be
treated by judiciaries, as a consequence of their familiarity, as a reason-
able norm to be implied in response to business or economic efficacy, in
the absence of similar wording in other contracts.
In view of the great increase in reported material and the drafting of
new forms of contract in many countries, together with the considerable
intervention of legislatures in many countries, a survey of this expanding
and changing field, and the selection of material in order to explain the
basic principles of interpretation of construction contracts, while at the
same time not becoming unduly tied to the detail of .current standard
forms, is not an easy task. Moreover, I am only too aware that with such a
wide coverage there will be many and important omissions which my own
reading as an individual practitioner will have failed to note. Indeed, in the
light of the foregoing paragraphs of this Introduction, my own reaction on
reviewing the emerging manuscripts of the Eleventh Edition has been
close to that of England's most famous soldier reviewing his troops before
battle: "They may not frighten the enemy, but by God they terrify me." I
repeat most earnestly my previous requests that practitioners in all coun-
tries should not hesitate to notify Sweet & Maxwell or myself of any errors
or omissions which may be found in the Eleventh Edition.
As a source of new cases I have found particularly helpful the Building
Law Reports in England (BLR) and the Australian Construction Law
Reporter (A.C.L.R.). I should like to record my particular appreciation of
the unusual editorial selective skill first of Mr. Peter Bryant and now Mr.
John Murrary in identifying valuable and interesting cases in A.C.L.R.
I have found their selections both useful and stimulating, in contrast to
1:'
11 much over-reporting which often goes on in unofficial construction
ii reports elsewhere. I regret that time considerations have prevented my
' endeavoured to avoid it, production considerations associated with the
using in any detail the Canadian or any other Australian or, indeed,
i/ English specialist reports, but this is no reflection upon them, merely on
I my own industry. If I may digress for a moment on this point, I consider it
to be of great importance that the official or semi-official law reporting
i bodies in all the Commonwealth countries should not cease to report con-
struction cases, which under budgetary restraints the e:Xistence of special-
:1
ist and often privately financed reporting entitities might tempt them to
I do. They should remember that library availability is an important factor
for writers or researchers seeking to examine the law in other jurisdic-
tions. Moreover, the editorial and analytical quality of official or semi-
official law reporting in most jurisdictions is, at least at present, usually
superior to that of the less formal privately funded specialist l'e'ports in the
construction field.
GENERAL INTRODUCTION AND PREFACE xxi
Structure of the Eleventh Edition
The basic structure of the Tenth Edition and -the division of its Chapters
have not been changed, but I have thought it important to explain rather
more often the history and practical or commercial background to com-
monly-found contractual provisions, to identify anomalies and suggest
improvements or alternative solutions to problems where necessary.
. I have continued the policy of using illustrations, always a special fea-
ture of Hudson, in which I believe strongly as a vitally important aid to
readability and understanding, for lawyers as well as for laymen, and
which in my opinion amply repays the additional text involved, though, in
the interests of space, illustrations have now been included in much
smaller print. The text of illustrations is often deliberately very free, for
reasons which I pointed out-in the Introduction to the 1979 Supplement,
and does not necessarily follow closely the headnotes or language of the
cases as reported, but is designed to simplify and illustrate principle, or to
draw attention to possibly significant elements not emphasised in the
report itself. I have also continued to retain nearly all of the nineteenth
century case law, which I have increasingly realised compares well, in the
simplicity and common sense of its judgments, with the often much longer
and more complicated modem judgments, absorbed as they so often
become with the procedural or legal technicalities being advanced by
modern litigants and their advisers. This link with the historical past of
construction law has not only always given me great pleasure, but is likely
in my opinion to be of increasing value given the wayward tendencies of
some jud~ciaries in the face of the blandishments and arguments resulting
from the strong industry or interested pressures often brought to bear in
modem construction litigation.
The result is a book, as before, of 18 chapters. One small earlier chapter
( Chapter 4 on Special Parties) had outlived its usefulness and has been
discarded, but a wholly new chapter (Chapter 15, Insurance and Indemni-
ties), considers two associated subjects of obvious and increasing import-
ance which had previously been dealt with only incidentally in the old
Chapter 5, Performance (now Chapter 4). Regrettably, although I have
need to expand the book into two volumes, have resulted in a few of the
Chapters being re-numbered. The total text and illustrations are some-
what more than three times as long as the Tenth Edition, but due to
smaller print the total number of pages of text has approximately doubled
(to somewhat over 1,700 pages).
Turning to some of the individual Chapters, Chapter 1 was originally
designed by me in earlier editions with readers who were not legally quali-
fied principally in mind. In its present form it contains an initial 142 pages
devoted to the general principles of contract law (including the new Sec-
tion 9 on Interpretation already mentioned), and it is hoped that it will
prove of value to lawyers as well. This is followed by a further 95 pages
dealing with quasi-contract and tort, a very considerable expansion on the
xxii GENERAL INTRODUCTION AND PREFACE
Tenth Edition, and reflecting the increased intervention of economic loss
liabilities of recent years into areas previously exclusively regulated by
contract.
Chapter 2, on architects and engineers, is also very substantial, being
170 pages long and in the nature of a small textbook on their contracts of
employment and their liabilities to their clients.
Chapter 4, a major chapter 210 pages long, covers the principal obli-
gations of contractor and owner, but also, as did its predecessor Chapter 5
in the Tenth Edition, discharge by breach or frustration; so far as owner/
contractor obligations are concerned, it may be regarded as the heart of
the book. The treatment of repudiation and frustration has been very con-
siderably expanded.
As previously indicated, a wholly new Chapter 15 (Insurance and
Indemnities) is now included, and Chapters 16 (Bankruptcy and Liqui-
dation), Chapter 17 (Guaranty and Surety), and Chapter 18 (Arbitration)
have been entirely re-written. Chapter 18, at 156 pages, is somefourtimes
the length of its predecessor in the Tenth Edition, and is intended as a
minor textbook for use alongside Mustill & Boyd, with certain aspects
relevant to construction disputes dealt with more expansively.
Finally, exigencies of production have required the Index to be pro-
fessionally prepared externally, I am sure very efficiently, but unavoidably
without the advantages of the personal insight of the author of the text in
an already very specialist field. I hope, therefore, to incorporate a prob-
ably more idiosyncratic author's index in a future Supplement which will
also serve to remedy some of the omissions or inadequacies of treatment
of the later cases reported during the fairly lengthy period of gestation of
this Edition.
The Commonwealth Judiciaries
As in the Preface and Introduction to the Tenth Edition, and as in the
1979 Supplement, I would wish to repeat my earlier tributes, now even
more strongly felt, to the quite exceptional if not superior quality of Com-
monwealth and overseas judgments in the construction field, and the very
great assistance which they have given to me in seeking to provide a coher-
ent and constructive commentary on Construction Law, particularly in
the face of a number of difficult English decisions since 1970 to which I
have previously referred in this Introduction.
Thus the decisions of the High Court of AustraliainShire ofSutherlandv.
Heyman (1985);" Pavey and Matthews Ltd. v. Paul (1987);"' and
Hungerford Ltd. v. Walker (1989) 41 are, of course, of seminal importance
in the development of the common law as a whole. The one High Court
case creating any difficulty (and then only as to the chosen basis of its
>9 (1985) 157 C.L.R. 424.
40 (1987) 162 C.L.R. 221.
"(1989) 63 A.L.J.R. 210.
GENERAL INTRODUCTION AND PREFACE xxiii
result) has been Code/fa Construction Ltd. v. Commissioners for Railways
(1982)."
In the Supreme Court of Canada, two very valuable landmark cases
have been Eisley v. J. G. Collins Insurance Agencies43 in 1978 (liquidated
damages as a cap to common law damages) and Citadel Assurance v.
Johns-Mansville Canada44 (United States rules for commercial sureties'
bonds). In the same oustanding category must be the New South Wales
Court of Appeal's judgments in Renard Constructions Ltd. v. Minister of
Public Worksv. Leighton Contractors Ltd. (1992) (requirement of reason-
ableness on owner's termination); 45 the South African Appellate Div-
ision's judgments in Grinaker Construction Ltd. v. Transvaal Provincial
Administration in 198246 (remeasurement under FIDIC contract, better
reasoned and more persuasive than the Privy Council's contrary decision
on slightly different but for relevant purposes identical wording in Mitsui
v. Attorney General of Hong Kong (1986);" White J.'s remarkable judg-
ment in the Full Court of South Australia in 1982 in Egan v. State Trans-
port Authority persuasively disapproving and not following Banbury
Railway v. Daniel (interim payment and ownership of plant) and correct-
ing the Tenth Edition in that regard, as well as making an analytical contri-
bution of the greatest value on inflation and its effect on damages )48;
White J. 's further re:markable judgment in 1990 in the Full Court in South
Australian Superannuation Fundv. Leighton Contractors, 49 (of very great
value in the increasingly important field of securing proper particularlisa-
tion of claims in construction arbitrations); the valuable and stimulating
decision of the Queensland Court of Appeal in Kratzmann Holdings Ltd.
v. University of Queensland50 in 1982 (forfeiture of retention moneys not a
penalty); and Brooking J.'s judgment in the Victoria Full Court in SMK
Cabinets v. Hili Modern Electrics Ltd. in 198451 (late variations and exten-
sion of time). Finally, I should mention the valuable and important judg-
ment of Fitzgerald P. in Iezzi Constructions Ltd. v. Currumbin Crest
Development Ltd52 in the Queensland Court of Appeal in 1994 ("Pay
when paid" provisions, repudiation of sub-contract and quantum meruit)
unfortunately received too late for illustration and discussion in the text of
Chapter 1, Section 11.
Turning to the many well-researched and well-informed first instance
judgments which have been of particular assistance to me, I would include
Marks J.'s judgment in Victoria in Gas & Fuel Corporation ofVictortia v.
•2 (1982) 149 C.LR. 337.
" (1978) 83 D.L.R. (3d) !.
" [1983] 1 S.C.R. 513.
4s [1992] 26 N.S.W.L.R. 234.
4E [1982] 1 S.A.L.R. 78.
47 (1986) 33 BLR 1.
48 [1982} 3 S.A.S.R. 481.
49 {1990) 55 S.A.S.R. 327.
~ {1982} Qd. R. 682.
SJ (1984] V.R. 391.
~ (1994) 13 A.C.L.R. 29.
xxiv GENERAL INTRODUCTION AND PREFACE
Woodhall Ltd. (arbitrator's removal for misconduct)53 ; the two Ontario
judgments of Houlden J. and Leary J. in Thomas Fuller Construction Ltd.
v. Continental Insurance (notice to bondsman)54 and in Ellis-Don Ltd. v.
Parking Authority of Toronto ( owner's duty to obtain excavation per-
mission)55 respectively; Hunter J. in Hong Kong in Hsin Chong Construc-
tion v. Yaton Realty56 (persuasively not following Nourse J. in Re Arthur
Saunders on express trusts on retention moneys); Hunt J. in New South
Wales in Traynor Panan Constructions Ltd. (arbitrator misconduct)57;
Chao Hick Tin J.C. in Turner (East Asia) Ltd. v. Builders Federal Ltd.
(arbitrator misconduct) 58; Thean J. in Singapore in Joo Yee Construction
Ltd. v. Diethelm Industries Ltd. (payment direct of sub-contractors and
insolvency, considering the British Eagle case),59 and Roper J. in Fern-
brook Trading v. Taggart, 60 (time for extension of time decision. All the
above cases were difficult, and in my view the judgments not only fully and
informatively researched but showing a full appreciation of the construc-
tion background and reaching valuable and correct conclusions.
It is also refreshing to find a forthrightness of comment overseas which
seems largely to have deserted the English courts in the construction field
since 1970. Thus one of the few judges in any jurisdiction prepared to
protest eloquently at the sacrifice of justice involved in the Nema-style
philosophies restricting appeal from arbitrators was Kirby P., in a dissent-
ingjudgmentin the New South Wales Court of Appeal in 1988. 61 Again, an
almost romantic account of the pricing techniques and aspirations of con-
tractors tendering to public authorities in measured contracts by Lord
Bridge in Mitsui v. Attorney General of Hong Kong should be read along-
side the blunt and experienced account of the price manipulation prac-
ticed by tendering contractors in such situations by Brooking J. in the Full
Court of Victoria in the Sist Constructions case. 62 Home truths such as that
of Lloyd L.J. in the English Court of Appeal in the recentMcAlpine Hum-
beroak case in 1992: "It seems to be the practice in the construction indus-
try to employ consultants to prepare a claim almost as soon as the ink on
the contract is dry", 63 and Parker L.J. 's "Topsy" account of standard form
draftsmanship,64 are now unfortunately only too rare. A few more of such
judicial noses above the parapet would be very welcome.
I would not wish it to be thought that I am in the least critical of the
quality of the English Official Referee specialist courts, which are rapidly
s; [1978] V.R. 385.
" (1973) 36 D.L.R. (3d) 336.
"(1978) 28 BLR 98 (English).
,;o (1986) 40 BLR 119.
7
1 (1988) 7 A.C.L.R. 47.
5~ (1988) 44 BLR 128.
·1g (1990) 2 M.L.J. 66.
60 [1979] 1 N.Z.L.R. 556.
~1 Quoted, Cha.18, para.18·024.
62
Quoted Chap. 8, para. 8·010. ..
04
McAlpine Humberoak Ltd. v. McDermott International Inc. (1992) 58 BLR'i, 24.
M Quoted Chap. 1, para. 1 ·218.
GENERAL INTRODUCTION AND PREFACE xxv
acquiring well-deserved popularity with litigants in the construction field
and, if present trends continue, will in my view progressively attract more
business (through the removal by owners of arbitration clauses from dom-
estic construction contracts, leaving arbitration only for ad hoc disputes
and agreement where it is genuinely desired by both parties after the dis-
pute has arisen). In contrast to some of the difficulties I have previously
expressed, I wish, on the contrary, to pay tribute to the Official Referee
judges who in recent years have done so much to steer construction law in
England relatively safely, with many valuable decisions now noted in
Hudson, in spite of the number of erratic and unpredictable higher
judiciary interventions. Judges Sir William Stabb Q.C., E. S. Fay Q.C. and
lately John Newey Q.C. have presided in those courts givingjudgments of
real and exceptional distinction. I would also applaud the robust justice-
driven independence of thought and action consistently shown over a
number of years by Judge Fox Andrews Q.C. and until illness and retire-
ment, by Judge John Davies Q.C.
American Readers
For the benefit of American readers, I should make clear that this book
is not remotely, of course, an attempt to cover the vast, perhaps too vast,
areas of United States construction case law. Hudson is essentially an
examination of the principles to be applied in all interpretation of con-
struction contracts in all common law systems, and of the remedies avail-
able for thc!ir enforcement. In the preponderant areas where the law is
broadly the same, I have felt no need to refer to United States law. Where
it appears to differ, I have endeavoured to point this out, and most cer-
tainly so in cases where United States law offers answers to problems or
seems to be an improvement on the current state of English and Common-
wealth construction law (for example,pro tanto enforcement of commer-
cial sureties' bonds). My principal aim in looking at the much greater mass
of reported United States case law was to find assistance in everyday fac-
tual situations on construction projects where the relatively limited
English and Commonwealth reporting had not as yet thrown up an exam-
ple, and also to see if the less rigid attachment to old doctrines and more
innovatory approach to new situations of the United States courts might
help in arguing for change in our own case-law or draftsmanship of con-
struction contracts. Typical areas where United States law has been
noticed include "pay when paid" sub-contracts, "total cost" presentation
of claims, acceleration claims, fixed overhead recovery, pro tanto
interpretation and enforcement of commercial surety's contracts, the
duties (if any) owed in tort by architects or engineers to safeguard con-
tractors from economic loss, "convenience" termination clauses, and "no
damage" clauses. A number of the historical and seminal American con-
struction cases are also referred to from time to time.
I would hope that the Eleventh Edition will prove of value to United
States practitioners who try construction cases and need arguments, or
who are involved in advising on overseas or international construction
 xxvi GENERAL INTRODUCTION AND PREFACE

projects, as well as to students or academics interested in the basic prin-

ciples of draftsmanship or interpretation of construction contracts. There
are certainly some areas, such as the law on the practicability or "build-
ability" of the owner's design, on which American jurisprudence has
wavered uncertainly, and on which comparison with the Commonwealth
case law could be of benefit to American law.
Articles by the Editor referred to in the text reproduced in 1986 as individ·
ual chapters in C.C.P.P (Construction Contracts: Principles and Policies
in Tort and Contract, Sweet & Maxwell, 1986)

l.N. Duncan Wallace Q.C. Corresponding

Articles, etc., Chapter in
Atkin Chambers reference C.C.P.P. Titles Subject Matter
1 Atkin Building
Grays Inn
London WClR SEQ (1973) 89 L.Q.R. Chapter 14 Set Back to Set Off Critique of
36 Dawnays Ltd.
Acknowledgements v. Minter and of
six later cases
I would like particulatly to acknowledge my debt to Boalt Hall School (1974) 90 L.Q.R. Chapter 15 Set Fair for Set Off Critique of
of Law at the University of California at Berkeley, for the hospitality and 21 Modern
facilities provided to me successively over the years since 1977 by Deans Engineering v.
Kadish, Choper and Kay. I am particularly grateful to Professor Justin Gilbert Ash
Sweet, who sponsored my original invitation to Boalt, and to Tom Rey- (1975) 91 L.Q.R. Chapter 16 The Mottram case Critique of
nolds, whose expertise as a professional librarian is unrivalled and who 471 Mottram v.
has been a never failing source of help to me. I am also grateful to Pro~ Bernard Sunley
fessor John Fleming, whose fine intellect during these years of the advance (1977) 93 L.Q.R. Chapter 1 A New Path for Preview of Anns
of tort into the construction field has been a constant stimulus. 16 Negligence v. Merton
I must also thank Mrs Freda Broderick who, first at Lincoln's Inn and (1978) 94 L.Q.R. Chapter2 Tort Demolishes Critique of Anns
then at Atkin Chambers, has borne the burden of typing this massive 60 Contract in New v. Merton
ii manuscript over the years with unflagging energy and remarkable skill Construction
and a wonderful tolerance and cheerfulness. So, too, Ms. Liz Duke at Ber- (1978) 94 L.Q.R. Chapter3 Negligence v. Critique of Batty
keley, who carried the burden during so many summers, and who, like me, 331 Economic Loss v. Metropolitan
must have wondered whether it would ever end. Property
I mu.st also express especially warm thanks to a small band of faithful
(1984-1985) 1 Chapter 5 Liability in Tort of Survey of new
correspondents who have helped me keep in touch with developments Const. L.J. 4 Construction cases up to
overseas. Foremost and most regular of these has been Mr. Ian Barnett of Professionals 1984, and of
Chatswood, New South Wales. But I am also very indebted to Mr. U.S. and
Maurice O'Brien Q.C. of Wellington, New Zealand, to Mr. F.C. Kirk- Canadian cases
Cohen S.C., now Kirk-Cohen J. of South Africa, to Mr. Robert Smellie on professional
liability
:! Q.C. of Auckland, New Zealand, now Smellie J., and, more recently, to
(1984-1985) 1 Chapter 6 The Peabody Case Critique of
Mr. John Singleton Q.C. of Vancouver. I would also like to mention my
tutor at Oriel College, Oxford in 1946, later to become Sir Zelman Cowen, Const. L.J. 176 Peabody
Donation Fund
Governor-General of Australia and later still Provost of Oriel, who did Case
much to bend my mind back into the ways of the law after my return, like
himself, from the navy in 1946; and also my pupil/master the late Judge (1986) 31.C.L.R. Chapter 7 The Shire of Critique of Shire
157 Sutherland Case of Sutherland v.
Gwynne R.F. Morris Q.C., who gave me and a small band of contem- in Australia Heyman
poraries, including Andrew Lyell, the late Judge Eric McLellan and Judge
Leo Clark Q.C., such a fine grounding in the art and understanding of (1985) 21.C.L.R. Chapter 18 The Time Bar in Time bars on
330 FIDICCl.67 arbitration
pleadings and their importance in 1947 and 1948.
including ICE
arbitration
clause
xxvii
xxviii PRE-1996 ARTICLES

Corresponding
Articles, etc., Chapter in
reference C.C.P.P. Titles Subject Matter

Post-1986 articles by the editor referred to in the text

(1986) 2 Const. Chapter 17 The Architect, the Critique of
L.J. 13 Arbitrator and N.R.H.A.v.
the Courts Crouch
Articles, etc.,
Construction reference
Ltd. Title Subject matter

(1984) 3 A.C.L.R. Chapter 21 The Jennings Case Critique of

2 in the High Jennings (1987) 3 Const. L.J. 3 How Much Critique of Mitsui v.
Court of Construction Measurement? A.-G. of Hong Kong
Australia case.
Nominated (1987) 3 Const. L.J.172 Interim Certificates: Critique of Lubenham
sub-contract Another Heresy? Fidelities case
repudiation and
the Bickerton (1987) 3 Const. L.J. 274 The Bickerton Critique of Jarvis v.
case (see also Albatross Once More Rockdale Housing
Chapter20) Association
(1983) 11.C.L.R. Chapters 23 Construction Advice to owners (1988) 4 Const. L.J. 100 The Lump and the Critique of D&F Estates
16 and24 Contracts from on selection Landlord as Exists case in the Court of
(1984) 11.C.L.R. } the Owner's and drafting of fromAnns Appeal
323 Point of View, contracts (1989) 105 L.Q.R. 46 Confusion Confounded: Critique of D&F estates
and Industrial Negligences and
Plant Contracts case in House of
Defective Buildings Lords
(1990) 106 L.Q.R. 11 Negligence and Further note on D&F
Complex Structures Estates case
(1990) 6 Arb. Int. 253 Control by the Courts; a Critique of the Nema
Plea for More and philosophy in the field
Not Less of construction
contract arbitrations
(1991) 7 Arb. Int. 149 Deficiences of Current Criticism of trends in
International conduct of
Arbitration Practice construction
arbitrations both
domestic and
international
(1990) 6 Const. L.J. 87 Defective Work: The Standard form and
New Flavours by-law deficiencies
and quality assurance
inadequate remedies
for a serious problem
(1990) 6 Const. L.J. 207 Charter for the Critique of Pacific
Construction Associates v. Baxter
Professional
(1991) 7 Const. L.J. 3 "Beyond the Critique of Scott
Contractor's Control" Lithgow v. Secretary
of State for Defence
(1991) 107 L.Q.R. 228 Anns Beyond Repair Critique of Murphy v.
Brentwood D.C.
xxix
xxx PosT-1986 ARTICLES

Articles, etc,,
reference Title Subject matter

TABLE OF CONTENTS
(1991) 7 Const. L.J. 45 Two Singapore Critique of Tropicon
Decisions and Joo Yee cases
(1992) 11 A.C.L.R. 1 Common Law Survey of Anns,
Developments Murphy, Hedley-
Applicable to New Byrne, Pacific VOLUMEl
Construction Associates and
Edgeworth
Construction cases Contents Page
Dedication ..................................................................................................... v
(1993) 1993 Tort L.R. Negligence and Survey of laws of tort as
General Introduction and Preface ............................................................ vii
152 Economic Loss: a in 1993 in the
View of the Future construction contract Table of Cases ............................................................................................ xlv
Table of Statutes ...................................................................................... cxvii
(1993) 9 Const. L.J. 7 A Surprising Decision Critique of Colbart v. Table of Statutory Instruments ............................................................. cxxiii
Kumar
Rules of the Supreme Court ................................................................... cxxv
(1993) 109 L.Q.R. 82 Assignment of Rights to Critique of Linden Table of References to RIBA Contract Form Conditions ................ cxxvii
Sue for Breach of Gardens case in Court Table of References to ICE Contract Fonn Conditions ..................... cxxxi
Contract of Appeal

(1994) 110 L.Q.R. 42 Assignment of Rights to Critique of Linden

Sue: Half a Loaf Gardens case in the Para.
House of Lords

(1994) 10 Const. L.J. House of Commons in Critique of Trafalgar 1. GENERAL PRINCIPLES OF LAW
190 the Court of Appeal: House Ltd. v. General
On Demand Per Surety in Court of Definitions and Background ................................................................. 1·001
Incuriam Appeal Section 1. Classification of Contracts.................................................. 1·014
Section 2. Formation of a Simple Contract
(1) Elements of a Simple Contract ................................................ 1-017
(2) Offer ............................................................................................ 1·018
(3) Withdrawal of an Offer and Counter-offer............................ 1-023
(4) Death of Offerer or Offeree .................................................... 1-030
(5) Acceptance................................................................................. 1-032
(6) Agreements to Agree and Vagueness.................................... 1·042
(7) Agreements "Subject to Contract" ......................................... 1-057
(8) Consideration
(a) Generally......................................................................... 1·061
(b) Accord and satisfaction................................................. 1-071
(c) Forbearance to sue ......................................................... 1·079
(d) Collateral agreements with third parties ..................... 1-080
(9) Intention to Create Legal Relations ....................................... 1-081
Section 3. Contracts Under Seal
(1) Generally.................................................................................... 1-085
(2) Contracts with Local Authorities ............................................ 1-088
Section 4. Variation of Contracts........................................................ 1·089
Section 5. Void and Voidable Contracts
(1) Generally.................................................................................... 1-092

xxxi
xxxii TABLE OF CONTENTS
(2) Mistake
(a) Of fact .............................................................................. 1·094
(b) Common mistake........................................................... 1·096
(c) Unilateral mistake .......................................................... 1·097
(d) .Parties mistaking each other......................................... 1·099
(e) Non estfactum ................................................................ 1·100
(3) Rectification ............................................................................... 1·109
(4) Misrepresentation
(a) Generally ......................................................................... l ·127
(b) Misrepresentation defined ............................................ 1·128
(c) Summary ofpre-1967 law .............................................. J.131
(d) Summary of the Misrepresentation Act 1967 ............. J.132
(e) The Hedley Byrne liability ............................................ J.134
(f) The law as modified by the Act of 1967 ...................... J.140
(g) Fraudulent misrepresentation ...................................... 1· 162
(h) Exclusion of liability for misrepresentation ................ 1·165
(i) Exclusion and effect of the Misrepresentation
Act 1967, s.3 .................................................................... 1·172
Section 6. Implied Terms
(1) General Principles ..................................................................... 1·179
(2) Application to Building and Engineering Contracts ............ 1·186
(3) Implied Covenant for Good Faith and Fair Dealing ............ 1·197
Section 7. Custom and Trade Usage
(1) Generally .................................................................................... 1·200
(2) Incorporation of Usage ............................................................. 1·202
(3) Admissibility of Evidence of Trade Usage ............................ 1·204
Section 8. Collateral Agreements ........................................................ 1·208
Section 9. Interpretation
(1) General Rules ............................................................................ 1·215
(2) More Specific Rules
(a) Subsequent conduct... .................................................... 1·222
(b) Deletions ......................................................................... 1·223
(c) Contrapreferentumrule ................................................ 1·224
(d) Priority of documents
(i) General rule ..................................................... 1·225
(ii) Express provisions for priority ...................... 1·226
(3) "Discrepancy and Divergence" Provisions ............................ 1·229
(4) Exemption Clauses .................................................................... 1·231
(5) Indemnity Clauses ..................................................................... 1·234
(6) Other Clauses ............................................................................ 1·236
(7) The Unfair Contract Terms Act 1977 ..................................... 1·238
Section 10. Estoppel and Waiver
(1) Estoppel... ................................................................................... 1·246
(2) Estoppel Per Rem Judicatem ................................................... 1·250
(3) Waiver and Equitable Estoppel .............................................. 1·255
Section 11. Quasi-contractual Liability
(1) Quasi-contract Generally ......................................................... 1·260
TABLE OF CONTENTS xxxiii
(2) Money Had and Received ........................................................ 1·261
(3) Quantum Meruit ........................................................................ 1·263
Section 12. Liability in Tort
(1) Generally .................................................................................... 1·273
(2) The Principle in Hedley Byrne v. Heller
(a) Generally ......................................................................... 1·280
(b) Application in construction projects ............................ 1·290
(c) Owner/sub-contractor situations .................................. 1·291
(d) Contractor/NE situations ............................................. 1·293
(i) Design ............................................................... 1·295
(ii) Supervision and temporary works ................ l ·297
(iii) Certification ..................................................... 1·302
(iv) Liability of A/Es to contractors
in United States Law ...................................... 1·305
(v) Liability of AJEs to contractors
in Canada ...................................................... 1·306A
(e) Limitation ........................................................................ 1·307
(3) Liability Under the Principle of Donoghue v. Stevenson
(a) Generally ......................................................................... 1·308
(b) Application to construction contracts ......................... 1·310
(c) Proximity and economic loss limits .............................. 1·322
(d) Disclaimers and "contract structure" or "contract
setting" exemptions ........................................................ 1·325
(4) The Occupiers' Liability Acts 1957 and 1984
(a) Generally .........................•................................................ 1·328
(b) Application to construction contracts
(i) As between owner and contractor ................ 1·330
(ii) As between the main contractor and
sub-contractor .................................................. 1·331
(iii) As.between non-contracting parties ............. 1·332
(5) Strict Liability ............................................................................ 1·337
(a) Rylands v. Fletcher ......................................................... 1-388
(b) Nuisance .......................................................................... 1·339
(c) Trespass ........................................................................... 1·340
(d) Withdrawal of support... ................................................ l ·343
(6) Liability Under the Anns Principle
(a) Generally ......................................................................... 1·345
(b) The limitation problem .................................................. 1·347
(c) Application of the Anns Principle
(i) To whom duty owed ....................................... 1·350
(ii) Applications ofprinciple ................................ 1·351
(iii) Principle not applicable .................................. 1·352
(d) The Heyman and D. & F Estates and Murphy cases
(i) Heyman's case., ............................................... 1·353
(ii) The D. & F. Estates case ................................. 1·354
(iii) Combined effect of the two cases .................. l ·356
(iv) Effect of Murphy v. Brentwood District
Council ............................................................. 1·357
 xxxiv TABLE OF CONTENTS
(7) Defective Premises Act 1972 ................................................... 1·361
(8) Latent Damage Act 1986.......................................................... 1·364
(9) Consumer Protection Act 1987................................................ 1·370
(10) Concurrent Liability in Contract and Tort
(a) Generally ......................................................................... 1·372
(b) Contributory negligence ................................................ 1·377
(c) Contributions between defendants .............................. 1 ·379
(i) A/Es' supervision ............................................ 1·383
(ii) The "contract setting" or "contract
structure" ......................................................... 1·386
(11) Vicarious Liability and Independent Contracts .................... 1·387
Section 13. Economic Duress .............................................................. 1 ·390
2. ARCHITECTS, ENGINEERS AND SURVEYORS
Section 1. Need for Employment ........................................................ 2·001
Section 2. Definitions and Qualifications
(1) Architects ................................................................................... 2·006
(2) Engineers .................................................................................... 2·016
(3) "In House" or "Associate" Architects and Engineers ......... 2·020
(4) Professional Assistants and Clerks of Work .......................... 2·023
(5) Quantity Surveyors ................................................................... 2·031
(6) Structural Engineers ................................................................. 2·035
(7) Project Managers ....................................................................... 2·037
Section 3. Contract of Employment
(1) Generally .................................................................................... 2·041
(2) Form of Appointment .............................................................. 2·043
(3) Conditions of Appointment.. ................................................... 2·044
(4) Duration and Termination of Appointment .......................... 2·049
(5) Death, Bankruptcy or Inability to Act of the Architect or
Engineer ..................................................................................... 2·054
(6) Death or Bankruptcy of Building Owner. .............................. 2·056
Section 4. Authority of the Architect and Engineer
(1) Generally ............................................................................ ,....... 2·057
(2) As to Waiver of Contractual Requirements of Building
Contract ...................................................................................... 2·058
(3) As to Contract or Variations ................................................... 2·061
(4) As to taking out Bills of Quantities ........................................ 2·069
(5) As to Measurement and Valuation of Variations ................. 2·072
(6) As to Employment of Engineering or Other Consultants ... 2·074
(7) Express Powers under Building and Engineering
Contracts .................................................................................... 2·078
(8) Effect of Restrictions as between Owner and Architect ...... 2·079
Section 5. Rights of Contractor when Architect or Engineer
Exceeds Authority
(1) Warranty of Authority ................................................ :,,; .......... 2·080
(2) Measure of Damages for Breach of Warranty .......... :............ 2·081
TABLE OF CONTENTS xxxv
Section 6. Duties and Liabilities of Architects and Engineers
to Employer
(1) Generally
(a) Nature of duty................................................................. 2·083
(b) Standard of care ............................................................. 2·086
(2) Duties in Detail
(a) Design
(i) Degree of care ................................................. 2·099
(ii) Continuing duty and limitation ..................... 2· 108
(iii) Measure of damage ......................................... 2· 111
(iv) Delegation ........................................................ 2·114
(b) Examination of site ........................................................ 2· 124
(c) Delivery of drawings, information and instructions
in tiine .............................................................................. 2·130
(d) Instructions as to methods of working and
temporary works ............................................................ 2· 138
(e) Special duties in regard to nominations ...................... 2·144
( f) Knowledge of legislation, building regulations,
by-laws and rights of adjoining owners ........................ 2· 146
(g) Excess of cost over estimates ........................................ 2· 156
(h) Preparation of quantities ............................................... 2·161
(i) Recommending builders ................................................ 2· 165
(j) Recommending form of contract ................................. 2· 167
(k) Supervision ...................................................................... 2·182
(1) Administration of contract ............................................ 2· 198
(m) Comprehensive design ................................................... 2·202
(n) Surveys
(i) Liability ............................................................ 2·203
(ii) Measure of damage ......................................... 2·205
(3) Quasi-judicial Duties ................................................................ 2·214
(4) Negligence in Certifying ........................................................... 2.218
(5) Limitation ................................................................................... 2·222
Section 7. Duties and Liabilities of Quantity Surveyors
(1) Bills of Quantities Defined ....................................................... 2·223
(2) Preparation of Bills and Other Duties .................................... 2·228
Section 8. Fraud and Bribery
(1) Fraud ........................................................................................... 2·232
(2) Bribes and Secret Commissions .............................................. 2·233
Section 9. Remuneration of Architects, Engineers and
Quantity Surveyors
(1) For Completed Services
(a) By special contract ......................................................... 2·237
(i) The size of the total percentage fee itself ..... 2·239
(ii) The degree of "front-loading" of the earlier
instalments .................................. ;.................... 2·240
(iii) Total cost on which the percentage fee is
calculated ......................................................... 2·241
(iv) Consultants ...................................................... 2·242
 xxxvi TABLE OF CONTENTS
(v) Specialist sub-contractors or suppliers
responsible for design ..................................... 2·243
(vi) Supervision generally...................................... 2·244
(b) Implication of reasonable remuneration ..................... 2·247
(c) Work done on approval and probationary drawings. 2·249
( d) Competition drawings .................................................... 2·251
( e) Amount of reasonable remuneration .......•.................. 2·255
(2) For Uncompleted Services ....................................................... 2·260
(3) By Whom Remuneration Payable .......................................... 2·265
(4) Services Outside Building Contracts ...................................... 2·266
(5) Charges for Settling Builders' Accounts ................................ 2·268
(6) When the Right to Payment Arises ........................................ 2·269
(7) Retention of Plans and Documents ........................................ 2·270
(8) Ownership and Copyright of Plans and Documents
(a) Ownership ....................................................................... 2·272
(b) Copyright... ...................................................................... 2·273
(i) Copyright of the buildings themselves ......... 2·274
(ii) Copyright of the plans and drawings of a
building ............................................................. 2·275
(9) Remuneration of Quantity Surveyors .................................... 2·283
Section 10. Liability for Quantity Surveyor's Fees
(1) Liability to Pay for Preparing Bills .......................................... 2·286
(2) Liability for Measuring Up ...................................................... 2·288
3. TENDERS AND ESTIMATES
Section 1. Types of Tender Documents
(1) Documentation Generally ........................................................ 3·001
(a) Invitation to tender ........................................................ 3·003
(b) Tender ............................................................................. 3·006
(c) Acceptance of tender ..................................................... 3·007
( d) Later formal agreement ................................................. 3·008
(e) Incorporation of terms or documents .......................... 3·009
(2) Principal Categories of Priced Contracts ............................... 3·011
(a) "Fixed price" or "lump sum" contracts ....................... 3·012
(b) Measured or bill of quantities contracts ...................... 3·014
(c) "Schedule" contracts ...................................................... 3·015
( d) Mixed contracts .............................................................. 3·016
(3) Where Extent of Work is Known at Time of Contract
(a) Drawings ......................................................................... 3·018
(b) Bills of quantities ............................................................ 3·019
(c) Specifications .................................................................. 3·022
( d) Schedules of rates or prices ........................................... 3·024
(4) Non-traditional Contracts
(a) "Turnkey" or "design-and-build" contracts ................ 3·026
(b) "Management" contracts .................................... \,'. ...... 3·033
(5) Where Extent of Work Uncertain ........................................... 3·041
TABLE OF CONTENTS xxxvii
(a) Contracts employing schedules of prices ..................... 3·043
(b) Contracts on a cost-plus basis ....................................... 3·045
Section 2. Incorporation of Documents .............................................. 3·048
Section 3. Acceptance of Tender
(1) Legal Effect of Tender. ............................................................. 3·053
(2) Whether Acceptance Creates Contract .................................. 3·054
(a) Acceptance of tender subject to condition
(i) Conditions as to a formal contract ................ 3·055
(ii) Conditions as to third party approval or
permission ........................................................ 3·060
(iii) Other conditions .............................................. 3·062
(b) Parties not ad idem ......................................................... 3·066
(c) Acceptance within reasonable time ............................. 3·068
(d) Commencement of work ............................................... 3·069
(e) Letters of intent .............................................................. 3·071
(3) Withdrawal of Tender............................................................... 3·072
(4) Tender for Such Work as Employer may Order ................... 3·073
Section 4. Liability Apart from Contract
(1) Cost of Tendering ...................................................................... 3·075
(2) Misrepresentation ..................................................................... 3·077
(3) Bribery and Secret Commissions ............................................ 3·079
Section 5. Collusive Tendering ............................................................ 3·080
Section 6. Other Statutory Requirements .......................................... 3·082
4. PERFORMANCE
Section 1. Obligations of the Contractor
(1) Obligation to Complete ............................................................ 4·003
(a) Entire contracts and substantial performance
(i) Completion of contract as a whole ................ 4·006
(ii) Substantial performance ................................ 4·014
(iii) Completion for purposes of interim
payments .......................................................... 4·023
(iv) Contracts which are not entire ...................... 4·035
(b) Extent of work included in obligation to
complete: the "inclusive price" principle .................... 4·036
(i) Indispensably necessary work expressly
or impliedly included ...................................... 4·039
(ii) Work contingently necessary to achieve
completion ....................................................... 4·043
(iii) Contractor's unqualified obligation to
complete: the United States position ............ 4·061
(2) Obligations as .to Design and Quality of Materials and
Work ........................................................................................... 4·063
(a) Design and suitability
(i) Where there is reliance on the contractor .... 4·075
(ii) "Duty to warn" cases ...................................... 4·100
xxxviii TABLE OF CONTENTS
(iii) Houses in the course of erection ................... 4.105
(iv) Nominated sub-contractor design ................. 4·108
(v) Express terms as to design, performance
or suitability ..................................................... 4· 111
(vi) By-laws obligations of contractor .................. 4·115
(vii) Generally .......................................................... 4·116
(b) Materials .......................................................................... 4·117
(c) Workmanship ................................................................. 4· 124
(d) Work to satisfaction of A/E .......................................... 4-126
(3) Obligations as to Progress ........................................................ 4·128
(4) Obligations as to Cost... ............................................................ 4·130
(5) Notices before Claims ............................................................... 4·132
Section 2. Obligations of the Owner
(1) General Summary of Obligations ............................................ 4·136
(a) Administration ............................................................... 4·137
(b) Possession of the site ...................................................... 4· 138
(c} Information and instructions ........................................ 4·139
(2) Payment ...................................................................................... 4·140
(3) Giving Possession of the Site ................................................... 4·141
(a) Stateofthesite ............................................................... 4·142
(b) Extent and time of possession ...................................... 4·144
(c) Quiet possession ............................................................. 4· 150
(i) Other contractors of the owner ..................... 4· 151
(ii) Sub-contractor's possession ........................... 4· 157
(iii) Statutory undertakers ..................................... 4·161
(iv) Strikes and industrial action .......................... 4·164
(v) Title and third parties ..................................... 4·166
(vi) Implied indemnity ........................................... 4· 171
(vii) Other interferences by the owner ................. 4·172
(4) Supplying Instructions as to the Carrying Out of Work
(a) Generally ......................................................................... 4·174
(b) Original contract work ................................................... 4· 176
(c) Variations ordered by the owner ................................. 4·183
(5) Nomination of Specialist Sub-contractors and Suppliers
(a) Original nomination ....................................................... 4· 184
(b) Re-nomination on failure of first sub-contractor ....... 4· 191
(6) Appointing an Architect, Engineer or Surveyor
(a) Duty to make appointment... ........................................ 4-197
(b) After appointment ......................................................... 4·200
(7) Obligation to Permit the Contractor to Carry Out the
Whole of the Work .................................................................... 4·202
(8) Duty of Disclosure .................................................................... 4·203
Section 3. Discharge From Further Performance .............................. 4·204
(1) Repudiation and Termination for Breach
(a) Generally ......................................................................... 4·205
(b) What breaches are repudiatory? ..
(i) Fundamental terms ............................ .::: ......... 4·209
TABLE OF CONTENTS xxxix
(ii} "Conditions", "conditions precedent" and
"of the essence" obligations ........................... 4·211
(iii) Non-fundamental breaches after notice ....... 4·212
(c) Need for clear and prompt election ............................. 4·213
(d) Wrong interpretation of contract ................................. 4·218
(e) Payment obligations and set-off ................................... 4·221
(f) Whether power to suspend ........................................... 4·223
(g) Anticipatory breach ....................................................... 4·225
(h) Effects of rescission ........................................................ 4·227
(i) The right to damages ..................................................... 4·228
(j) Quantum meruit: a remedy on rescission .................... 4·230
(k) Recovery of sums paid in quasi-contract ..................... 4·231
(2) Release ....................................................................................... 4·232
(3) Impossibility and Frustration
(a) Generally ......................................................................... 4·233
(b) Theory of frustration ..................................................... 4·234
(c) Leases .............................................................................. 4·238
(d) Effect of frustration
(i) Before the English Act of 1943 ..................... 4·239
(ii) The Frustrated Contracts Act 1943............... 4·241
(e) Incidence of frustration in construction contracts ...... 4·245
(4) Act of God and Force Majeure
(a) Act of God ..................................................................... 4·265
(b) Force majeure .................................................................. 4·267
(5) Death or Illness of a Party ........................................................ 4·270
(6) Illegality ...................................................................................... 4·273
(7) Limitation of Actions ................................................................ 4·283
(a) Summary of current legislation in England ................ 4·284
(b) Accrual of cause of action in contract ......................... 4·288
(c) Contractual indemnities ................................................ 4·289
(d) Contractor and owner .................................................... 4·291
(e) Defective work ............................................................... 4·292
(f) Deliberate concealment ................................................ 4·294
Section 4. Specific Performance
(1) Generally .................................................................................... 4·297
(2) Injunctions Having Effect of Compelling Performance ....... 4·305
(3) Decrees in the Case of Agreements for Building Leases ..... 4·307
5. ACCEPTANCE AND DEFECTS
Section 1. Acceptance
(1) Generally .................................................................................... 5·001
(2) Acceptance not Implied by Occupation ................................. 5·003
(3) Acceptance, Payment or Judgment no Bar to Claim for
Damages ..................................................................................... 5·007
(4) Defects where Work is Done to the Approval of the
Owner ......................................................................................... 5·012
xl TABLE OF CONTENTS
(5) Defects where Approval or Certificate of a Third Person ... 5·014
(6) Defects which Could have Been Previously Detected ......... 5·020
Section 2. Defective Work
(1) Generally .................................................................................... 5·025
(2) The "Temporary Disconformity" Theory .............................. 5·027
(3) Express Powers during Construction Period
(a) Required powers ............................................................ 5·029
(b) Current powers in standard forms ............................... 5·033
(c) Special anomalies of RIBA/JCT forms ....................... 5·035
(d) No duty of owner or A/E .............................................. 5·038
(4) Types of Maintenance and Defects Liability Clauses ........... 5·039
(5) The Maintenance or Defects Liability Period ....................... 5·045
(6) Nature of Maintenance or Defects Obligation ...................... 5·050
(7) Damages for Defects ................................................................. 5·059
6. APPROVAL AND CERTIFICATES
Section 1. Types of Provision
(1) General Review ......................................................................... 6·001
(2) Narrow Construction of Stipulations ...................................... 6·011
(3) Evidence of Approval... ............................................................ 6·020
(4) Vendor's Approval of Building on Land Sold ....................... 6·021
Section 2. Approval by Building Owner
(1) Implication of Reasonableness ................................................ 6·022
(2) Disapproval Must be Honest.. ................................................. 6·027
(3) Approval as to Matters of Taste .............................................. 6·028
(4) Binding Effect of Approval ..................................................... 6·029
Section 3. Approval by Third Person
(1) Generally .................................................................................... 6·031
(2) Whether Certificate, Satisfaction or Approval a Condition
Precedent to Builder's Right to Sue ........................................ 6·036
(3) Whether Employer Bound by Certificate, Satisfaction
or Approval... ............................................................................. 6·046
Section 4. Effect of Arbitration Clause
(1) Generally .................................................................................... 6·060
(2) The "Crouch" View .................................................................. 6·063
(3) Distinction between Certifier and Arbitrator ........................ 6·065
(4) Review of Earlier Cases
(a) Generally ................................................................. ,....... 6·067
(b) Arbitrator not bound by A/E's certificate ................... 6·068
(c) Arbitrator bound by A/E's certificate ......................... 6·078
(5) Summary of the Law ................................................................. 6·089
Section 5. Recovery Without Certificate
(1) Generally .................................................................................... 6·096
(2) Disqualification on Ground of Interest ......................,./......... 6·099
(3) Disqualification on Ground of Fraud or Collusion ....:':......... 6·106
TABLE OF CONTENTS xli
(4) Prevention or Interference by the Owner .............................. 6· 112
(5) Conduct Not Amounting to Fraud or Collusion ................... 6· 126
(6) Summary and Discussion of Preceding Subsections ............. 6· 139
(a) Interest of certifier ......................................................... 6·140
(b) Fraud ................................................................................ 6·141
(c) Interference with the certifier ....................................... 6·142
(d) Want of impartiality or indiscreet conduct of the
certifier............................................................................. 6·143
(e) Prevention by the owner ............................................... 6·145
(f) Refusal of the certifier ................................................... 6· 146
(g) Wrong matters taken into consideration ..................... 6· 149
Section 6. Certificates
(1) Generally .................................................................................... 6·152
(2) Form and Sufficiency of Certificate......................................... 6·154
(3) Mistakes in Certificates ............................................................. 6· 167
(4) Correcting a Mistake in a Certificate ...................................... 6·169
(5) Who is to Give the Certificate? ............................................... 6·172
(6) Final Certificates ........................................................................ 6·181
(7) Interim Certificates
(a) Generally ......................................................................... 6·186
(b) Is interim certificate a condition precedent to
payment? ......................................................................... 6·190
(c) Is an interim certificate binding on the owner? .......... 6·194
(d) The concept of "temporary finality" generally ........... 6·204
(e) Extent of valuation in certificate .................................. 6·206
(f) Early arbitration ............................................................. 6·209
(g) Other aspects of interim certificates ............................ 6·214
(8) Final Accounts ........................................................................... 6·215
Section 7. Effect on Third Persons ...................................................... 6·216
Section 8. Summary of the Law on Conclusiveness of Satisfaction
or Certificates ....................................................................... 6·218
Section 9. Status and Duties of Certifier
(1) Generally .................................................................................... 6·220
(2) Duty When a Final Certificate has to be Given ..................... 6·225
(3) Where the Same Person is Named as both Certifier and
Arbitrator ................................................................................... 6·226
(4) Duties of Certifier to Building Owner. ................................... 6·228
7. VARIATIONS
Section 1. What Variations Are
(1) Generally
(a) Terminology .................................................................... 7·001
(b) Draftsmanship of provisions ......................................... 7·004
(c) Reasons for variation clauses ........................................ 7·005
(d) General summary ........................................................... 7·006
(e) Defects in modern standard forms ............................... 7·007
xiii TABLE OF CONTENTS
(2) Work Included in the Contract
(a) Generally ......................................................................... 7·010
(b) Where "as-built" quantities differ from bills .............. 7·015
(c) Necessary work not mentioned in bills ........................ 7·019
(d) Necessary work not mentioned in schedule of rates .. 7·020
(e) Promise to pay when contractor already bound ......... 7.024
(f) Instructions to assist contractors in difficulty.............. 7·025
(g) Temporary works and methods of working ................ 7·037
Section 2. V aria tion Claims and Express Provisions
(1) Generally .................................................................................... 7·041
(2) The Power to Order Variations ............................................... 7·043
(3) Notice of Claims ........................................................................ 7·051
(4) Orders in Writing
(a) Generally ......................................................................... 7·055
(b) What are orders in writing? .......................................... 7·056
(c) Confirmation or subsequent sanction in writing ........ 7·061
( d) Order in writing a condition precedent ....................... 7 ·063
(e) Order in writing not a condition precedent ................ 7 ·071
(f) Where there is an arbitration clause ............................ 7·075
(g) Where a fraud on the contractor .................................. 7·076
(h) Where work is outside the contract or its "scope" ..... 7·079
(i) Waiver ............................................................................. 7·094
G) Summary of preceding paragraphs .............................. 7·098
(5) Where there is a Certificate ..................................................... 7·099
Section 3. Valuation of Variations
(1) Types of Valuation Clause ....................................................... 7·102
(2) The "Shopping List" Principle ................................................. 7· 105
(3) "Preliminaries" Expenditure ................................................... 7·107
(4) Criteria for Valuation ............................................................... 7·111
(5) Miscellaneous Provisions in Standard Form Valuation
Clauses ........................................................................................ 7·113
(6) Multiple Interacting Variations ............................................... 7·118
Section 4. Appropriation of Payments to Extras ............................... 7·119
8. PRICE AND DAMAGES
Section 1. Price
(1) Generally .................................................................................... 8·001
(2) Principal Adjustments of Price
(a) Measurement contracts generally ................................ 8·005
(b) English bills of quantities contracts
(i) Evolution of the contracts .............................. 8·016
(ii) Standard Methods of Measurement and
the "omitted item" claim ................................ 8·024
(iii) Re-measurement at higher prices ................. 8·037
(iv) Summary of position under English~/
standard forms ................................... :............. 8·044
TABLE OF CONTENTS xliii
(v) Mistakes of contractor in the bills ................. 8·047
(vi) Approximate bills of quantities ..................... 8·050
(c) Fluctuations clauses
(i) Generally .......................................................... 8·052
(ii) Labour .............................................................. 8·053
(iii) Materials ........................................................... 8·055
(iv) Index-based clauses ........................................ 8·057
(d) "Clause 12" or "changed conditions" clauses ............. 8·060
(e) "Loss and expense" claims ............................................ 8·069
(f) Bonus and deductions provisions ................................. 8·007
(3) Retention
(a) Generally ......................................................................... 8·076
(b) Express trust provisions
(i) Sub-contracts ................................................... 8·078
(ii) Main contracts ................................................. 8·081
(4) Contra Items .............................................................................. 8·087
(5) Interest
(a) Generally ......................................................................... 8·088
(b) Statutory powers to order interest
(i) Interest on judgments or awards ................... 8·090
(ii) Statutory discretionary interest on sums
claimed ............................................................. 8·091
(c) Interest as special damage for non-payment .............. 8·093
(d) Interest as damages for other breaches ....................... 8·094
(e) Express terms for interest ............................................. 8·098
(6) Reasonable Price ....................................................................... 8.101
(7) Instalments of the Price ............................................................ 8·105
Section 2. Damages
(1) Generally
(a) Scope of section .............................................................. 8·108
(b) General principles in contract and tort ........................ 8· 109
(2) Breach by the Contractor ......................................................... 8·111
(a) Defective or incomplete work ...................................... 8· 119
(i) So-called prima facie rule in tort. .................. 8· 141
(ii) Plaintiff's intention to rebuild ........................ 8·142
(iii) Betterment or profit factor ............................ 8· 143
(iv) Inflation and date of assessment ................... 8·145
(v) Re-building or diminution of value: an
intermediate measure .................................. 8· 153A
(vi) Effect of subsequent transfer of property .... 8·154
(b) Consequential costs of defective work ........................ 8· 156
(i) Third party claims ........................................... 8·157
(ii) Vacating premises ........................................... 8· 159
(iii) Damages for distress ....................................... 8·160
(c) Delay and consequential loss ........................................ 8·162
(d) Failure to complete ........................................................ 8·168
(e) Sub-contracts .................................................................. 8· 169
xliv TABLE OF CONTENTS

(3) Breach by the Owner

(a) Generally ......................................................................... 8·170
(b) Loss of profit
(i) Terminated contracts ..................................... 8· 172 TABLE OF CASES
(ii) Delayed contracts ............................................ 8·176
(iii) Profit and fixed overhead relationship ......... 8·177
(c) Contractor's prime-cost and owner's breaches........... 8·180 (References are to Paragraph numbers with those in bold referring to Illustrations)
(d) Fixed overheads and the Hudson and Eichleay
formulae .......................................................................... 8· 182
(e) Site overheads ................................................................. 8·190 A.B. Marintrans v. Comet Shipping Co. Ltd. [1985] 1 W.L.R. 1270 . . . . . . . . 1·377
A & B Taxis v. Secretary of State for Air (1922) 2 K.B. 328 . . . . . . . . . . . . . . . 8·216
(f) Plant ................................................................................. 8·192 A.B.C. v. Waltham Holy Cross U.D.C. See Amalgamated Building Contractors v.
(g) Disturbance and loss of productivity ........................... 8· 196 Waltham Holy Cross U.D.C.
(h) Acceleration claims ........................................................ 8·199 A.B.C. Coupler and Engineering Co., Re. (No. 3) [1970) 1 W L.R. 702; (1970) 114
(i) Global and "total cost" claims ...................................... 8·200 S.J. 242; [1970] 1 AllE.R. 650 . . . . . . . . 16·007
A-Jae Demolition (London) Limited v. Urlin Rent-A-Car Inc. {1990) 74 0.R. 2nd
{j) Use of programmes ..................................................... 8·211B 474,D.C. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4-041,4·221
(4) Express Terms .................................................;......................... 8·212 AKT Reidar v. Arcos Ltd. (1927) 1 K.B. 352. . . . . . . . . . • • . . . . . 9·005, 10·001, 10·003
(a) "Direct" or "consequential" damage provisions ........ 8·213 A.M.F International v. Magnet Bowling [1968) 1 W.L.R. 1028; (1968) 112 S.J. 522;
[1968) 2All E.R. 789;66 L.G.R. 706 . . . . . . . . . . . 1·009, 1·235, 1·312, 1·329, 1·235,
(b) "No damage" clauses ..................................................... 8·217 1·312, 1·329, 1·332, 1·333, 1·335, l.386, 2·022, 2·197, 4·142,
(5) Double Recovery of Damage .................................................. 8·223 4·266, 5·021, 5·022, 5·024, 5·038, 7·031, 7·037, 8·115,
(6) "Collateral Source" Compensation......................................... 8·225 15-051, 15·053, 15·054
Aberdeen Harbour Board v. Heating Enterprises [1988) 4 Const.
LJ.195. . . . . . . . . . . . . . . . . . • . . . . . • . . . . . . . . . . . . 1·327, 15.018, 15·022
Abrams v. Ancllffe [1978) 2 N.Z.LR. 420, N.Z. Sup. a. . . . . . . 1·286, 2.159, 3·001, 4· 130
Index.......................................................................................................... [1] Absalom (F.R.) Ltd. v. Great Western (London) Garden Village Society [1933}
A.C. 592; 102 L.J.K.B. 648; 49 T.L.R. 350 . . . . . . . . . . . . . . . 6-072, 6·211, 18· 118
Abu Dhabi Gas Liquefaction Co. v. Eastern Bechtel Corp.; Eastern Bechtel Corp.
v. Ishikawajima Harima Heavy Industries (1982) 126 S.J. 524; [1982) Com,
VOLUME2 LR. 215; [1982) 2 Lloyd's Rep. 425, C.A. . . . . . . . . . . . . . . . . . . . . . . . 18·117
Aced v. Hobbs-Sesack 7 Cal. Rep. 391 (1961) . . . . . . . . . . . . . . . . . . . . . . . . 4·106
Acme Investments Ltd. v. York Structural Steel Ltd. (1974) 9 N.B.R
699 ....... , ..... , . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1·248, 4-091, 7·097
(For a more detailed Table of Contents please see Volume 2) Acrecrest v. Hattrell (W.S.) & Partners [1983] Q.B. 260; [1982) 2 W.L.R. 1076;
• (1982) 126 S.J. 729; [1983] 1 AIIE.R.17; (1982) 264 E.G. 245; (1983) 113 New
9. TIME FOR PERFORMANCE L.J. 64; (1983) 22 Build L.R. 88, C.A.; affinnmg [1980JJ.P.L.172; (1979) 252
E.G.1107 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1·350, 1·384
10. PENALTIES AND LIQUIDATED DAMAGES Acsim (Southern) v. Danish Contracting and Development Co. 47 BLR 55 and 59,
11. VESTING AND SEIZURE OF MATERIALS AND CA ...... 5.015,5·026,6·006, 6·197, 6·201, 6·202, 6·204, 6·208, 8·087, 8.118, 17·016
PLANT Adam v. Newbigging (1888) 13 App. Cas. 308; 57 LJ.Ch. 1066; 59 L.T. 267; 37 W.R.
12. FORFEITURE AND DETERMINATION 97, H.L.; affirming sub nom. Newbigging v. Adam (1886) 34 Ch.D. 582; 56
LJ.Ch.275;55L.T. 794;35W.R.597;3T.L.R. 259, C.A.....• , .... 1·150, 1·163
13. SUB-CONTRACTS Adamsv. Great North of Scotland Railway [1891) A.C.31;26Sc.L.R. 765; 16Ct. of
14. ASSIGNMENT Sess. Cas. (4th ser.) 84 . , , .... , . . . . . . . . . . . , .... , • . . . . . . . . . . 18·129
15. INSURANCE AND INDEMNITIES Adcock's Trustees v. Bridge Rural District Council (1911) 75
J.P. 241. . . . . . . . . . . . . . . . . . . . . 4-084, 4·118, S,018, 6·063, 6-070, 6.093, 8·116
16. BANKRUPTCY AND LIQUIDATION Addie v. Henderson (1879) 7 Ct. of Sess. Cas. {4th ser.) R. 79 . . . . . . . . . . . . . 6·103
17. BONDS AND GUARANTEES . Adelaide (The aty of) v. Jennings Industries (1985) 57 A.L.R., 455 High Court of
18. ARBITRATION Australia. , . . . . . . . . . . . . . . . . , . . . . . . . . . . . , ..... 13·013, 13·069, 13,084
Adenberg v. Canning (1992) 62 Build. L.R 47 . . . . . . . . . . . . . . . . . . . . . . . . 1 ·378
Administrator, Natal v. Magill Grant and Nell, 1967 (1) SA 660, S.A. . . . . . . . . . . 8·079,
13· 126, 14·045, 16·054
Aesco Steel Inc, v. Jones Construction Company (1985) 621 F. Supp. 1576
(1985) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13·112
Aetha Insurance Company v. Hellmuth, 392 F.(2d) 4n {1968), 8th Circuit . . . . 1 ·305
Aetna Surety Co. v. Bedford-Stuyvesant Restoration Corporation 455 N.Y. Sup.
p. 265 (1982), App. Div, NY 14·062

xiv
 First Edition (1891) By Alfred Hudson
Second Edition (1895) By Alfred Hudson TABLE OF CONTENTS
Third Edition (1906) By Alfred Hudson
Fourth Edition (1914) By Alfred Hudson
Fifth Edition (1926) By Alfred Hudson K.C. VOLUMEl
Sixth Edition (1933).By Lawrence Mead
Seventh Edition (1946) By Lawrence Mead
Eighth Edition (1959) By E.J. Rimmer Q.C., and (Fora more detailed Table of Contents please see Volume 1)
I.N. Duncan Wallace
Ninth Edition (1965) By I.N. Duncan Wallace
Tenth Edition (1970) By I.N. Duncan Wallace 1. GENERAL PRINCIPLES OF LAW
2. ARCHITECTS, ENGINEERS AND SURVEYORS
Published in 1994 by 3. TENDERS AND ESTIMATES
Sweet & Maxwell Limited, of
4. PERFORMANCE
100 A venue Road, 5. ACCEPTANCE AND DEFECTS
Swiss Cottage, London NW3 3PF 6. APPROVAL AND CERTIFICATES
http://www.smlawpub.co.uk
7. VARIATIONS
Phototypeset by 8. PRICE AND DAMAGES
MFK Typesetting Ltd., Hitchin, Herts.

Printed in Great Britain by

The Bath Press, Bath
Reprinted 1997
A cata.Iogue record for this book is available from the British Library
ISBN O421 33260 3
All rights reserved.
No part of this publication may be
reproduced or transmitted, in any form
ur by means, electronic, mechanical, photocopying,
recording or otherwise, or stored in any retrieval
system of any nature, without the written permission
of the copyright holder and the publisher, application
for which shall be made to the publisher.
No natural forests were destroyed to make this product.
Farmed timber was used and replanted.
©
Text: I.N. Duncan Wallace
1995
VOLUME2
Contents Page
Table of Cases .............................................................................................. xv
Table of Statutes.................................................................................... lxxxvii
Table of Statutory Instruments· ................................................................ xciii
Rules of the Supreme Court ...................................................................... xcv
Table of References to RIBA Contract Form Conditions ................... xcvii
Table of References to ICE Contract Form Conditions ............................ ci
Para.
9. TIME FOR PERFORMANCE
(1) Generally .................................................................................... 9·001
(2) Where Time Specified for Completion ................................... 9·006
(3) Where Specified Time Inapplicable ........................................ 9·007
(4) Whether Time of the Essence .................................................. 9·013
(5) Notice Rendering Time of the Essence .................................. 9·022
(6) Reasonable Time ....................................................................... 9·024
(7) Due Diligence and Expedition Terms .................................... 9·032
(8) Programmes Supplied by Contractor...................................... 9·040
(9) Nature of Required Completion ............................................. 9·043

v
 vi TABLE OF CONTENTS
10. PENALTIES AND LIQUIDATED DAMAGES
Section 1. Construction and Effect of Clauses
(1) Generally .................................................................................. 10-001
(2) Distinction between Penalties and Liquidated Damages ... 10·006
(3) Clauses Operating as Limitations on Damages ................... 10·022
Section 2. Release of Liquidated Damages
(1) Release by Prevention ............................................................ 10·024
(2) Prevention by Late Variations ............................................... 10·043
(3) Effect of Forfeiture ................................................................. 10·047
(4) Effect of Payment without Deduction .................................. 10·054
(5) Partial Re·entry or Occupation ............................................. 10·057
Section 3. Extension of Time
(1) Drafting of Extension of Time Clauses ................................ 10·063
(2) Whether Decision of NE Binding ........................................ 10·069
(3) Effect of Unqualified Certificate ........................................... 10·071
(4) Contents of Certificate ............................................................ 10·075
(5) Time for Exercise .................................................................... 10·078
(6) Effect on Damages Claimed by Contractor ······················t·· 10·091
(7) Phased Completion .............................................................. 10·091A
Section 4. Summary of Preceding Contracts .................................... 10·092
Section 5. Policy of Liquidated Damages and Extension of
Time Clauses ...................................................................... 10.096
11. VESTING AND SEIZURE OF MATERIALS AND
PLANT
Section 1. Ownership in the Absence of Express Provision
(1) Generally .................................................................................. 11·00!
(2) Materials, Goods and Fittings ................................................ 11·003
(3) Contractor's or Construction Plant ....................................... 11·015
Section 2. Express Provisions
(1) Generally .................................................................................. 11·019
(2) Effect of Provisions for Payment. .......................................... 11 ·044
(3) Whether Vesting or Seizure Clauses are Bills of
Sale ............................................................................................ 11·046
(4) Validity of Seizure or Forfeiture ........................................... 11.048
(5) Time of Vesting or Seizure ..................................................... 11·049
(6) Reputed Ownership ................................................................ 11.050
(7) Third Party Rights and Retention of Title ........................... 11 ·051
Section 3. Lien
(1) Common Law and Equitable Liens ...................................... 11.059
(2) Contractual Liens .................................................................... 11·060
(3) Mechanics' Liens ..................................................................... 11.063
Section 4. Old Materials ..................................................................... 11 ·064
TABLE OF CONTENTS vii
12. FORFEITURE AND DETERMINATION
Section 1. The General Nature of the Power to Forfeit or
Determine
(1) The Owner's Right to Possession .......................................... 12·001
(2) Determination of the Contract .............................................. 12·002
(a) Common law determination ....................................... 12·003
(b) Contractual detennination .......................................... 12·004
(3) Contractual Determination Not Exclusive .......................... 12·006
(4) Events on which the Express Power Usually Conditioned
(a) Owners' determinations .............................................. 12·011
(b) Owners' "convenience" clauses .................................. 12·014
(c) Contractors' determinations ....................................... 12·018
(5) Relief Against Forfeiture ....................................................... 12·021
(6) Good Faith, Ex Aequo et Bono or other Limitations ......... 12·028
(7) Necessity for Unequivocal Act .............................................. 12·031
(8) Contractual Notice Requirements
(a) Generally ....................................................................... 12·033
(b) Contents ofnotice ........................................................ 12·034
(c) Time requirements ofnotices ..................................... 12·038
(d) Formalities of notice .................................................... 12·042
(9) Who is to Ascertain Events? .................................................. 12·045
(10) Interpretation of Clauses ........................................................ 12·046
(11) Effect of Waiver and Estoppel .............................................. 12·050
(12) Set-off and Contractors' Detenninations for
Non-payment ........................................................................... 12·055
Section 2. Effect of Exercising a Forfeiture Clause
(1) Generally .................................................................................. 12·059
(2) The Rights Conferred ............................................................. 12·062
(a) To seize materials ......................................................... 12·063
(b) To seize money in hand ............................................... 12·064
(c) To complete the works ................................................ 12·065
(d) Agreement void or voidable on re-entry................... 12·066
(3) What Sums are Included in Forfeiture ................................. 12·067
(4) Position of Owner Completing after Determination .......... 12·071
Section 3. Wrongful Forfeiture
(1) When Forfeiture is Wrongful... .............................................. 12·076
(2) Remedies for Wrongful Forfeiture
(a) Damages ........................................................................ 12·082
(b) Quantum meruit alternative ........................................ 12·083
(c) Right to Possession of Owner ..................................... 12·084
13. SUB-CONTRACTS
Section 1. Generally
(1) Ordinary or "Domestic" Sub-contracts ................................ 13·001
(2) Nominated Sub-contracts ....................................................... 13·003
(3) Express Prohibitions on Sub-contracting ............................. 13·014
viii TABLE OF CONTENTS
Section 2. Building Owner and Sub-contractor
(1) Generally .................................................................................. 13·015
(2) No Privily of Contract ............................................................ 13-016
(3) Liability in Tort
(a) Generally ....................................................................... 13-042
(b) Donoghue v. Stevenson physical damage .................. 13·043
(c) Economic loss undet the Anns principle ................... 13·044
(d) Economic loss under the Hedley Byrne doctrine ..... 13·045
(4) Name-borrowing Provisions .................................................. 13·046
(5) Direct or Collateral Warranties
(a) Collateral warranties .................................................... 13·053
(b) Direct sub-contractor warranties ............................... 13·055
(6) Express Trust and Pay Direct Provisions ............................. 13·060
Section 3. Building Owner and Contractor
(1) Main Contractor Responsibility for Nominated
Sub-contractor ......................................................................... 13·061
(2) Bickerton and the Duty to Nominate .................................... 13·066
(3) Provisional and P-C Sum Items ............................................. 13-089
(4) Cash discount ........................................................................... 13·094
Section 4. Main Contractor and Sub-contractor
(1) Generally .................................................................................. 13·096
(2) Documentation ........................................................................ 13·097
(3) Incorporation of Terms .......................................................... 13·099
(a) Incorporation of main contract terms ........................ 13· 100
(b) Incorporation of sub-contract conditions .................. 13·105
(4) Quotations to Tendering Main Contractors ........................ 13·107
(5) "Pay wheil Paid" Provisions
(a) Generally ....................................................................... 13·108
(b) Whether a condition of liability.................................. 13·110
(c) Owner cross-claim or set-off ....................................... 13·115
(6) Payment and Set-off................................................................ 13-117
(7) Cash Discount.. ........................................................................ 13·118
Section 5. Payment Direct and Express Trust Provisions
(1) Generally .................................................................................. 13-120
(2) Payment of Sub-contractor Direct ........................................ 13· 121
(3) Express Trust Provisions ........................................................ 13· 130
Section 6. Sub-contractor's Lien and Property ................................ 13· 132
Section 7. Performance of Sub-contracts .......................................... 13·133
14. ASSIGNMENT
Section 1. Assignment of Contractual Liability
(1) Generally .................................................................................. 14·001
(2) Vicarious Performance of Contractual Liabilities ............... 14·003
, -------
TABLE OF CONTENTS ix
Section 2. .Assignment of Contractual Rights
(1) Generally .................................................................................. 14·012
(2) Statutory Assignments ............................................................ 14·016
(3) Equitable Assignments ........................................................... 14·017
(4) Assignment of Personal Contracts ........................................ 14·019
(5) Notice ........................................................................................ 14·021
(6) Assignee Takes Subject to Equities ...................................... 14·022
Section 3. New Contract with Third Person ..................................... 14·023
Section 4. Unassignable Rights .......................................................... 14·024
(1) Bare Right of Litigation ......................................................... 14·025
(a) As a compromise of litigation ..................................... 14·026
(b) On transfer of property ............................................... 14·027
(c) Damages recoverable on assignment ......................... 14·032
(2) Rights of Seizure and Forfeiture ........................................... 14·037
(3) Arbitration Clauses ................................................................. 14·038
Section 5. Assignment of Moneys Due
(1) Generally .................................................................................. 14·040
(2) MoneysnotyetDue ................................................................ 14·041
(3) Notice to Building Owner ...................................................... 14·046
(4) Form of Assigmnent ............................................................... 14·047
(5) Equities ..................................................................................... 14·049
Section 6. Provisions Against Assignment
(1) Interpretation of Provisions ................................................... 14·055
(2) Whether Prohibitions of Assignment Valid ......................... 14·058
Section 7. Attachment of Moneys Due ............................................. 14·063
Section" 8. Assignment by Operation of Law
(1) Generally .................................................................................. 14·070
(2) Death ........................................................................................ 14·07!
15. INSURANCE AND INDEMNITIES
Section 1. Insurance
(1) Generally
( a) Purpose of contractually required insurance ............ 15·001
(b) Two main types of contractor insurance ................... 15·002
(c) Distinction between insurance and bonds ................. 15·003
(d) Over-insurance common in U.K. standard forms .... 15·005
(e) Ingenuities ofwording ................................................. 15·006
(f) Subrogation and assignment ....................................... 15·007
(g) Comprehensive project cover ..................................... 15·008
(h) "Accident" wording ..................................................... 15·0!0
(i) Sub-contractor insurance ............................................ 15·011
G) Summary of insurance discussed in this Chapter ..... 15·012
x TABLE OF CON'IENTS
(2) Insurance of Works
(a) Joint insurance .............................................................. 15·013
(b} Owner insurance .......................................................... 15·015
(3) Adjoining Property Insurance ............................................... 15·023
(4) Third Party Liability Insurance ............................................. 15·026
(5) Professional Insurance ............................................................ 15·031
Section 2. Indemnities
(1) Generally .................................................................................. 15·038
(2) Interpretation of Clauses ........................................................ 15·040
(3) "Secondary" Indemnitee Negligence .................................... 15·047
(4) Unsuccessful Third Party Claims .......................................... 15·055
(5) Indemnitor's Sub.contractors ................................................ 15·058
(6) Implied Indemnity ................................................................... 15·061
16. BANKRUPTCY AND LIQUIDATION
Section 1. Insolvency Generally
(1) Scope of Present Chapter ....................................................... 16·001
(2) Insolvency and its Effect··········································-············ 16·004
Section 2. Disclaimer and Adoption ................................................. 16·011
Section 3. Right of Set·off under Mutual Credit and Dealing
Clause .................................................................................. 16·014
Section 4. Administrative Receivers ................................................. 16-020
Section 5. Administration and Administrators ................................ 16·024
Section 6. Insolvency of Construction Owner
(1) Continuation of Contract ....................................................... 16·027
(2) Contractor's Possible Right to Security ................................ 16·028
(3) Express Termination Powers ................................................. 16·029
(4) Statutory Right of Rescission ................................................ 16·030
(5) Express Trust Provisions in Main Contracts ........................ 16·031
Section 7. Insolvency of Contractor
(1) Continuation of the Contract ................................................. 16·032
(2) Provisions Affected by Contractor's Insolvency ................. 16·034
(3) Termination and Seizure Provisions ..................................... 16·035
(4) Vesting of Materials or Plant in Owner
(a) General insolvency principle ...................................... 16·048
(b) Retention of title .......................................................... 16·049
(c) Bills of sale, registrable charges and Sale of
Goods Act, s.25 ............................................................. 16·050
(d) Reputed ownership ...................................................... 16·052
(5) Power to Pay Sub·contractors Direct ................................... 16·054
(6) Express Trust Provisions in Sub·contracts ........................... 16·055
(7) Suggested Principles of Invalidation ..................................... 16·056
TABLE OF CONTENTS xi
Section 8. B~qkruptcy of Architect or Engineer ............................. 16-059
Section 9. Priority of Earlier Assignees of Moneys Due ................ 16·061
17. BONDS AND GUARANTEES
Section 1. Generally ............................................................................ 17·001
(1) Terminology ............................................................................. 17·004
(2) Types of Obligation Guaranteed ........................................... 17·005
(3) Form of Traditional Bond
(a) Bond effectively a guarantee ...................................... 17·007
(b) The Trafalgar House case ........................................ 17-0llA
(4) EnforcementofBonds ............................................................ 17·012
(a) Breach by creditor. ....................................................... 17·013
(b) Rescission by creditor .................................................. 17·014
(c) Set-off by surety ........................................................... 17·016
(5) Writing and Consideration ..................................................... 17·017
(6) Interpretation........................................................................... 17-019
(7) Notice Unnecessary: Limitations and Duration .................. l 7·021
Section 2. Discharge of Surety
(1) Generally .................................................................................. 17·023
(2) Discharge by Full Performance ............................................. 17·024
(3) Non·disclosure ......................................................................... 17·025
(4) Laches ....................................................................................... 17·028
(5) Express Notice Requirements ............................................... 17·029
(6) Acts to the Prejudice of the Surety
(a) Generally ....................................................................... 17-034
(b) Payment guarantees ..................................................... 17·041
(c) Performance guarantees
(i) Increased or advanced payments ................ 17·043
(ii) Alterations of the work ................................ 17·049
(iii) Extensions of time ......................................... 17·052
(iv) Other alterations to the contract ................. 17·053
Section 3. Unconditional or "On Demand~' Bonds
(1) Generally
(a) Recent emergence ........................................................ 17·054
(b) Nature of unconditional or "on demand"
undertakings ................................................................. 17 ·056
(c) Counter-indemnities and the "indemnity string" ..... 17·059
(2) Interpretation........................................................................... l 7·060
(3) Call must Conform to Bond Requirt'.:ments ......................... 17·064
(4) Fraud as a Ground of Avoidance .......................................... 17·067
(5) Contractual Restrictions on Call ........................................... 17·072
(6) Abuse of On Demand Bonds ................................................ 17·076
(7) ICC Counter·guarantee Scheme ........................................... 17·077
(8) Debtor's Rights when Bond is Paid ...................................... 17·078
Section 4. Co·sureties .......................................................................... 17·079
xii TABLE OF CONTENTS
18. ARBITRATION
Section 1. General Principles
(1) Submissions and Agreements to Refer ................................ 18-001
(2) Principal Characteristics of English Arbitration
( a) Control by the courts ................................................... 18·002
(b) Appeal to the courts on point of law ......................... 18·004
(c) Arbitrator may not decide his own jurisdiction ........ 18·006
(d) Arbitrator must apply the law .................................... 18·010
(3) · The English Legislation
(a) The current arbitration acts ........................................ 18·013
(b) Historical background ................................................. 18·014
(c) Deficiencies in the present law ................................... 18·016
(4) Comparative Law of Arbitration .......................................... 18·019
Section 2. The Arbitration Agreement
(1) Formal Requirements ............................................................. 18·025
(2) Terms of the Agreement ........................................................ 18·028
(3) Incorporation of Arbitration Clauses ................................... 18·031
(4) Special Provisions in Construction Contracts
(a) "Scottv.Avery" clauses ............................................... 18·036
(b) "Early arbitration" provisions .................................... 18·042
(c) "Prior reference" provisions ....................................... 18·045
(d) Time-bar provisions
(i) Generally ........................................................ 18·048
(ii) Time-bars in construction contracts............ 18·049
(iii) "Undue hardships" under section 27 of
the Arbitration Act 1950 .............................. 18·056
(iv) The FIDIC time-bar ..................................... 18·058
(e) Arbitration agreements distinguished from
agreements for valuation or certification .................. 18·061
( f) Two or three arbitrator provisions ............................. 18·072
(g) Court's powers of appointment of arbitrators .......... 18·075
(h) Named arbitrators and appointing bodies ................ 18·076
(5) International Arbitration ....................................................... 18·078
(a) Jurisdiction of the English courts ............................... 18·079
(b) Choice of law ................................................................ 18·083
Section 3. Effect of the Arbitration Agreement
(1) Enforceability Generally ........................................................ 18·088
(2) Grant and Refusal of Stay ...................................................... 18·089
(a) "No dispute" cases ....................................................... 18·090
(b) "No dispute" as to part... ............................................. 18·091
( c) Defendant not ready and willing to arbitrate ........... 18·093
(ct) Dispute not within the clause ..................................... 18·095
(e) Arbitrator without power to decide dispute ............. 18·097
(i) Contract void ab initio .................................. 18-098
(ii) Rectification ................................................... 18·099
(f) Fraud or serious personal charges .............................. 18·102
'
TABLE OF CONTENTS xiii
(g), ·General discretion to grant or refuse stay
(i) Generally ........................................................ 18·105
(ii) Some issues only within clause .................... 18·108
(iii) "Scott v. Avery" clauses ................................ 18· 109
(iv) Multiplicity of proceedings .......................... 18· 111
(v) Where questions of law are involved .......... 18·118
(h) Step in the action .......................................................... 18·121
(3) Succession and Assignment
(a) Succession ..................................................................... 18· 124
(b) Assigmnent ................................................................... 18·125
Section 4. Disqualification and Misconduct of Arbitrators
(1) Generally .................................................................................. 18· 126
(2) Interest and Bias ...................................................................... 18·127
(3) Misconduct ............................................................................... 18·!32
Section 5. Procedure in Arbitrations
(1) Generally .................................................................................. 18·150
(2) Nature of Construction Disputes .......................................... 18·153
(3) Conduct of the Arbitration
(a) Prior to acceptance of appointment
(i) Jurisdiction ..................................................... 18·155
(ii) Remuneration ................................................ 18·156
(iii) Availability of arbitrator .............................. 18· 157
(b) Interlocutory matters after appointment
(i) Generally ........................................................ 18·158
(ii) Pleadings ........................................................ 18· 159
(c) The hearing ................................................................... 18·161
(4) Interim Awards ........................................................................ 18·167
(5) Final Awards
(a) Costs ............................................................................... 18·169
(b) Reasoned awards .......................................................... 18·170
(c) Where the award is made ............................................ 18· 171
(6) Appeals From Arbitrators ..................................................... 18· 172
(a) Appeals on a point of law
(i) The requirement of leave and the Nema
guidelines ....................................................... 18·173
(ii) No evidence as a point of law ...................... 18·175
(b) Detennination of preliminary points of law ............. 18· 177
(c) Appeals from awards of costs ..................................... 18·178
(7) Sealed Offers ............................................................................ 18·182
Section 6. Current' Outlook for English Arbitration Law .............. 18· 192
Index.......................................................................................................... [1]
------
-
 ,,..-._
xliv TABLE OF CONTENTS
(3) Breach by the Owner
(a) Generally ......................................................................... 8·170
(b) Loss of profit
(i) Terminated contracts ..................................... 8·172
(ii) Delayed contracts ............................................ 8·176
(iii) Profit and fixed overhead relationship ......... 8·177
(c) Contractor's prime-cost and owner's breaches ........... 8·180
(d) Fixed overheads and the Hudson and Eichleay
formulae .......................................................................... 8· 182
(e) Site overheads ................................................................. 8· 190
(f) Plant ................................................................................. 8·192
(g) Disturbance and loss of productivity ........................... 8· 196
(h) Acceleration claims ........................................................ 8·199
(i) Global and "total cost" claims ...................................... 8·200
G) Use of programmes ..................................................... 8·211B
(4) Express Terms ........................................................................... 8·212
(a) "Direct" or "consequential" damage provisions ........ 8·213
(b) "No damage" clauses ..................................................... 8·217
(5) Double Recovery of Damage .................................................. 8·223
(6) "Collateral Source" Compensation ......................................... 8·225
Index.......................................................................................................... [1]
VOLUME2
(For a more detailed Table of Contents please see Volume 2)
9. TIME FOR PERFORMANCE
10. PENALTIES AND LIQUIDATED DAMAGES
11. VESTING AND SEIZURE OF MATERIALS AND
PLANT
12. FORFEITURE AND DETERMINATION
13. SUB-CONTRACTS
14. ASSIGNMENT
15. INSURANCE AND INDEMNITIES
16. BANKRUPTCY AND LIQUIDATION
17. BONDS AND GUARANTEES
18. ARBITRATION
TABLE OF CASES
(References are to Paragraph numbers with those in bold referring to Illustrations)
A.B. Marintrans v. Comet Shipping Co. Ltd. {1985] 1 W.L.R. 1270 . . . . . . . . . . 1-377
A & B Taxis v. Secretary of State for Air (1922) 2 K.B. 328 . . . . . . . . . . . . . . . 8·216
A.B.C. v. Waltham Holy Cross U.D.C. See Amalgamated Building Contractors v.
Waltham Holy Cross U.D.C.
A.B.C. Coupler and Engineering Co., Re. (No. 3) {1970] 1 W.L.R. 702; (1970) 114
S.J. 242; {1970] 1 All E.R. 650 . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16·007
A-JacDemolition (London) Limited v. Urlin Rent-A-Car Inc. (1990) 74 0.R. 2nd
474, D.C.. . . . . ................................. 4-041, 4·221
AKT Reidar v. Arcos Ltd. [1927] 1 K.B. 352 . . . . . . . . . . . . . . . . . 9·005, 10·001, 10·003
A.M.F International v. Magnet Bowling [1968] 1 W.L.R. 1028; (1968) 112 S.J. 522;
{1968] 2 All E.R. 789; 66 L.G.R. 706 ........... 1·009, 1·235, 1·312, 1·329, 1·235,
1·312, 1·329, 1·332, 1·333, 1·335, 1.386, 2·022, 2·197, 4·142,
4·266, 5·021, 5·022, 5·024, 5·038, 7·031, 7·037, 8-115,
15·051. 15·053, 15·054
Aberdeen Harbour Board v. Heating Enterprises [1988] 4 Const.
L.J.195 ..................................... 1·327, 15.018, 15-022
Abrams v. Ancliffe [1978] 2 N.Z.L.R. 420, N.Z. Sup. Ct....... 1·286, 2.159, 3·001, 4·130
Absalom (F.R.) Ltd. v. Great Western (London) Garden Village Society {1933)
A.C. 592; 102 L.J.K.B. 648; 49 T.L.R. 350 ............... 6,072, 6·211, 18·118
Abu Dhabi Gas Liquefaction Co. v. Eastern Bechtel Corp.; Eastern Bechtel Corp.
v. lshik.awajima Harima Heavy Industries (1982) 126 S.J. 524; {1982] Com.
L.R. 215; [1982] 2 Lloyd's Rep. 425, C.A. . . . . . . . . . . . . . . . . . 18·117
Aced v. Hobbs-Sesack 7 Cal. Rep. 391 (1961) . . . . . . . . . . . . . . 4·106
Acme Investments Ltd. v. York Structural Steel Ltd. (1974) 9 N.B.R.
699 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1·248, 4-091, 7-097
Acrecrest v. Hattrell (W.S.) & Partners [1983] Q.B. 260; {1982) 2 W.L.R. 1076;
(1982) 126 S.J. 729; [1983] 1 All E.R.17; (1982) 264 E.G. 245; (1983) 113 New
L.J. 64; (1983) 22 Build L.R. 88, C.A.; affirming {1980) J.P.L. 172; (1979) 252
E.G.1107 .......................................... 1·350, 1·384
Acsim (Southern) v. Danish Contracting and Development Co. 47 BLR 55 and 59,
C.A...... 5·015, 5·026, 6·006, 6·197, 6·201, 6·202, 6·204, 6-208, 8·087, 8.118, 17·016
Adam v. Newbigging (1888) 13App. Cas. 308;57L.J.Ch.1066;59L.T.267;37W.R.
97, H.L.; affirming sub nom. Newbigging v. Adam (1886) 34 Ch.D. 582; 56
LJ.Ch. 275; 55 L.T. 794; 35 W.R. 597; 3 T.L.R. 259, C.A ........... 1·150, 1·163
Adams v. Great North of Scotland Railway [1891] A.C. 31; 26 Sc. LR. 765; 16 Ct. of
Sess. Cas. (4th ser.) 84 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18·129
Adcock's Trustees v. Bridge Rural District Council (1911) 75
J.P. 241. . . . . . . . . . . . . . . . . . . . . 4.o84, 4·118, 5·018, 6·063, 6-070, 6.093, 8·116
Addie v. Henderson (1879) 7 Ct. of Sess. Cas. (4th ser.) R. 79 6·103
. Adelaide (The City of) v. Jennings Industries (1985) 57 A.L.R., 455 High Court of
Australia. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13·013, 13·069, 13.084
Adenberg v. Canning (1992) 62 Build. L.R. 47 1·378
Administrator, Natal v. Magill Grant and Nell, 1967 (1) SA 660, S.A........... 8·079,
13·126, 14·045, 16·054
Aesco Steel Inc. v. Jones Construction Company (1985) 621 F. Supp. 1576
(1985) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13-112
Aetha Insurance Company v. Helhnuth, 392 F.(2d) 472 (1968), 8th Circuit . . . 1·305
Aetna Surety Co. v. Bedford-Stuyvesant Restoration Corporation 455 N.Y. Sup.
p. 265 (1982), App. Div, NY 14·062
xiv
xlvi TABLE OF CASES TABLE OF CASES xivii

Agip Sp Av. Navigazione Alta Italia Sp A; Nai Genova and Nai Superba, The [1984]
1 Lloyd's Rep. 353, C.A.; affirming [1983] 2 Lloyd's Rep. 333; (1983) 133
New L.J. 621; [1983] Can. L.R.170.... . ........ 1·114, 1·115, 1·124
Air-a-Plane Corporation v. U.S. 408 F.(2d) 1030 (1969). . 7·080, 7·088
Airport Commission v. U.S. Fidelity & Guarantee Co. 86 S.C. 2nd 249, 252
(1955) . . 17-020
Aitken v. Bachelor (1893) 62 L.J.Q.B. 193; 68 L.T. 530; 5 R. 218; 9 T.L.R. 21 18·025
Ajayi v. Briscoe (R.T.) (Nigeria) [1964] 1 W.L.R. 1326; 108 S.J. 857; [1964] 3 All
E ..R. 556, P.C. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1·256
Al Kandari v. Brown (J.R.) & Co. [1988] Q.B. 665; [1988] 2 W.L.R. 671; (1988) 132
S.J. 462; [1988] 1 AllE.R. 833; (1988) 138 New L.J. 62; (1988) Fam.Law 382;
[1988] L.S.Gaz. April 13, 1988, C.A.; reversing [1987] Q.B. 514; [1987] 2
W .L.R.449; (1987) 131 S.J. 225; [1987] 2 AIIE.R. 302; (1987) 84 L.S.Gaz. 825;
(1987) 137 New L.J. 36 . . . . . . 1·289
Alampi v. Swartz (1964) 43 D.L.R. (2d) 11 . . . 1-104
Alberta Building Co. v. City of Calgary (1911) 16 W.L.R. 443, Canada ..... 6·107, 6-119
Alberta Carriers v. V ollan R. (Alta) (1977) lOA.R. 501; (1977) 81 D.L.R. 672, Alta.
Sup. Ct. . . . . . . . . . . . . . . . . . . . . ... .. 1-379
Alcock v. Wraith (1991) 59 Build. L.R. 16, [1991] E.G.C.S. 137; [1991] N.P.C. 135;
The Times, December 23, 1991, C.A.................. . .. 1·388, 1·389
Alderslai:le v. Hendon Laundry [1945] K.B. 189; 1 All E.R. 244; 114 L.J.K.B. 196;
172 L.T. 153; 61 T.L.R. 216; 89 S.J. 164. . 1·235, 5-042, 15·015, 15·016,
15·020, 15.040, 15-041, 15-042, 15·043, 15·046, 15·047, 15·048, 15-051,
15·053, 15.054, 15.057
Alexander v. Mercouris [1979] 1 W .L.R. 1270, (1979) 123 S.J. 604; [1979] 3 All E.R.
305; (1979) 252 E.G. 911, C.A. . . . . . . . . . . . 1·362
~ v. Webber [1922] 1 K.B. 642; 91 L.J.K.B. 320; 126 L.T. 512; 38 T.L.R. 42 3·079
Alghussein Establishment v. Eton College [1988] 1 W.L.J;l. 587; [1991] 1 All E.R.
267; (1988) 132 SJ. 750, H.L.; a/finning The Times, February 16, 1987,
C.A. . . . . . . . . 1·188
Alkok v. Grymek (1968) 67 D.LR. (2d.) 718, Supreme Ct.; affirming in part (1966)
56 D.L.R. (2d) 393; [1966] C.L.Y. 1067 4·210
Allen v. Pierce (1895) 3 Terr. L.R. 319. . . . . . .. . ... 8·125, 8·137
- - v. Robles. Compagnie Parisienne de Garantie, Third Party [1969] 1 W.L.R.
1193; [1969] 3 All E.R. 154; [1969J 2 Lloyd's Rep. 61; sub nom. Allen v.
Robles (1969) 113 S.J. 484, C.A. . . 4·227
Alliance Bank Ltd. v. Broome (1864) 2 Dr. & Sm. 289;5 New Rep. 69; 34 L.J.Ch.
256; 11 L.T. 322; 10 Jur.(N.s.) 1121; 13 W.R.127; 62 E.R. 631 1·079
Allied Finance & Investments Ltd. v. Haddow & Co. [19831 N.Z.L.R. 22 . . . . . . 1·289
Alpenstow v. Regalian Properties [1985] 1 W.L.R. 721; (1985) 129 S.J. 400; [1985] 2
All E.R. 545; [1985] 1 E.G.L.R.164;(1984) 274 E.G.1141 (1985) 135 New
L.J. 205; (1985) 82 L.S.Gaz 2241. . . . . . . . . . . . . . . . . . . . 1·057, 3·059
Aluminium Industrie Vaassen B.V. v. Romalpa Aluminium [1976] 1 W.L.R. 676;
120 S.J. 95; [1976] 2 All E.R. 552; [1976] 1 Lloyd's Rep. 443; C.A.; affirming
(1975) 119 S.J. 318. . 11·055, 11·056, 11·058, 13·103, 13·127
Amalgamated Building Contractors v. Waltham Holy Cross U.D.C. [1952] W.N.
400; [1952] 2 T.L.R. 269; 96 S.J. 530; [1952] 2 All E.R. 452; 50 L.G.R. 667,
C.A.; affirming [1952] 1 T.L.R. 1165; 50 L.G.R. 429. . . . . . . . . . . 10·036, 10·083,
10·084, 10·085, 10·086, 10-087
Amalgamated Investment& Property Co. v. Walker (John) & Sons [1977] 1 W.L.R.
164; (1976) 32 P. & C.R. 278, C.A..... . ...... 1·094, 1·107
American Fidelity v. Pavia Byrne (1981) 393 S.E. (2d) 830 Louisiana 1·305
Amey Finance Ltd. v. Artes Studios (1989) 15 N.S.W.L.R. 564 . . . . . . . . . . . . . 10·018
Amey-UDC Finance Ltd. v. Austen (1986) 162 C.L.R. 170. . . . . . . . . . . 10-018, 10·020
Anangel Atlas Compania Naviera S.A. v. Ishikawajima-Harima Heavy Industries
Co. Ltd. (No. 2) [1990] 2 Lloyd's Rep. 526 . . . . . . . . . 1·069
Ancher Mortlock v. Hooker Homes Pty. Ltd. [1971] 2 N.S.W.L.R. 278 ..... 2-280, 2·281
Anchor Brewhouse Developments Ltd. v. Berkley House (Docklands) Develop-
ments Ltd. (1987) 38 Build. L.R. 82; (1988) 4 Const. L.J. 29 284 E.G.
625 . 1.J42
Anchorage Asphalt Paving Co. v. Lewis (1981) 629 P(2d) 65 .......... , . 8·151,8-152
Anderson v. Tuapeka (1900) 19 N.Z.L.R. 1. . . . . . . . . . . 10·039, 10·044,,..10·071, 10.073,
10·080, 10.()81, 10·082;>10·085, 10-089
Anderson (W.B.) & Sons Ltd. v Rhodes [1967] 2 All E .. R. 850 . . . . . . . 1·280
Andreae v. Selfridge & Co. Ltd. [1938] Ch. I; [1937] 3 AUE.R. 255; 107 L.J.Ch.126;
157 L.T. 317; 81 S.J. 525, C.A. . . . . . . . . . . . . . . 1·339
Andrews v. Belfield (1857) 2 C.B.(N.s.) 779; 29 L.T.(o.s.) 81, 212; 109 R.R
885 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6·027, 6°028
- - v. Lawrence (1865) 19 C.B.(N.s.) 768; 147 R.R. 760 .............. · . . 17-053
- v . Schooling [1991) 1 W.L.R. 783; [1991] 3 All E.R. 723; (1991) 135 S.J. 446;
(1991) 23 H.L.R. 316; 53 BLR 68; 26 Con. L.R. 33; The Times, March 21,
1991, C.A. . . . . . . . . . ......................... 1·363
- - v. Smith (1835) 2 Cr. M. & R. 627; 1 Gale 335; Tyr & Gr. 173; 5 LJ.
Ex. 80 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17·017
Angel v. Jay [1911] 1 K.B. 666; 80 L.J.K.B. 458; 103 L.T. 809; 55 S.J. 140. . . . 1·148, 3·077
Anglian Water Authority v. RDL Contracting 43 BLR 98 . . . . . . . . . . . . . . . . 6·168
Anglo-Egyptian Navigation Co. v. Rennie (1875) L.R. 10 C.P. 271; 44 L.J.C.P. 130;
32 L.T. 467; 23 W.R. 626; on appeal, L.R. 10; C.P. 571 . . . . . . . . . . . . . . 4·251
Annamunthodo v. Oilfield Workers' Trade Union [1961] A.C. 945; [1961] 3 W.L.R.
650; 105 S.J. 706; [1961] 3 All E.R. 621; [25 M.L.R. 86], P.C. . . . . . . . · . . 1·126
Annefield, The (1971] P. 168; [1971] 2 W.L.R. 320; [1971J 1 Lloyd's Rep. 1,
C.A.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18·027, 18·032
Anos v. Merton London Borough Council [(1987) 137 New L.J. 794]; [1978] A.C.
728; [1977] 2 W.L.R. 1024; (1977) 121 S.J. 377; (1977) 75 L.G.R. 555; [1977]
J.P.L. 514; (1977) 243 E.G. 523, 591; [1977 L.G.C. 498; (1987) L.S. 319];
sub norn. Anos v. London Borough of Merton [1977] 2 All E.R. 492, H.L.;
affinning sub nom. Anos v. Walcroft Property Co. (1976) 241 E.G.
311, C.A.. . . . . ... 1·276, 1·277, 1·279, 1·292, 1-301, 1·307, 1·314, 1·326, 1·327,
1·345, 1-346, 1·347, 1·348, 1·349, 1·350, 1·351, 1·352, 1·353,
1·354, 1·355, 1·356, 1·357, 1·359, 1·360, 1·361, 1·364, 1-367,
1·369, 1·372, 1·374, 1·375, 1·379, 1·384, 1·385, 1·388, 1-389,
2·083, 2·110, 2·129, 2-148, 2·152, 2-222, 4·107, 4·284, 4·285,
4·287, 4·288, 8-223, 13·042, 13·044, 14·002A
Anstruther-Gough-Calthorpe v. McOscar [1924] 1 K.B. 716; 130 L.T. 691; sub nom.
Calthorpe v. McOscar, 93 L.J.K.B. 273; 40 T.L.R. 223; 68 ~.J. 367 . . . . . . 5·041
Antaios, The. See Antaios Compania Naviera SA v. Salen Redenerna AB.
Antaios Compania Naviera SA v. Salen Rederierna AB [1985] A.C. 191; [1984] 3
W.L.R. 592; (1984) 128S.J. 564; [1984] 3 AllE.R. 229; [1984] 2Lloyd's Rep.
235; [1984] L.M.C.L.Q. 547; (1984) 81 L.S.Gaz. 2776; [1985] J.B.L. 200, H.L.;
affirming [1983] 1 W.L.R. 1362; (1983) 127 S.J. 730; [1983] 3 All E.R. 777;
{1983] 2 Lloyd's Rep. 473; [1983] Com. L.R. 262, C.A.. . . . . . . 1·185, 1·217, 1-220,
18-004, 18·173, 18·174
Antino v. EppingForestDistrictCouncil53BLR56; (1991) 1551.P. 663; (1991) 155
J.P.N. 426; The Times, March 11, 1991 D.C. . . . . . . . . . . . . . . . . . . . . . 2-149
Appleby v. Myers (1867) L.R. 1 C.P. 615; L.R. 2 C.P. 651; 35 L.J.C.P. 295; 36 L.J.C.P.
331; 14 L.T. 549; 16 L.T. 669; 12 Jur. 500; 14 W.R. 835. . . . . . . 4-010, 4·015, 4-018,
4·019, 4-032, 4·232, 4·233, 4·236, 4·251, 4·253, 4·255, 11·003, 11-006
Applegate v. Moss; Archer v. Moss [1971] 1 Q.B. 406; [1971] 2 W.L.R. 541;sub nom.
Archer v. Moss; Applegate v. Moss (1970) 114S.J. 971; [1971] 1 All E.R. 747;
[115 S.J. 764], C.A..................................... 4·294, S.128
Arab African Energy Corp. v. Olie Producten Nederland BV [1983] 2 Lloyd's Rep.
419; [1983] Com. L.R. 195 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . · . . . 18,081
Archdale(James) &Co. v. Comservices [1954] 1 W.L.R. 459;98S.J.143 [1954] 1 All
E.R. 210, C.A. [1953] 6 Build L.R. 52, C.A................... 15,018, 15-019
Archital Luxfer v. Boot (Henry) Construction [1981} 1 Lloyd's Rep. 642. . 18·186, 18·190
Architectural Installation Services v. James Gibbons Windows 16 Con. L.R. 68; 46
BLR 91. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . U.007, 12-010, 12·050
Archivent Sales & Developments v. Strathclyde Regional Council (1985) 27 Build.
L.R. 98, Ct. of Session, OulerHse................ . . . 11·006, 11·054, U,057
Arcos Industries Pty. v. Electricity Commission of New South Wales (1973) 12
Build. L.R. 65, N.S.W.C.A ..... 3·014, 3·016, 7·016, 7·020, 7·116, 8·006, 8·024, 8·037
Arenson v. Arenson. See Arenson v. Casson, Beckman Rutley & Co.
- - v. Casson, Beckman Rutley & Co. [1977] A.C. 405; [1975] 3 W.L.R. 815; 119
S.J. 810; [1975] 3 All E.R. 901; [1976] 1 Lloyd's Rep. 179, H.L.; reversing sub
nom. Arenson v. Arenson [1973] Ch. 346; [1973] 2 W.L.R. 553; [1973] 2 All
E.R. 235; 117 S.J. 247; sub nom. Arenson v. Arenson and Casson, Beckman,
Rutley & Co. [1973] 2 Lloyd's Rep. 104; [123 New L.J. 703],
C.A.. . . . . . . . . . . . 1·130, 1·302, 1·303, 2·216, 2·220, 2·221, 6·228, 18·063, 18-071
 xi viii TABLE OF CASES
Argyll (Duchess of) v. Beuselinck [1972] 2 Lloyd's Rep. 172 . . . . . . . . . . . . . . . 2·091
Arkwright v. Newbold (1881) 17 Ch.D. 324; 49 L.J.Ch. 684;42 L.T. 729; 28 W.R. 828;
(1881) 18 Ch.D. 301, 313; 50 L.J.Ch. 372, 44 L.T. 393; 29 W.R. 455, C.A. . . 1·146
Armitage v. Palmer(1960) 175 E.G. 315, C.A.;affirming (1958) 173 E.G. 91; [1959]
C.L.Y. 317 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . , ........ 2·095, 2·152
Armstrong v. Jones (1869), Hudson Building Contracts (4th ed.) Vol. 2, p. 6 . . . . 2·215
Arnhold v. Att.-Gen. of Hong Kong, 47 BLR 129; (1989) 5 Const. L.J.
263. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10.018, 10·019, 10·023, 10·060, 10·061
Arnold v. Walker (1859) 1 F. & F. 671; 115 R.R. 962 . . . . . . . . . . . . . . . . . . . . 10·072
Arterial Drainage Co. v. Rathangan Drainage Board (1880) 6 L.R. Ir. 513... 4·146, 6·014
Aruna Mills v. Dhanrajmal Gobindram [1968] 1 Q.B. 655; [1968] 2 W.L.R. 101; 111
S.J. 924; [1968] 1 All E.R.133; [1968] 1 Lloyd's Rep. 304 . . . . . . . . . . . . 8·147
Ashdown v. Williams(Samuel) &Sons Ltd. [1957] 1 Q.B.409;[1956] 3 W.L.R.1104;
lOOS.J. 945; [1957] 1 AUE.R. 35; [101 S.J. 278;73L.Q.R.142;20M.L.R.181;
21 M.L.R. 78], C.A.; varying [1956] 2 Q.B. 580; [1956} 3 W.L.R. 128; [1956]
2 All E.R. 384; 100 S.J. 420 [72 L.Q.R. 470; 19 M.L.R. 532; [1966] C.LJ.
153] . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1·329
Ashville Investments v. Elmer Contractors [1989] Q.B. 488, C.A.......... 1·126, 6·063,
6·094, 18·007, 18,101, 18·107
Ashwell & Nesbitt v. Allen (1912) Hudson Building Contracts (4th ed.) Vol. 2.
462. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2·061, 6·015 6·016 7·005 7·055
Asia Construction Co. v. Crown Pacific (1988) 44 BLR 135. . . . . . 18· i38, 18°142, i8· 149,
18·159E
Asphaltic Limestone Co. v. Glasgow Corporation 1907 S.C. 463 . . . . . . . . . . . . 14-008
Associated Bulk Carriers v. Koch Shipping Inc.; The Fuohsan Maru [1978] 2 All
E.R. 254; (1977) 122 S.J. 708; [1978] 1 Lloyd's Rep. 24; (1977) 7 Build. L.R.
18, C.A. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18·091
Astor Chemicals v. Synthetic Technology [1990] B.C.C. 97; [1990] B.C.L.C. 1 . . . 16·024
Astra Vencedor Compania Naviera S.A. of Pamama v. Mabanaft GmbH; Damia-
nos, The [1971} 2 Q.B. 588; [1971) 3 W.L.R. 24; 115 S.J. 284;sub nom. Astro
Vencedor Compania Na vi era S.A. v. Mabanaft GmbH [1971 J1 Lloyd's Rep.
602; [1971} 2 All E.R. 1301, C.A .......................... 18·007, 18·096
Ata ulHaq v. City Council of Nairobi [1959] P.C. Appeal No. 48; (1962) 28BLR 76
. P.C............ 1·247, 5·034, 5·045, 5,047, 6·052, 6·056, 6·081, 6-092, 8·115, 8·116
Atkms v. Scott (1980) 7 Const. L.J. 215, C.A ................... 5·061 8,131 8·139
Atkinson & Forbes Ltd. v. Nelson Hospital Board (1982) (Unrep.), High Cou;t of '
New Zealand, Nelson Registry N32-80 October 11, 1982 . . . . . . . . . . . . 4·052
Atlas Construction Co. Ltd. v. City of Montreal (1954] Que. S.C. 350; (1954) 4
D.L.R. (~d) 124. . . . . . . . . . . . . . . . . . . . . . . . . 1·158, 1·166, 3·077, 3·078, 4·143
Att.-Gen. v. Bnggs (1855) 1 Jur.(N.s.) 1084. . . . . . . . . . . . . . . . . . . . 2-030 6·021 6·172
--v. Draper's Co. (1869) L.R. 9 Eq. 69; 21 L.T. 651. ................ '2·257: 2·266
- v . McLeod (1893) 14 N.S.W.L.R. 246. . . . . . . . . . . . . . . . . . . . . , ... 7·060, 7,063
Att.-Gen. (British Guiana) v. Serrao (1965) 7 W.I.R. 404, West Indies . . . . . . . . 10·006
Att.-Gen. (Canada) v. Laminated Structures (1961) 28 D.L.R. 92......... 4·078, 4·120
Att.-Gen. of Hong Kong v. Aoki Construction Co. Ltd. [1983] Build. L.R. 81, Hong
Kong Ct. of Justice . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18·104
- - v. Ko Hon Mau (Trading As Ko's Construction Company) 44 BLR 144,
C.A. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12·097
- - v. Wang Chong Construction (1991) 7 Const. L.J. 310. . . . . . . . . . . . . 6·003, 6·054
Attwood v. Emery (1856) 1 C.B.(N.s.) 110;26L.J.C.P. 73;28L.T.(o.s)85;5W.R.19;
107 R.R. 595 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9·025, 9,027, 9·028
--v. Small (1838) 6 CL & Fin. 232; 7 E.R. 684;sub nom. Small v. Attwood 2Jur.
226, 246, H.L., varying (1832) You. 407; subsequent proceedings (1838) 3 Y.
& C. Ex. 501; (1840) 6 CL & Fin. 523 . . . . . . . . . . . . . . . . . . . . . . . . . . 1·163
Auburn Municipal Council v. ARC Engineering (1973) N.S.W.L.R.
513 . . . . . . . . . . . . . . . . . . . . . . . . . 2·112, 2·129, 5·060, 8·119, 8,129, 8·131, 8·137
A ugh ton Ltd. (formerly Aughton Group Ltd.) v. M.F. Kent Services Ltd. (1991) 57
BLR 1; [1992] A.D.R.L.J.; (1993) 9 Const. L.J.104 ....... 13·106, 18·027, 18·032,
18·033, 18·034
Aurel Porras Ltd. v. Graham Karp Developments Ltd. [1975] V.R. 202,
Victoria. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4·256, 10.037
Auriemia Ltd. v. Haigh and Kinrose Ltd. (1988) 4 Const. L.J. 200 . . . . . . . . . . . 1·078
Austin v. Guardians ofBethnal Green (1874) L.R. 9 C.P. 91; 43 L.J.C.P. 100; 29 L.T.
807;22W.R.406;38J.P.248 . . . . . . . . . . . . . . . . . . . . . . . . . . . ~···'· .. 1·088
Australasian Conference Association Ltd. v. Mainline Construction Pty. Ltd; (in
liq.) 1979) 53 A.L.J.R. 66 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17·005
TABLE OF CASES xlix
Auto Concrete Curb Ltd. v. South Nation River Conservation Authority (1992) 89
D.L.R 4th 393 ............... 1·161A, 1·161B, 1·296B, 1·3068, 1·306C, 4·062
Ayr Road Trustees v. Adams (1883) 11 Ct. of Sess. Cas. ( 4th Ser.) R.. . 6·036, 6.050, 6.168
Azzopardi v. Tasman UEB Industries Ltd. [1985) 4 N.S.W.L.R 139 18· 176
B.L. Holdings v. Wood (Roberts, J.) and Partners (1979) 123 SJ. 570; (1979) 12
Build. L.R. 1, C.A.; reversing [1978] J.P.L. 833; (1978) 10 Build. L.R. 48;
(1978) 122 SJ. 525 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2·154
B.P.Exploration Co. (Libya) v. Hunt (No. 2) [1983] 2A.C. 352; (1982] 2 W.L.R. 253;
[1983} 1 AllE.R. 925;H.L.;affirming[198lJ 1 W.L.R. 232; (1980) 125 S.J.165,
C.A.; affirming [1979} 1 W.L.R. 783; (1979) 123 S.J. 455 .. 1·264, 4·241, 4·242, 4·263
B.P. Refinery (Western Port) Pty. Ltd. v. Hastings Shire Council (1978) 52 A.L.J.R.
20.... 1·184
B.T.P. Tioxide v. Pioneer Shipping and Armada Marine S.A.; Nema, The. See Pion-
eer Shipping v. B.T.P. Tioxide.
BWP (Architectural) Ltd. v. Beaver Building Systems 42 BLR 86 ...... , . 6·207
Babanaft International Co. S.A. v. Avanti Petroleum Inc; Ottenia, The [1982] 1
W.L.R. 871; (1982) 126 SJ. 361; [1982] 3 All E.R 244; [1982] Com. L.R. 104;
[1982] 2 Lloyd's Rep. 99; (1982) 79 L.S.Gaz. 953, C.A.; affirming [1982] 1
Lloyd's Rep. 448; [1982) Com. L.R. 40. . . . . . . . . . . . 4·135, 6·185, 18·056, 18·057
Babbage v. Coulburn (1882) 9 Q.B.D. 235; 52 L.J.Q.B. 50; 46 L.T. 283; 30 W.R.
950 . . . . . . . . 6·039
Babcock v. Lawson (1880) 5 Q.B.D. 284; 49 L.J.Q.B. 408; 42 L.T. 289; 28 W.R. 591,
C.A. 1-146
Badery v. Consolidated Bank (1888) 38 Ch.D. 238; 57 LJ.Ch. 468; 59 L.T. 419; 36
W.R. 745; 3 T.L.R. 60 . . . . . 14·046
Badger Chiyoda v. C.B.I. N.Z. [1989] 2 N.Z.L.R. 599 . . . .18·082A
Badgley v. Dickson (1886) 13 A.R. 494 (Canada) . . . . . . . . . . . . . . . . . . . . 2·088, 2·215
Bagot v. Stevens, Scanlan & Co. [1966} 1 Q.B. 197; [1964] 3 W.L.R. 1162; 108 S.J.
604; [1964] 3 All E.R. 577; [1964] 2 Lloyd's Rep. 353............. 1·372, 2·083
Baily v. De,.Crespigny (1868) L.R. 4 Q.B. 180. . . . . . . . . . . . . . . . . . . . . . . 4·233, 4·262
Bailey v. Thurston & Co. Ltd. [1903] 1 K.B.137;72 L.J.K.B. 36; 88L.T. 43;51 W.R.
162; 19 T.L.R. 75. . . . . . . .... 16·004, 16·059
--v. Wilkins(1849)7C.B.886 . . . . . . . . . . 2·069
Baker v. Gray (1856) 17 C.B. 462; 25 L.J.C.P. 161; 2Jur.{N.s.) 400; 4 W.R. 297; 104
R.R 756 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11·008, 11·012, 11·040, 12·063
- - v. Yorkshire, etc., Insurance Co. [1892] 1 Q.B. 144; 61 L.J.Q.B. 838; 66 L.T.
161 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18·025
Baldasaro & McGregor Ltd. v. The Queen, Re. (1975) 48 D.L.R. (3d) 517 . . . . . 4·256
Baldwin's Ltd. v. Halifax Corporation (1916) 85 L.J.K.B. 1769........... 4·265, 4·266
Balfour v. Barty-King; Hyder & Sons (Builders), Third Parties [1957] 1 Q.B. 496;
(1957] 2 W.L.R. 84; [1957] 1 All E.R.156; 101 S.J. 62; [1956] 2 Lloyd's Rep.
646; [101 S.J. 362], C.A.;affirming [1956) 1 W.L.R. 779; 100 S.J. 472; [1956] 2
All E.R. 555; [1956} l Lloyd's Rep. 600 . . . . . . . . . . . . . . . . . . . . . . . . 1·387
Balfour Beatty Building Ltd. v. Chestermount Properties Ltd. (1993) 62
BLR 1 ................. 1·219, 2·172, 10·039, 10·046A, 10·090, 10·094, 18·005
Ball v. London County Council [1949) 2 K.B.159; 65T.L.R. 533; 113 J.P. 315; 93 S.J.
404; [1949) 1 AllE.R. 1056,47 L.G.R. 591; [206 L.T. 373; 93 S.J. 385; 1141.P.J.
280; 65 L.Q.R. 518; 12M.L.R. 500; 13 Conv. 394]; C.A.; reversing [1948] 2All
E.R. 917 . . 1·314
Ballantine v. Western Hotels (Pty.) (1960) 1960 (4) S.A. 137. . . . . . . . . . . . 6-092, 6.081
Banbury Railway Co. v. Daniel (1884) W.N. 243; 54 L.J.Ch. 265; 33 W.R. 321 ... 11·023,
11·026, 11·031, 11·038, 11·040, 11·042, 11·044, 11·059
Bank Mellat v. Helleniki Techniki S.A. [1984] Q.B. 291; [1983] 3 W.L.R. 783; (1983)
127 S.J. 618; [1983] 3 All E.R. 428; (1983] Com. L.R. 273; (1983) 133 New L.J.
597, C.A.; affirming [1983] Com. L.R. 174. . . . . . . . . . . . . . . . . 18,082, 18·082A
Bank of Montreal v. Bail Ltee (1992) 93 D.L.R. (4th) 490 1·161B
Bank of New Zealand v. Simpson (1900) A.C. 182; 69 L.J.P.C. 22; 82 L.T. 102; 48
W.R. 591; 16 T.L.R. 211 . . . . . . . . . . . . . . . . 2-237
Bankline Ltd. v. Arthur Capel [1919] A.C. 435 . . . . . . . . . . . . . . . . . . . . . . 4·236, 4·262
Barclays Bank Ltd. v. Simms (W.J.) Son and Cooke (Southern) Ltd. [1980] Q.B.
677; (1980] 2 W.L.R. 218; (1979) 123 S.J. 785; [1979] 3 AllE.R. 522; [1980] 1
Lloyd's Rep. 225 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1·261, 16·022
Barclays Mercantile Business Finance Ltd. v. Sibec Developments Ltd. [1992] 1
W.L.R.1253............. 16·026
 TABLE OF CASES
Barlett v. Vinor (1692) Carth. 251 . . . . . . . . . . . . . . . . 4·273
Barnett v. Capetown Foreshore Board 1960 (4) S.A. 439 . . . . . . . . . . . . . . . . . 2-276
Barque Quilpue v. Brown [1904] 2 Q.B. 264; 73 L.J.K.B. 596; 90 L.T. 765; 9 Asp.
H.L.C. 596; 9 Com. Cas.13, C.A. . . . . . . . . . . . . . . . . . . . . . . . . . . 1·186, 4·136
Barrie Gas Co. v. Sullivan (1880) 5 A.R. 110 (Canada) ............ 4-015, 4·018, 4·035
Barter, ex parte., re Walker (1884) 26 Ch.D. 510; 53 L.J.Ch. 802; 51 L.T. 811; 32 W.R.
809....... ,, ...... 11·040, 12·065, 12·077, 12·078, 16·037, 16·038, 16·040, 16·041
Barton v. Piggott (1874) L.R. 10 Q.B. 86; 44 L.J.M.C. 5; 31 L.T. 404; 23 W.R
233 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4·279
Basildon District Council v. Lesser (J.E.) (Properties) [1985] Q.B. 839; [1984J 3
W.L.R. 812; [1985] 1 All E.R. 20; (1984) 1 Const. L.J. 57; (1987) 8 Con. L.R.
89; (1984) 134 New L.J. 330; (1984) 81 L.S.Gaz. 1437........ 3·026, 3·027, 3·028,
3·032, 4·073, 4·097
Baskett v. Bendigo Gold Dredging Co. (1902) 21 N.Z.L.R. 166......... 10·035, 10·039,
10·046A, 10.055, 10·056
Bateman (Edward L.) v. Liquidator, Reed (Eric) (Pvt.) 1960 (4) S.A. 151 . . . . . . 11·009
Bateman (Lord) v. Thompson (1875) (4th ed.) Vol. 2, p. 36. . . . . . . . 5·012, 5·013, 5·045,
5·055, 5·057, 6·001, 6·030, 6-049, 6·050, 6·051, 6·052, 6·058, 6·163
Bates (Thomas) & Son Ltd. v. Wyndham's (Lingerie) Ltd. [1981] 1 W.L.R. SOS;
[1981) I All E.R.1077; (1980) 125 S.J. 32; (1980) 257 E.G. 381; (1980) 41 P. &
C.R. 345, C.A.; affirming (1979) 39 P. & C.R 517. . . . . . 1·052, 1·111, 1·114 1·123
Batten v. White (1960) 12 P. & C.R. 66 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . '3·060
Batterbury v. Vyse (1863) 2H. & C. 42;332L.J.Ex.177; 8 L.T. 283; 9Jur.(N.s.) 754;
11 W.R. 891; 133 R.R. 583 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6·108
Batty v. Metropolitan Property Realisations Ltd. [1978] Q.B. 554; [1978] 2 W.L.R.
500; [1978) 2 All E.R. 445; (1977) 122 S.J. 63; (1977) 245 E.G. 43; (1977) 7
Build. L.R. 1, C.A. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.373
Baylis v. Wellington City of (1886) 4 N.Z.L.R. C.A. 84............... 10·047, 10·049
Baytur S.A. v. Finagro Holdigns S.A. [1992] 1 Q.B. 610; [1991] 3 W.L.R. 866; [1991]
4 All E.R.129; (1991) 135 S.J. (LB) 52; [1992] 1 Lloyd's Rep.134; The Times,
June 21, 1991; Financial Times, June 26, 1991; The Independent, June 19,
1991, C.A. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14·039, 18·124, 18·125
Beaman v. A.R.T.S. [1949] 1 K.B. 530; 65 T.L.R. 389; 93 S.J. 236; [1949] 1 All E.R.
465; [92 S.J. 432; 207 L.T. 275; 65 L.Q.R. 292J C.A.; reversing [1948] W.N.
224; 64 T.L.R. 285; [1948] 2 All ER. 89 . . . . . . . . . . . . . . . . . . . . . . . . . 4·294
Beattie v. Gilroy (1882) 10 Ct. of Sess. Cas. (4th ser.) R. 226; 20 Sc.L.R.
162. ...................... . . . ... 2-072 2·288
Beck v. Montana Constructions Pty. Ltd. [1964-65] N.S.W.R. 229. . . . 2·277, 2·278'. 2·280
Beddow v. Beddow (1878) 9 Ch.D. 89; 47 L.J.Ch. 588; 26 W.R. 570 . . . . . . . . . . 18.129
Beerv.Bowden [1981] 1 W.L.R.522; [1981] 1 AllE.R.1071; (1976)41P.&C.R.317,
C.A. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1·047, 1·051, 1·052, 1·054
Beeston v. Marriott (1864) 4 Gitt. 436; 9 Jur.(N.s.) 960; 2 N.R. 437; 11 W.R. 896; 8
L.T. 690; 141 R.R. 268. . . . . . . . . . . . . . . . . . . . . . . . . . . 11·023, 11-036, 11·037
Begley v. Att.-Gen. of New South Wales (1910) 11 C.L.R. 43 . . . . . . . . . . . . . . 17·012
Behn v. Burness (1862) 1 B. & S. 877 (1863) 3 B. & S. 751; 2 New Rep. 184; 32
L.J.Q.B. 204; 8 L.T. 207; 9 Jur.(N.s.) 620, 11 W.R. 496; 1 Mar L.C. 329; 122
E.R.281,Ex.Ch.............................. 1·140
Beigtheil and Young v. Stewart (1900) 16 T.L.R. 177 . . . . . . . . . . . . . . . . . . . . 2·080
Bell v. Lever Bros. Ltd. [1932] A.C. 161; 101 L.J.K.B. 129; 146 L.T. 258; 48 T.L.R.
133; 76 S.J. SO; 37 Com. Cas. 98, H.L.; reversing {1931] 1 K.B.
557. . . . . . . . . . . . . . . . . . . . . . . . . 1·094, 1·096, 1·102, 1·105, 1·148, 3-077, 4·233
--v. London & North Western Ry. (1852) 15 Beav. 548; 19 L.T.(o.s.) 292; 92R.R
538 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14-047
Bellamy v. Davey [1891] 3 Ch. 540; 60 L.J.Ch. 778; 65 L.T. 308; 40 W.R.118; 7T.L.R.
1?5.. . . . . .......................... 11·008, 11·009, 11-062
Belle River Commumty Arena Inc. v. Kaufmann (W.J.C.) Co. Ltd. (1978) 87
D.L.R. (3d) 761; (1978) 20 O.R. (2d) 447, Ontario C.A ............ 1·025 1·108
Bellgrove v. Eldridge {1954) A.L.R. 929. . . . . . . . 8· 120, 8· 123, 8-126, 8· 127, 8· 134,'8-140,
8·141,8-142
Bennet v. Capetown Foreshore Board 1960 (4) S.A. 439 . . . . . . . . . . . . . . . . . 2,045
Bennet & White (Calgary) v. Municipal District of Sugar City No. 5 [1951 JA.C. 786,
P.C.. · · - - . . . . . . . . . . . . . . . . . . . . . . . . 11-006, 11,029, 11·032, 11·033, 11·037
Benstrete Construction v. Angus Hill (1987) 38 Build. L.R. 115; (1988) 4 ConsL· L.J.
114, C.A.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6·06¢;;6·094, 6·095
Bentley v. The State 41 N.W. 338 (1889) Wisconsin . . . 4-061
TABLE OF CASES Ii
Bentley (Dick) Productions Ltd. v. Smith (Harold) (Motors) Ltd. [1965] 1 W.L.R.
623; [1965] 2 All E.R. 65; 109 S.J. 329, C.A.. . . . . . . . . . . . . . . . . . . 1·212, 1·214
Bentsen v. Taylor [1893] 2 Q.B. 274; 63 LJ.Q.B. 13; 69 L.T. 487; 42 W.R. 8; 9 T.L.R.
552; 4 R. 510 . . . . . 4-227
Beresford (Lady) v. Driver (1852) 22 L.J.Ch. 407; 16 Beav. 134; 92 R.R. 151 . . . . 2-271
Berkshire Senior Citizens Housing Association v. Pitt (McCarthy E.) and National
Westminster Bank (Trustees of the estate of Anthony Cripps, deed.) (1979)
15 Build. L.R. 27, C.A. 18·112
Berley (E.) Industries v. City of New York 385 N.E. (2d) 281 (1978) 8·186
Bevan (George) Enterprises Ltd. v. Robert Patrick Ltd. (1988) 7 A.C.L.R. 34.... 12·037,
12-040, 12-041
Bevan Investments v. Blackball & Struthers {1977) 11 Build. L.R. 78,
N.Z.C.A.. . . . . . . . . . . 1·276, 2·112, 2-113, 2·119, 2-213, 5·060, 8·108, 8·119, 8·129,
8·131, 8-137, 8·143, 8·149
Bickerton & Sons Ltd. v. N.W. Metropolitan Regional Hospital Board. See North
West Metropolitan Regional Hospital Board v. Bickerton (T.A.) & Sons
Ltd.
Biggin&Co. v. Pennanite (Wiggins& Co., Third Parties) [1951J2K.B.314; [1951] 2
T.L.R.159; 95 S.J.414; [1951 J 2 AllE.R.191; [101 L.J. 131; 68L.Q.R. 5], C.A.;
reversing in part [1951] 1 K.B. 422; [1950) 2 All E.R. 859; sub nom. Biggio &
Co. and Archibald Bathgate (Building Materials) v. Pennanite, 66 T.L.R.
(Pt. 2) 944 .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. . . .. . !5·057
Billings (A.C.) & Sons Ltd. v. Riden (1958] A.C. 240; [1957] 3 W.L.R. 496; [1957] 3
All E.R. 1, 101 S.J. 645; [73 L.Q.R. 433; 21 M.L.R. 76; 107 L.J. 643; 101 SJ.
722]; H.L.; affirming sub nom. Riden v. Billings (A.C.) & Sons [1957] 1 Q.B.
46; [1956) 3 W.L.R. 704; [1956) 3 All E.R. 357; 100 S.J. 748; [106 L.J. 707; IOI
S.J. 524; 73 L.Q.R. 294; 20 M.L.R. 288]; [1956) C.L.Y. 5837, C.A. .... 1-308, 1·314,
1·316
Billyack v. Leyland Construction Co. [1968] 1 W.L.R.471; 112S.J. 274; [1968] 1 All
E.R. 783; 66 L.G.R. 506. . . . . . . . . . 2·058, 4· 120, 5·013, 5·014, 5·016, 5·045, 5·055,
5·057, 6·004, 6,016, 6·035, 6·046, 6·052, 6,056, 6-058, 6·059
Bilodeau v. Bergeron [1975] 2 S.C.R. 345..... 1·292A, 1·297, 1·301, 1·306A, 1·383, 5-024
Bilton (Percy) v. Greater London Council [1982] 1 W.L.R. 794; (1982) 126 S.J. 397;
[1982] 2 All E.R. 623; [1982] 80 L.G.R. 617; (1982) 20 Build. L.R. 1, H.L.;
affirming [1981] 79 L.G.R. 463; (1981) 17 Build. L.R. 1,
C.A.. . . . . 1 ·220, 2·174, 4· 192, 4· 193, 4-195, 10·091A, 13·074, 13·080, 13-082, 13·085,
13-088
Binnie and Partners International v. Swire Clemsyn [1983] Build. L.R. 92, Hong
Kong High Ct. of Justice . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18·104
Birch v. Clifford (1891) 8 T.L.R. 103 . . . . . . . . . . . . 5·042
Bird v. McGaheg (1849) 2 C. & K. 707. . . . . . . . . . . . . . . . . . . . . . . . . . . 2·248, 2·256
- v . Smith (1848) 12 Q.B. 786; 17 L.J.Q.B. 309; 12 Jur. 916 . . . . . . . . . . . . . 6·055
Birdseye v. Dover Harbour Commissioners, Hudson Building Contracts (4th ed.)
Vol. 2, p. 76. . . . . . . . . . . . . . . . . . . . . . . . . . . . , , ........... 2·072, 2·288
Birkensbaw, ex parte., re Allison [1904] 2 K.B .. 327; 73 L.J.K.B. 763; 91 L.T. 66; 20
T.L.R. 493 2·247
Birmingham Association of Building Trade Employers' Agreement Re, L.R. 4 R.P.
54; [1963] 1 W.L.R. 484; 107 S.J. 318; (1963] 2 All E.R. 361; 107 S.J.
318. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1·203, 2·071, 3·081, 8·008
Birmingham & District Land Co. v. London & North Western Ry. Co. (1888) 40
Ch.D. 268; [1886--90] All E.R. Rep. 620; 60 L.T. 527; C.A.. . . . . . . . . 1·090, 1·256
Bishop and Baxter Ltd. v. Anglo Eastern Trading & Industrial Co. Ltd. [1944) 1
K.B.12; [1943) 2All E.R. 598; 113 L.J.K.B. 26; 169 L.T. 351; 60T.L.R. 37; 88
S.J. 34, C.A. . . . 1-044
Bishop (W.I.) Ltd. v. J. Maclaren Co. [1937) 2 D.L.R. 625. . . . . . . . . . . . . 1·140, 1·166
Bjornstad v. Duse Shipbuilding Co. [1924] 2K.B. 673; 93 L.J.K.B. 977; 131 L.T. 663;
30 Com. Cas. 14; 68 S.J. 754; 40T.LR. 636; 19 Ll.L. Rep. 7 . . . . . . . . . . . 18·036
Black v. Christchurch Finance [1894] A.C. 48 .......... '. . . 1·387
Blackford & Sons (Caine) v. Christchurch Corporation (1962) 106 S.J. 263; 60
L.G.R. 214; sub nom. Blackford & Sons (Caine) v. Christchurch Borough
(1962J 1 Lloyd's Rep. 349, 182 E.G. 623. . . . . . . . . . . . . 4·134, 6·224, 8·062, 8·065
Blackpool Borough Council v. Parkinson (1991) 58 BLR 85. . . . . . . . . . 18·043, 18·059
Blackpool & Fylde Aero Club v. Blackpool Borough Council [1990J 1 W.L.R 1195;
[1990] 3 All E.R. 25; 88 L.G.R. 864; (1991) 155 LG. Rev. 246; (1991) 3
Admin. L.R. 322, C.A. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1·019, 1·022, J.053
 r
Iii
If
TABLE OF CASES
Blair v. Osborne. & Tompk!ns [1971] 2 Q.B. 78; [1971] 2 W.L.R. 503; 114 S.J. 865;sub
nom. Blrur v. Tomkms (Alan S.) and Osborne (Frank) (Trading as Osborne
& Tomkins (A firm)) [1971] 1 All E.R. 468, C.A ............ 2·276 2·277 2·278
Blake v. Izard (1867) 16 W.R. 108. . . . . . . . . . . . . . . . . . . . . . . . ll-024, 1i·026, l.1-046
Blanchard v. Sun Fire Office (1890) 6 T.LR. 365 . . . . . . . . . . . . . . . . . . . . . . 18,130
Blay v. Pollard & Morris [1930] 1 K.B. 628; [1930] All E.R. Rep. 609; 99 L.J.K.B:
421, 143 L.T. 92; 74 S.J. 284, C.A.. . . . . . . . . . . . . . . . . . . . . . 1-100 1·101
Blecick v. Sch~ol_District of Cochise County 405 P.(2d) 750 (1965) . . . . . . . . . . '1-295
Blewman v. W1lkmson {1979] 2N.Z.L.R. 208, C.A . . . . . . . . . . . . ."......... 1·344
Blexen v. G. Percy Trentham 54 BLR 37; [1990] 42 E.G. 133; 21 Con L 61,
. C.A..... - . . . . . . . . . . . . . . . . . . . . . . . . 18·178, 18-181, 18·185, 18·190, 18·195
Bliss v. South East Thames Regional Health Authority [1987] 1 C.R. 700; [1985]
I.R.L.R. 308, C.A.; reversing (1984) 134 New LJ. 121 . . . . . . . . . . . . . . . 8·160
Bloemen (F.J.) Pty. v. Council of the City of Gold Coast [1973] A.C. 115; [1972] 3
W.L.R. 43; 116 S.J. 395; [1972} 3 All E.R. 357, P.C............... 4·227, 8·100
Blue Cir7le Industries v. Holland Dredging Co. (U.K.) (1987) 37 Build. LR. 40; The
T~mes'. ~arch 23, 1987. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1-036, 7,083
Blyth Shipbmlding and Dry Docks Co. Ltd., Re; Forster v. Blyth Shipbuilding and
Dry Docks Co. Ltd. [1926J Ch. 494; 95 L.J.Ch. 350; 134 L.T. 643. . . 11-012, 11 ·040
Boast v. Firth (1868) L.R. 4 C.P. 1; 38 L.J.C.P. l; 19 L.T. 264; 17 W.R. 29 . . . . . . 4-271
Bognuda v. '!)pton & ~hearer [1972] 2 N.Z.L.R. 741 . . . . . . . . . . . . . . . . . . . . 1·344
Bolam v. Fnern Hospital Management Committee [1957] 1 W.L.R. 582; 101 S.J.
.. 357; [1957] 2 All E.R. 118; [101 S.J. 291] ...................... 2·087, 2·102
Bohv1nter 011 S.A. v. Chase Manhattan Bank [1984] 1 W.L.R. 392; (1984) 128 SJ.
153; [1984] 1 Lloyd's Rep. 251, C.A.................. 17·067 17·068 17·071
Bolland, ex parte., re Winter (1878) 8 Ch.D. 225;47 LJ.B.K. 52; 38 L.T. 362; 26 W.R. '
512 ..... · - . . . . . . . . . . . . . . . . . . . . . . 11-025, 11-035, 11·036, 11·037, 11·038
Bolt v. Thomas (1859), Hudson Building Contracts (4th ed.) Vol. 2, p. 3 ..... 2·232, 2·286
Bolton v. Lambert (1889) 41 Ch.D. 295; 58 L.J.Ch. 425; 60 L.T. 687; 37 W.R. 236,
434; 5 T.L.R. 201, 357 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . , 3·072
- v. Mahadeva [1972) 1 W.L.R. 1009; 116 S.J. 564; [1972] 2 All E.R. 1322,
C.A.. · · .. · · · · - . . . . . . . . . . . . . . . . . . . . . . . . . . . 4·013, 4·014, 4·020, 4·021
Bond Worth, Re [1980] Ch. 228; [1979} 3 W.L.R. 629; (1979) 123 S.J. 216; [1979) 3 All
E.R. 919; [129NewL.J. 651] . . . . . . . . . . . . . . . . . . . . . . . 11·053 11·056 11·058
Bonomiv.Backhouse[l861]9H.L.C.503 . . . . . . . . . . . . . . . . . . . . . . : .... ' 1-342
Boomer v. Muir~4 ~- 570 (1933) Sup. Ct.. . . . . . . . . . . . . . . . . . . . . . . . . 1·272, 4·230
Boot (Henry) Bmldmg v. Croydon Hotel and Leisure Co. (1986) 2 Const. LJ.183;
(1987) 36 Build. ~.R. 41, C.A.. . . . . . . . . . . . . . 6·075, 6-087, 8·084, 8·086, 16·058
Boot (Henry) Construction v. Central Lancashire New Town Development Cor-
poration (1980) 15 Build. L.R. 8. . . . . . . . . . . . . . . . . . . . . . . . . . . 1·228 4·163
Boot (Henry) & Sons v. London County Council. See London County Council v. '
Boot (Henry) & Sons.
Borden (U.K.) v. Scottish Timber Products and McNicol Brownlie [1981] Ch 25·
[1979] 3 W.L.R. 672; [1979] 123 S.J. 688; [1979] 3 All E ..R. 961; [1980] i [1961] 1 Q.B. 445; [1961] 2 W.L.R. 596105 S.J. 232; [1961] 2 All E.R. 97; [24
Lloyd's Rep. 160, C.A.; reversing [1979] 2 Lloyd's Rep. 168; (1978) 122 S.J.
825. · · · - . · · · ·, . . . . . . . . . . . . . . . . . . . . . . . . 11·051, 11-052, 11-053, 11·05_6
Borough of Stratford v. J. H. Ashman Ltd. [1960] N.Z.L.R. 503 ...... 6·001, 6·092 6·163
Bos v. tt,elsham ~1866) L.R. 2 Ex. 72; 4 H. & C. 642; 36 L.J.Ex. 20; 15 L.T. 481; 15 '
.R. 259, 143 R.R. 817. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18·065 18·066
Boskalis Westminster Construction v. Liverpool City Council (1983) 24 Build. L.R. '
•~m-um ...................
Bosma v. Larsen [1966] 1 Lloyd's Rep. 22. . . . . . . . . . . . . . . . . . . . . . . . . 4·289 4·290
•™
Bostel Bros. v. Hurlock [1949] 1 K.B. 74; [1948] L.J.R. 1846; 64 T.L.R. 495; 92 S.J. '
361; [1948] 2 All E.R. 312; {99 L.J. 159; 64 L.Q.R. 440], C.A ......... 4·277, 4-280
Bosto~ Deep Sea Fishing Co. v. Ansell (1888) 39 Ch.D. 339; 59 L.T. 345 . . . . . . 12·078
Botterill v. Wave Guardi~s (1886) 2 T.L.R. 621. .................. , 6·127, 18·129
Bottoms v. York Corporation (1892) Hudsons Building Contracts (4th ed.) Vol. 2,
p. 208; 10th ed. p. 270, C.A.. . . . . . . . . . . . . . . . . . . . . 1·166, 4-048, 4-050, 4·143
Bottomley v. Bannister [1932] 1 K.B. 458; [1931] All E.R. Rep. 49; 101 L.J.K.B. 46;
146 L.T. 68; 48 T.L.R. 39, C.A.. . . . . . . . . . . . . . . . . . . . . . . . . 1·314 1·321
Boulton v. Jones (1857) 2H. & N. 564; 27 L.J.Ex.117; 157E.R. 232;sub nom: B~Iton '
--
v. Jones 30 L.T.(o.s) 188; 3 Jur.(N.s.) 1156; 6 W.R. 107. . . . . . . . . . 1·098 1·101
Bowden's Patent Syndicate v. Smith (Herbert) & Co. [1904] 2 Ch. 86. . . . . . . . . i4·017
Bowen v. Paramount Builders [1977] 1 N.Z.L.R. 394, N.Z.C.A........... ':" 1'·276, 1-359
Bowers Bros. v. Chapel-en-le-Frith Rural Council (1911) 751.P. 122, 321; 9 L.d'.R.
~
I
l
l
TABLE OF CASES liii
BowmakersLtd. v. Barnet Instruments [1945] 1 K.B. 65; 114LJ.K.B.41; 172L.T.1;
61 T.L.R. 62; 89 S.J. 22; (1944] 2 All E.R. 579 . . . . . . . . . . . . . . . . . . . . 4-276
Box Hill (The City of) v. E.W. Tavschke [1974] VR 39 ... 1·041, 1·059, 3-059, 3·061, 3·067
Boyajian v. U.S. 423 F. (2d) 1231 (1970). . ...... 4-261, 7·118, 8-196, 8·201, 8·203
Bozson v. Altrincham Urban Council (1903) 67 J.P. 397; 1 L.G.R 639.......... 3-057,
3·065, 3.oo;
Brace v. Wehnert (1856) 25 Beav. 348; 27 LJ.Ch. 572; 4 Jur.(N.s) 549; 6 W.R. 425;
119 R.R. 442. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4·300, 6·021
~radbury v.Morgan (1862) 1 H. & C. 249, 31 L.J.Ex.462; 7L.T.104; lOW.R. 776;8
Jur.(N.s) 918; 130 R.R. 489; 158 E.R. 877. . . . . . . . . . . . . . . . . . . . . 1.030, 1·031
Bramall & Ogden v. Sheffield City Council (1983) 29 Build. L.R. 73
o.c.. . . . . . . . . . . . 10-023, 10-043, 10-061
Brandt's Sons & Co. v. Dunlop Rubber Co. [1905] A.C. 454; 74 LJ.K.B. 898; 93 L.T.
495; 21 T.L.R. 710; 11 Com. Cas. 1 . . . 14·048
Brantford (City of) v. Kemp and Wallace-Carruthers and Associates (1960) 23
D.L.R. (2d) 640, C.A.; affem;ng (1959) 21 D.L.R. (2d) 670......... 2-045, 2-100
Braunstein v. Accidental Death Insurance Co. (1861) 1 B. & S. 782; 31 L.J.Q.B.17; 5
L.T. 550; 8 Jur. 506; 124 R.R. 745 . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6·025
Brazendale & Co. v. Saint Freres S.A. [1970] 2 Lloyd's Rep. 34......... 18·106, 18·108
Brecknock Navigation Co. v. Pritchard (1796) 6 T.R. 750; 3 R.R. 335 . . . . . . . . . 4-250
Bremer Vulkan Schiffbau und Maschinenfabrik v. South India Shipping Corp;
Gregg v. Raytheon. Sub nom. Gregg v. Raytheon; Bremer Vulkan Schiffbau
und Maschinenfabrik v. South India Shipping Corp. [1981] A.C. 909; [1981] 2
W.L.R. 141; (1981) 125 S.J. 114;[1981) 2A11E.R. 289; [1981] 1 Lloyd's Rep.
253; [1981JCom. L.R.19. H.L.; affirming [1980] 2 W.L.R 905; (1979) 124 S.J.
396; [1980] 1 All E.R. 420; [1980) 1 Lloyd's Rep. 255, C.A.; affirming
[1979] 3 W.L.R. 471; (1979) 123 S.J. 504; [1979] 3 All E.R. 194; 78
L.S.Gaz. 834. . . . . . . . . . . . . . . . . . . . . . . . . . . . 18·007, 18·016, 18-162, 18·198
Brenmar Building Co. Ltd. v. University of Newcastle [19n] December 12,
unreported . . . . . . . . . . . . . . . . 12.037
Breslin v. Hichens [1914] A.D. 312 . . . . . . . . . . 4·079
Brewer v. Chamberlain May 13, 1949, unreported......... , . . . . .... 2-255, 2·259
Brewer St. Investments Ltd. v. Barclays Woollen Co. Ltd. [1954) 1 Q.B. 428; [1953]
3 W.L.R. 869; 97 S.J. 796; [1953] 2AIIE.R.1330; [70L.Q.R. 6; 18Conv. 79; 9
Sec. Jo. 66J C.A.; affirming [1953] C.P.L. 231; 171 E.G. 264 . . . . . 4·277
Brice v. Bannister (1878) 3 Q.B.D. 569; 47 L.J.Q.B. 722; 38 L.T. 739; W.R.
670. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14'°42, 14·046, 14·054
Brickfield Properties Ltd. v. Newton; Rose bell Holdings v. Newton [1971] 1 W.L.R.
862; 115 S.J. 307; [1971} 3 All E.R. 328, C.A.................... 2·083, 2·108
Bridge v. Campbell Discount Co. [1962] A.C. 600; [1962] 2 W.L.R. 439; 106S.J. 94;
[1962] 1 AllE.R. 385; [112L.J. 216,231, 316;233 L.T.199; [1962] J.B.L. 252;
25 M.L.R. 198] H.L.; reversing sub nom. Campbell Discount Co. v. Bridge
M.L.R. 502; 105 S.J. 291; 111 L.J. 399, 482; 81 L.Q.R. 86] [1961 J C.L.Y. 3908,
C.A............................... . . 10·017, 12-021
Brightman & Co. Ltd. v. Tate [1919] 1 K.B. 463; 88 L.J.K.B. 921; 120 L.T. 512; 35
T.L.R. 209. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4·277, 4·280
Brightside Kilpatrick Engineering Service Ltd. v. Mitchell Construction (1973)
[1975] 2 Lloyd's Rep. 493, C.A.. . . . . 1·207, 3-050, 3-051, 3·081, 6·007, 6-008, 6·075,
6·087, 6·088, 6·090, 8·008, 10·041, 10-070, 10-077, 10·095, 13.106, 18·031
Brightside Mechanical & Engineering Services Group Ltd. v. Hyundai Engineering
& Construction Co. Ltd. (1988) 41 BLR 110 . . . . . . . . . . . . . . . . . . . . . 13·116
Brinkibon Ltd. v. Stahag Stahl und Stahlwarenhandelsgesellschaft mbH [1983] 2
A.C. 34; [1982] 2 W.L.R. 264; [1982] 1 AIIE.R. 293; (1982) 126 S.J.116; [1982]
Com. L.R. 72, H.L.; affirming [1980] 2 Lloyd's Rep. 556 . . . . . . . . . . . . . 1·040
Brisbane City Council v. Group Projects Ltd. (1979) 145 C.L.R 143, 160, High a. of
Australia . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4·234
Bristol Corporation v. Aird (John) & Co. [1913] A.C. 241; 82 L.J.K.B. 684; 109 L.T.
434; 77 J.P. 209; 29 T.L.R. 360. . . . . . . . . . . . . . . . . . . . . . 18·104, 18·119, 18·131
British Columbia Sawmills v. Nettleship (1868) L.R. 3 C.P. 499; 37 L.J.C.P. 235; 18
L.T. 604; 16 W.R.1046.................................... 8·109
British Crane Hire Corp. Ltd. v. Ipswich Plant Hire Ltd. [1975] Q.B. 303; [1974] 2
W.L.R. 856; [1974]1 All E.R.1059; (1973) 118 S.J. 387, C.A ........ 1·202, 1-207,
15-043. 15,044
 liv TABLE OF CASES
British Eagle International Air Lines v. Compagnie Nationale Air France [1975] 1
W.L.~. 75_8; 119 S.J. 368; [1975] 2All E.R. 390; [1975] 2Lloyd's Rep. 43,H.L;
reversmg mpart [1974} 1 Lloyd's Rep. 429, C.A.; affinning [1973] 1 Lloyd's
Rep. 414.. - ....... 8·079, 8-080, 8·081, 8·082, 8·083, 8·084, 8·086, 13·120, 13·125,
13·126, 13·127, 13·131, 14·045, 16·031, 16·045, 16-046, 16-054,
.. . 16-055, 16·057, 16·058
Bnt1sh Electncal and Associated Industries (Cardiff) v. Patley Pressings (Reid
Bros. (Glasgow), Third Party; Douglas Scott, Fourth Party) [1953] 1 W.L.R.
. . 280; [1953] 1 All E.R. 9_4; 97 S.J. 96; [69 L.Q.R. 290; 17 Conv. 173].... 4·267, 1·044
Bntish GlanzstoffManufactunng Co. Ltd. v. General Accident Fire and Life Assur -
ance Corporation Ltd. 1912 S.C. 591; [1913] A.C. 143. . . . . 10-003, 10·004, 10·047,
10·050
British Movietonews v. London and District Cinemas [1952J A.C. 166; [1951] 2
T.L.R. 571; 95 SJ. 499; [1951] 2 AIIE.R. 617; [210 L.T. 25; 212 L.T.174; 100
L.J. 677; 101 L.J. 676; 14 M.L.R. 85; 15 M.L.R. 85; 1952 S.L.T. 3] H.L.; revers-
2g [1951] 1 K.B. 190; 66 T.L.R. (Pt. 2) 203; 94 S.J. 504; [1950] 2 All E.R. 390,
.. S.S.
B~t(sh A Investment Trust v. Foundation Co. ..Ltd. (1930)
. December 15 . . · . . .· 13·124
·-
Bntish Steel Corp. v. Cleveland Bridge & Engineering Co. Ltd. [1984] 1 All E.R.
504; (1983) 24Build. L.R. 94; [1982] Com. L.R. 54.......... 1·015 1·051 1·055
1·056, 1·268, 1·270, 1·271, 3·071, 8·104, 9-024 9-025 9·030
B~~sh Thomson-Houston Co. v. West (1903) 19 T.L.R. 493 ............ 6-016, io,074
Bnttsh Waggon Co. v. Lea (1880) 5 Q.B.D. 149; 49 L.J.Q.B. 321; 42 L.T. 437; 28
. . W.R..349; 441.P. 440. . . . . . . . . . . . . . . . . . . . . . . 14·003, 14·004, 14·005, 14-008
Bnt1sh Westinghouse Co. v. Underground Electric Railways of London [1912] A.C.
673 · · · · · · · · · · · · · · · · · · · · · · · · · · · · · - .... · . . . . . 8·155
Broc~lebank v: Lancashire & Yorkshire Ry. (1887) 3 T.L.R. 575. . . . . . . . . 2·257, 2·266
Brodie v. Cardiff Corporation [1919] A.C.337; 88L.J.K.B. 609; 120L.T.417; 831.P.
77; 17 L.G.R. 65, H.L.. . . . . . . . . . . 1·220, 1-271, 4·220, 6·062, 6-067, 6-071, 6·146,
6·091, 7·004, 7·066, 7-068, 7·069, 7·075, 8·134 10-069
Brogden v. Metropolitan Ry. Co. (1877) 2 App. Cas. 666, H.L. . . . . . . . . . . . . . ' 1·034
Bromley London Borough v. Rush and Tompkins Ltd. (1987) 35 Build. L.R 94·
(1985) 1 Const. L.J. 374; [1985] C.I.L.L. 179 . . . . . . . . . . . . . . . . . . . . '.
1·348
Brook Enterp-?sesLtd. v. Wilding (1973) 38D.L.R. (3d) 472, [1973] 5 W.W.R. 660 1·276
Broom v. Davis (1794) 7 East 480n.j. 103 E.R. 186 . . . . . . . . . . . . . . . . . . . . . . 4-015
Brown v. Bateman (1867) L.R. 2 C.P. 272; 36 L.J.C.P. 134; 15 L.T. 658; 15 W.R.
350. · · · · · - · · · · . . . . . . . . . . . . . . . . . . 11·024, 11·026, 11·040, 11-041, 11·046
- v. Heathcote C.C. [1986] 1 N.Z.L.R. 76.......................... 1·282
--v. John~on (1842) lOM. & W. 331; Car. &M. 440; 11 L.J.Ex. 373; 62R.R 632 10·025
--v. Laune (1~54) 1 L.C. ~ep._343;5 L.C. Rep. 65.................... 2-124
- - v. Metropolitan Counties Life Assurance Society (1859) 1 E. & E. 832; 28
L.J.Q.B. 236; 33 L.T.(o.s.) 162; 5 Jur.(N.s.) 1028; 7 W.R. 477 . . . . . . . . . . 14·037
- v. Raphael [1958] Ch. 636; [1958] 2 W.L.R. 647; [1958} 2 All E.R. 79; 102 S.J.
269; (108 L.J. 371; 74 L.Q.R. 473; 21 M.L.R. 556; 22 Conv. 297], C.A. . . . . 1·145
- - v. Rollo (Lord) (1832) 10 Ct. of Sess. Cas. (1st ser.) (Shaw) 667 . . . . . . . . . 7·073
--v. Royal Insurance Society (1859) 1 E. & E. 853;28 L.J.Q.B. 275; 32 L.T.(o.s.)
134; 7_W.R. 479; 5 Jur.(N.s.) 1255; 117 R.R. 492 . . . . . . . . . . . . . . . . . . . 4-250
Brown (_Chnstopher) _v. Geno_sse!1schaft Oesterreichischer Waldbesitger Holz-
wutsch aftsbertiebe Reg1stnerte Genossenschaft mit Beschrankter Haftung
[1954] 1 Q.B. 8; [1953] 3 W.L.R 689; 97 S.J. 744; [1953] 2 AllE.R 7039; [1953]
2 Lloyd's Rep. 373 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18·006
Brown & Davis Ltd. v. Galbraith [1972] 1 W.L.R. 997; [1972] 3 AllE.R. 31; 116S."1:
545; [1972) R.T.R. 523; [1972] 2 Lloyd's Rep. 1, C.A. . . . . . . 1·062
Brown & Docherty v. Whangarei County [1988] 1 N.Z.L.R. 33. . . . . . . . . . 4·215 6· 121
6·134, 6·159, 6-168, 12-024,'12-03{}
Brown & Huston v. City of York (1983) 5 C.L.R. 240 . . . . . . . . . . . . . . . . . . . 1·306A
Browne's Estate Re [1893J 2 Ch. 300; 62 L.J.Ch. 695; 69 L.T. 12; 41 W.R. 440; 3 R.
463. · · · · - . · · · · - - . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17-012 17·021
Bruce (W.) v. Strong (J.) (A firm) [1951] 2 K.B. 447; 95 S.J. 381; [1951] 1 ·AJl E.R. '
1021; [_1951} 2 Lloyd's Rep. 5, C.A......... 18.048, 18-108, 18·110, 18·111, 18·125
Bruens v. Smith 195~ 1 S.A. L.R. 67................ 5·012, 5·040, 5·055, 6·030, 6·051
Bruns v. Colocotroms; Vasso, The [1979] 2 Lloyd's Rep. 412 . . . . . . . . . . . . . . 17·012
Brunsden v. Beresford (1883) 1 C. & E. 125 . . . . . . . . . . 6·117
Brunsdon v. Staines Local Board (1884) 1 C. & E. 272 . . . . . . . . . . . . . . . . . . .• 7·064
- v . Humphrey (1884) 1 Q.B.D.141; (1881-5] All E.R. Rep. 357: 53 L.J.Q.B. 47(5.
51 L.T. 529; 49 J.P. 4; 32 W.R. 944, C.A. . . . . . . . . . . . . . . . . . . . . . . . '. 1·252
TABLE OF CASES Iv
Brunswick Construction v. Nowlan (1975) 49 D.L.R. (3d) 93, Canada Supreme
Ct.. 4·080, 4·102, 4·103, 4·111
Bryant & Son v. Birmingham Hospital Saturday Fund (1938} 1 All E.R.
503. . . . . . ............... 4·039, 4-049, 8-028, 8·030
Buckingham County Council v. Lovell (Y.J.) & Son [1956] J.P.L. 196. . . . 15·076, 15·017,
15·020
Buckland & Garrard v. Fawson & Co. (1890) 6 T.L.R. 421 ............... . 2·257
Bulfield v. Fournier (1894) 11 T.L.R. 62, 282. . . . . . . . . . . . . . . . . . . 2·235
Bulmer v. Gilman (1842) 4 M. & G. 108; 11 L.J.C.P. 174; 4 Sc.(N.s.) 781; 1 D. & L.
367; 6 Jur.(o.s.) 761; 61 R.R. 487 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2·095
Burden v. Swansea Corporation (1957] 1 W.L.R.1167; 101 S.J. 882; [1957] 3 All E.R.
243; 55 L.G.R. 381, H.L.; affirming (1956) 54 L.G.R. 161; [1956] C.L.Y. 875
C.A.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2·063, 6·125, 6·220
Burns & Kenealy v. Furby (1885) 4 N.Z.L.R. S.C. 110. . . . . . . . . . . . . . . . . 6·173, 6·177
Burr v. Ridout (1893) The Times, February 22
Bush v. Whitehaven Trustees of Port and Town of) (1888), Hudson Building Con·
2·257
tracts (4th ed.) Vol. 2, p. 122; 52 J.P. 392. . . . . 4-252, 4·257, 4-263
Butler v. Egg and Egg Pulp Marketing Board (1966) 114 C.L.R. 185 . . . . . . . . . 8-110
Butler Machine Tool Co. Ltd. v. Ex-Cell-O Corp. (England) Ltd. [1979] 1 W.LR.
401; [1979] 1 All E.R. 965; (1977) 121 SJ. 406, C.A. . . . . . . . . . . . . . . . . 1·039
Byford v. Russell (1907) 2 K.B. 522; 76 L.J.K.B. 744; 97 L.T. 104 . . . . . . . . . . . . 11·049
Byrne v. Van Tienhoven (1880) 5 C.P.D. 344; 49 L.J.Q.B. 316; 42 L.T. 371; 44 J.P.
667........ . ............ 1-023, 1-029, 3-072
Bysouth v. Shire of Blackbum (1928) V.R. 562............ 4·215, 6-122, 7·065, 10-013,
10-017, 10-020, 12-002, 12-004, 12-007, 12-010, 12-012, 12-067
Bywaters v. Curnick (1906) Hudson Building Contracts (4th ed.) Vol. 2 p. 393. . 4·146,
4-167,8-073
C.C. Smith Co. Inc. v. Frankini Construction Co. 135 N.E. (2d) 924 (1956) 4-224
C.C.H. v. Mollenhawer (1974) 51 D.L.R. (3d) 638, Sup. Ct., Canada....... 4·084, 4-091
C.G. Monkhouse Pty. Ltd. Re. (1968) 69 S.R., N.S.W., 429 . . . . . . . . . . . . . . . . 16·054
COAC v. Kennedy Engineers, 67 Cal. App. (3d) 916 (1977), Califor~a . . . . . . . 1·305
Cable (1956) v. Hutcherson Bros. Pty. (1963) 43 A.L.J.R. 321, Australia High
Court. . . . . . . . . . . . . . 1·010, 3·027, 3·032, J.050, 4·072, 4·080, 4-090, 4·091, 4·096
Calderbank v. Falderbank [1976] Fam. 93; [1975] 3 W.L.R. 586; 119 S.J.490; [1975] 3
All E.R. 333; 5 Fam.Law 190, C.A. . . . . . . . . . . . . . . . . . . . . . . . . . . . 18·188
Caledonian Ry. v. Lockhart (1860) 3 Macq. 808; 6 Jur.1311; 3 LT. 65; 8 W.R. 373;
119 R.R. 1101 . . . . . . . . ...... 2·186
Calgary (The City of) v. Northern Construction Ltd. (1986) 2 W. W .R 426; affirmed
[1987] S.C.C.D. 980, Sup. Ct., Canada. 1·025, 1·097, 1·108, 1·117, 3·072,
8-047, 8·048
- - v. Northern Construction Company Division of Morrison-Knudsen Company
Inc. (1897) 3 Const. L.J. 179, Alberta Court of Appeal . . . . . . . . . . . . . . 1·094
Callisher v. Bischoffsheim (1870) L.R. 5 Q.B. 449, sub nom. Calisher v. Bischoff-
sheim 39 LJ.Q.B. 181; 18 W.R.1137 . . . . . . . . . . . . . . . . . . . . . . . . . . 1·079
Caltex Oil (Australia) Pty. Ltd. v. Dredge Willemstad, The (1977) 51 A.L.J.R. 270;
(1976) 136 C.L.R. 529, Aust. High Court. . . . . . . . . . . . . . . . . . . . . 1·322, 1·324
Calvert v. London Dock (1838) 2 Keen 638 ................ 17-010, 17·011E, 17-043
Cambridge Water Co. v. Eastern Counties Leather plc. [1994] 2 W.L.R
53. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1·337, 1·339, 1·344
Cameron (A.) Ltd. v. John Mowlem (1990) 52 BLR 24, C.A ......... 6·198, 6·200, 6·202
Cameron-Head v. Cameron & Co. (1919) 1919 S.C. 627, Ct. of Sess. . . . . . . . . . 10·013
Camilla Cotton Oil Co. v. Granadex S.A.; Shawnee Processors Inc. v. Same [1976] 2
Lloyd's Rep. 10, H.L.; reversing (1975) 119 S.J. 115; [1975] 1 Lloyd's Rep.
470, C.A. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18·103
Camillo Eitzen and Jewson & Sons, Re (1896) 40 S.J. 438 . . . . . . . . . . . . . . . . . 6-228
Cammell Laird v. Manganese Bronze & Brass Co. [1934] A.C. 402............ 4·070,
4-072, 4·078, 4·080, 4-084, 4· 107, 4·116
Campbell v. Blyton (1893), Hudson Building Contracts (4th ed.) Vol. 2, p. 234 2·285
Campbell Discount Co. v. Bridge. See Bridge v. Campbell Discount Co.
Campbell Flour Mills v. Bowes and Ellis (1914) 32 O.R. 270. . . . . . . . 1-379, 1·380, 8-222
Camprell v. Billericay Union (1848) 18 L.J.Ex. 282 . . . . . . . 6-162
Cana Construction Co. Ltd. v. Queen, The (1973) 37 D.L.R (3d) 418, Canada
Supreme Ct. . . . . . . . . . . . 7-091
 !vi TABLE OF CASES
Canada Foundry Co. Ltd. v. Edmonton Portland Cement Co. [1918] 3 W.W.R. 886;
43 D.L.R. 583 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8·163 S.167
Canada Steamship Lines v. R. [1952] A.C.192; [1952] 1 T.L.R.261;96 S.J. 72; [1952] '
_1 All E.R. ~05; [1952] 1 Lloyd's Rep............. 15·015, 15·044, 15·051, 15-059
Canadian Indemmty v. Walkem Machinery [1975] 53 D.L.R. (3d) 1 . . . . . . . . . . 15·010
Canadian National Railway v. Norsk Pacific Steamship [1992] 1 S.C.R. 1021; 91
D.L.R. (4th) 289 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1·359
Candler v. London and Lancashire Guarantee and Accident Co. of Canada (1963)
40 D.L.R. (2d) 408 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15·010
Candle wood Navigation Corp. Ltd. v. Mitsui OSK Lines Ltd. [1986] A.C.1; [1985] 3
W.L.R. 381; [1985] 2All E.R. 935; (1985) 129 S.J. 506; [1985] 2 Lloyd's Rep.
303; (1985) 82 L.S.Gaz. 2912; (1985) 135 New L.J. 677, P.C. .. .. . 1·322
Canterbury Pipe Lines v. Christchurch Drainage Board [1979] 2 N.Z.L R.
347. . . . . . . . . 4·223, 6 096, 6 114, 6119, 6-134, 6142, 6·144, 6·145, 6 149, 6·190,
12·024, 12·050, 12·081
Canty v. Clarke (1879) 44 U.C. Q.B. 222. . . . . . . . . . . . . . . . . . . . . . 6-036, 6·039, 6,176
Caparo Industries plc. v. Dickman & others [1990} 2A.C. 605; [1990] 2 W.L.R. 358;
[1990) 1 All E.R. 568; (1990) 134 S.J. 494; [1990] BCC 164; [1990] BCLC 273;
[1990] E.C.C. 313; [1990] L.S.Gaz. March 28, 42; (1990) 140 New L.J. 248,
H.L.; reversing [1989] Q.B. 653; [1989] 2 W.L.R. 316; (1989) 133 S.J. 221;
[1989] 1 All E.R. 798; (1989) 5 BCC 105; [1989] BCLC 154; 1989 PCC 125
C.A., reversing in part. . . . . . . . . . . . . . . . . . . . . . . . 1·282 1-288 1·306
Capital Electric Company v. U.S. 729 F. (2d) 743 (1984) . . . . ' '8·186
Capital Motors Ltd. v. Beecham [1975] 1 N.Z.L.R. 576 . . . . . . . . . . . . . . . . . . 1·154
Cardinal Construction v. City of Brockville [1984] 4 C.L.R. 149. . . . . . . . . 1·306A, 4·052
Carew's Estate Re (1858) 26 Beav.187; 28 L.J.Ch. 218; 4Jur.1290; 32 L.T.( o.s.) 154;
7 W.R. 81; 122 R.R. 76. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3·080
Carl Zeiss Stiftung v. Rayner & Keeler Ltd.; Rayner & Keeler v. Courts [1967] 1
A.C. 853 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1-250
Carlill v. Carbolic Smoke Ball Co. [1893] 1 Q.B. 256; 62L.J.Q.B. 257;67LT. 837;41
. W.R. 210; 57 J.P. 325; 4 R. 176; 9 T.LR. 124. . . . . . . . . . . . . . . . . . . 1·019, 1·083
Carlisle Place Investments Ltd. v. Wimpey Construction (U.K.) (1980) 15 Build.
L.R.109 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18·149, 18·163
Carlton Contractors v. Bexley Corporation (1962) 106 S.J. 391; 60 L.G.R.
331. ..... : . . . . . . . . . . . . . . . . . . . . . . . . . . 1·110, 1·121, 2·066, 3-052, 7·005
Carman Construct10n Ltd. v. C.P.R. (1982) 136 D.L.R. (3d) 1983; (1980) 28 OR (2d)
232; (1980) 109 D.L.R. (3d) 288; Can. High Ct.. ....... 1·141, 1·167, 1·214, 4·041
Camforth, etc., Co., ex parte, re. Phoenix, etc., Co. (1876) 4 Ch.D. 108; 46 L.J.Ch.
115; 35 L.T. 776; 25 W.R. 187 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16·028
Carosella v. Ginos [1981} 46 LORA 51. . . . . . . . . 5·060, 8·108, 8·134, 8-141, 8·142, 8·143
Carpenters Estates Ltd. v. Davies [1940] Ch.160; 109L.J.Ch. 92; 162L.T. 76;83 S.J.
960; 56 T.L.R. 269; [1940] 1 All E.R. 13. . . . . . . . . . . . . . . . . . . . . . 4-300, 4-302
Carr v. Berriman (J.A.) Pty. [1953] 27 A.L.J. 273 ........... 4·142, 4·144, 4-147, 4·173,
4-202, 4·206, 4·213, 7,047, 9·001, 9·003, 9·022, 9·023, 12·017
Carron Co. Ltd. v. Thyssen Edelstahwerke A.G. (H.L.) Oct. 15, 1990 . . . . . . . . 11·051
Cartledge v. Jopling (E.) & Sons [1963] A.C. 758; [1963} 2 W.L.R. 210; 107 S.J. 73;
[1963] 1 All E.R. 341; [1963} 1 Lloyd's Rep. l; H.L.; affirming [1962] 1 Q.B.
189; [1961] 3 W.L.R. 838; 105 S.J. 884; [1961] 3 All E.R. 482; [1961] 2 Lloyd's
Rep. 61; C.A.; [1961] C.L.Y. 5055 . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4·285
Cartwright v. Hoogstoel (1911) 105 L.T. 628.................... . . . . . . 1·024
Carus-Wilson and Green Re. (1886) 18 Q.B.D. 7; 56 L.J.Q.B. 530; 55 LT. 864; 35
W.R. 43; 3 T.L.R. 22. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6-065, 6·220, 18-066
Catre Industries Ltd. v. Alberta (1990) 63 D.LR. (4th) 74.......... 1·168, 1·191, 4-052
Cattle v. Stockton Waterworks Co. (1875) L.R. 10 Q.B. 453; [1874-80] All E.R.
Rep. 220; 44L.J.Q.B.139; 33 L.T. 475; 30J.P. Jo. 791............... 1·322
Cavalier v. Pope (1906} A.C. 428, 75 LJ.K.B. 609; 95 L.T. 65;22 T.L.R. 648; 50S.J.
575 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1-314, 1·316
Ce have N.V. v. Bremer Handelgesellschaft m.b.H; Hansa Nord, The [1976] Q.B.
44; [1975] 3 W.L.R. 447; 119 S.J. 678; [1975] 3 All E.R. 739, [1975] 2 Lloyd's
Rep. 445, C.A.; reversing [1974] 2 Lloyd's Rep. 216 . . . . . . . . . . . . . . . . 4·067
Cellulose Acetate Silk Co. v. Widnes Foundry (1925) [1933J A.C. 20. . . . . 10{HJ2, 10·014
Cellulose Products Pty. Ltd. v. Truda (1970) 92 W.N. 561 (N.S.W.) ....... 6-021, 17·016
Cementation Piling Foundations v. Aegon [1991} 1 Lloyd's Rep. 526 ...... ,•.. 15.009A
Central Provident Fund Board v. Ho Bock Kee (t/a Ho Bok Kee General Contract-
or) (1981) 17 Build. L.R. 21, C.A. Singapore . . . . . . . . . . . . . . . . . . . . . 12,()43
TABLE OF CASES lvii
Centrovincial Estates v. Merchant Investors Assurance Co. [1983} Com. L.R 158,
C.A. . . . . ......... 1·114
Cervidone Construction Corp. v. U.S. (1991) 931 F. 2d. 860 (Fed. Cir. 1991) . . . . 8·201
Ceylon (Government of) v. Chandris [1963] 2 Q.B. 327; [1963] 2 W.L.R. 1097; 107
S.J. 316; [1963] 2 All E.R. 1; [1963) 1 Lloyd's Rep. 214 . . . . . . . . . 18·137
Chabot v. Davies [1936} 3 All E.R. 221. . . . . .......... 2-275, 2·278
Chambers, exparte, re. Edwards (1873) L.R. 8 Ch. 289;42 LJ.Ch. 37; 28 L.T.(N.s.)
325; 21 W.R. 349 . . . . . . . 16·028
- v. Goldthorpe [1901) 1 K.B. 624; 70 L.J.K.B. 482; 84 L.T. 444;49 W.R. 401; 17
T.L.R. 304..... , . . . . . . . . 2·089, 2-216, 2-218, 2·219, 6-184, 18-067
Chandlerv. Webster [1904] 1 K.B. 493; 73 L.J.K.B. 401; 90L.T. 217;52 W.R. 290;20
T.L.R. 222; 48 S.J. 245, C.A.. . . . . . . . . . . . . . . . . . . . . . . . . 1·271, 4·240, 4·272
Chandler Bros. v. Boswell [1936] 3 All E.R. 179. . . . . . . . . . . . . . . . . . . 13-101, 13-102
Chandris v. lsbrandsten-Moller Co. Inc. [1951] 1 K.B. 240; 66 T.L.R. (Pt. 2) 358; 94
S.J. 534; [1950} 2 All E.R. 618; 84 Ll.L. Rep. 347; reversing in part66 T.L.R.
(Pt. 1) 971; 94 SJ. 303; [1950] 1 All E.R. 768; 38 Ll.L. Rep. 385. . . . 18·012, 18·092
Channel Tunnel Group and France Manche S.A. v. Balfour Beatty Construction
[1992] 1 Q.B. 656; [1992] 2 W.L.R. 741; [1992] 2 All E.R. 609; (1992) 136S.J.
(L.B.) 54; 56 B.L.R. 23; [1992] 2 Lloyd's Rep. 7; (1992) 8 Const. L.J. 150;
[1992] NPC 7; The Times, January 23, 1992; Financial Times, January 29,
1992, C.A..................... 4·305, 18·016, 18·047, 18·082, 18·093, 18·198
Chaplin v. Hicks [1911} 2 K.B. 786 8·198
Chapman v. Edinburgh Prison Board (1844) 6 a. ofSess. Cas. (2nd Ser.) D.1288 6-036
- v. Walton (1833) 10 Bing. 57; 3M. & S. 389; 2 LJ.C.P. 213; 38 R.R. 396 . . . 2·086
Chanthall Investments Ltd. v. F.G. Minter Ltd. (1976) 1976 S.C. 73 . . . . 10-004
Charon (Finchley) v. Singer Sewing Machine (1968) 112 S.J. 536; 207 E.G.
140.............................. . ... 4-051, 4·179, 7·030
Charrington v. Laing (1830) 3M. & P. 587; 6 Bing 242; 8 L.J.(o.s.) CP 50 . . . . . . 10-008
Chatbrown v. Alfred McAlpine Construction (Southern) (1987) 3 Const. L.J. 104;
(1988) 11 Con. L.R. 1, C.A.; affirming (1987) 7 Con. L.R. 131 . . . . . . . . . 6·199
Cheeseman v. Bowaters United Kingdom Paper Mills Ltd. [1971] 1 W.L.R. 1773;
115,S.J. 931; [1971] 3 All E.R. 513, C.A. . . . . . . . . . . . . . . . . . . . . . . . . 18·185
Chelmsford District Council v. Evers (T.J.) (1984) 25 Build. L.R. 99; (1984) 1 Const.
L.J. 65....... . . . . . . . . . . . . . . . . . . . . . . . . ... 2·083, 2·108
Chermar Productions Pty. Ltd. v. Prestest Pty. Ltd. [1989] 7 BCL 46; (1991) 7 B &
C.L. 46; (1992) 8 Const. L.J. 44. . . . . . . . . . . . . . . . . 4-305, 12·095
Chess (Oscar) v. Williams. See Oscar Chess v. Williams.
Chester Grosvenor Hotels v. Alfred McAlpine Management (1991) 56 BLR 115. . 1·243,
1·245, 3·035
Chevalier v. Thompkins (1915) 48 Quebec L.R.(s.c.) 53 . . . . . . . . . . . . . . . 4·104
Chichester Joinery v. John Mowlem 42 Build. LR. 100; 23 Con. L.R. 30, D.C. . . 1·039
Chillingworth v. Esche [1924} 1 Ch. 97; 93 L.J.Ch. 129; [1923] All E.R. Rep. 97; 129
L.T. 808; 40 T.L.R. 23; 68 S.J. 80, C.A. . . . . . . . . . . . . . . . 1·057
Chin Keow v. Government of Malaysia [1967] 1 W.L.R. 813; 111 S.J. 333, P.C. . . 2·087
Chinook Aggregates Ltd. v. District Abbotford [1990] 1 W.W.R. 624. . . . . . . . . 3·053
Chittick and Taylor. Re (1954) 12 W.W.R. 653. . . 1 ·067, 2·064, 7·005, 7·072
Christie v. U.S. 237 U.S. 234 (1915) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4·061
Chugach Electric Association v. Northern Corporation 562 (P. (2d) 1053
(1977). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4·236, 4·237, 4-257
Church v. Sage (1892) 67 L.T. 800; 9T.L.R.119; 41 W.R. 175;5 R. 140........ 11·047
Churchward v. R. (1865) L.R. 1 Q.B. 173; 14 L.T. 57; 6 B. & S. 807; 141 R.R. 623 . 3·060
Citadel General Assurance Company v. Johns-Mansville Canada Inc. [1983]
1.S.C.R. 513...................... 17-002, 17·005, 17,032, 17·040
City Centre Properties v. Hall (Matthew) [1969] 1 W.L.R. 772; 113 SJ. 303; sub
nom. City Centre Properties (I.T.C. Pensions) v. Tersons [1969] 2 All E.R.
I
1121. ....... 13·051, 18·002, 18·015, 18·113, 18·114, 18·115, 18·122, 18·145, 18·196
Clare v. Whittaker (L.) & Sons (London) Ltd. [1976] I.C.R.l . . 1·319
Clark v. Gilbert (1863) 26 N.Y. 279 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2·256
--v. Woor [1965] 1 W.L.R. 650 . . . . . . . . . . . . . . . . . . . . . . 4·294, 4·295, 8·117, 8·147
Clark Contractors Ltd. v. Drewett [1977] 2 N.Z.L.R. 556 1·285
Clark Grave Vault v. U.S. 371 F. (2d) 459 (1967) . 4·237
Clarke v. Murray (1885) 11 Viet. L.R. (Law) 817. . . . . . . . . . . . . . . . . . . . 6-162, 6·173
I - v . Spence (1836) 4A. & E.448; 6 N. & M.399; 1 H. & W. 760;5 L.J.K.B.161;43
R.R. 395.............. . . . . . . . . . . . . . . . . . . . 11·014, 16·053
r - v . Watson (1865) 18 C.B.(N.s) 278; 34 L.J.C.P. 148; 11 L.T. 679; 13 W.R. 345;
I
144 R.R. 491 . . . . . 6°126
!

lviii TABLE OF CASES
Clay v. Crump (A.J.) & Sons Ltd. [1964] 1 Q.B. 533; [1963] 3 W.L.R. 866; [1963] 3
All E.R. 687; 107 S.J. 664; [27 M.L.R. 216; 80 L.Q.R. SJ, C.A.. . .. 1·308, 1·311,
1·317, 1·318, 1·319, 2·188
Clayton v. McConnell (1888) 15 A.R. 560 (Canada) 4-216
- - v. Woodman & Son (Builders) Ltd. [1962] 2 Q.B. 533; [1962] 1 W.L.R. 585;
[1962] 2 All E.R. 33; 106 S.J. 242; [78 L.Q.R. 319J, C.A.; reversing [1961] 3
W.L.R. 987; [1961} 3 AllE.R. 249; 105 S.J. 889; (24 M.L.R. 797; 78 L.Q.R.
107; 111 L.J. 831]; [1961] C.L.Y. 825. Leave to appeal to H.L. dismissed sub
nom. Woodman & Son (Builders) v. Ware (Charles E.) & Son [1962] 1
W.L.R. 920 ...... 1·311, 1·312, 1·313, 1·317, 1·318, 1·319, 1·325, 2·138, 2·196, 4·179,
5·022, 5·024, 5·038, 7·031
Clemence v. Clarke (1880) (4th ed.) Vol. 2, p. 54....... 2·185, 2·186, 2·229, 6·015, 6·068,
6·079, 6·083, 6-092, 6·095, 6·127, 6-168, 6-180, 6·218, 6-226, 18·063
Clemence plc. Re. (1992) 59 BLR 56 . . . . . . . . . . . . . . . . 16·003
Clifford v. Watts (1870) L.R.S.C.P. 577; 40 L.J.C.P. 36; 22 L.T. 717; 18 W.R.
925. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4·233, 4·245
Clifford (Frank W.) v. Garth [1956] 1 W.L.R. 570; 100 S.J. 379; [1959] 3 All E.R. 323;
C.A. . . . . . . . . . . . . . . . . . 4·274
Clough v. L.N.W.R. (1871) L.R. 7 Ex. 26; 41 L.J.Ex. 17; 25 L.T. 708; 20 W.R.
189. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1·146,4·227
Clough Mill Ltd. v.Martin[1985] 1 W.L.R.111; (1984) 128S.J.850; [1984] 3AllE.R.
982; (1985) 82 L.S.Gaz. 116; [1985] L.M.C.L.Q. 15; C.A.; reversing [1984] 1
W.L.R. 1067; (1984) 128 S.J. 564; [1984] 1 All E.R. 721; (1984) L.S.Gaz.
2375. . . . . . . . . . . . . . . . . . 11 ·053, 11·058
Clydebank and District Water Trustees v. Fidelity and Deposit Co. of Maryland
1916 S.C., H.L. 69; 52 Sc.L.R. 106; 1915, 2 S.L.T. 359. . . . . . . . . . . 17·009, 17·030
Clydebank Engineering and Shipbuilding Co. v. Yzquiderdo Y Castaneda [1905]
A.C. 6; 74 L.J.P.C. 1; 91 L.T. 666; 21 T.L.R. 58. . . . . . . . . . 10·006, 10·012, 10.056
Codelfa Construction Pty. v. State Rail Authority (1982) 149 C.L.R. 337, High Ct. of
Australia. . . . . . . . . . . 1·189, 1·194, 1·196, 1·217, 4·169, 4·170, 4-171, 4·233, 4·234,
4·237, 4·248, 4-260, 8·043, 8·052, 8·054, 8·055, 8·092, 18·007, 18·012
Cohen v. Roche [1927] 1 K.B.169; 95 L.J.K.B. 945; 136 L.T. 219; 42 T.L.R. 674; 70
SJ. 942 .................... 3-080
Cohen (George) Sons & Co. v. Docks and Inland Waterways Executive (1950) 84
LI.L. Rep. 97; [94 S.J. 300], C.A.; affirming (1949) 83 LI.L. Rep. 22....... 12·113,
1·115, 1·119
Coker v. Young (1860) 2 F. & F. 98; 121 R.R. 771. . . . . . . . . . . . . . . . . . . . 6·153, 8.017
Colbart v. Kumar (1993) 9 Const. L.J. 7; (1992) 8 Const. L.J. 268; [1992] N.P.C. 32; 59
Build. L.R. 89. . . . . . . 1·219, 2·078, 2·170, 5·059, 6·003, 6·090, 6·185
Coleman v. Gittens (1884) 1 T.L.R. 8 . . . . . . . . . . . . . . . 6,155
Colin v. De Guisti (1975] 4 S.A.L.R. 223 South Africa . . . . . . 4-091
College Point Boat Corporation v. U.S. 12 (1925). . . . . . . . . . . . . . . . . . 12·015, 12·016
Collen v. Wright (1857) 8 E. & B. 647; 27 L.J .Q.B. 215; 4Jur. 357; 30 L.T.( o.s.) 130; 6
W.R. 123; 110 R.R. 602. . ...... 2·080, 2-082
Collett v. Morrison (1851) 9 Hare 162; 21 L.J.Ch. 878; 68 E.R. 458. . . . . . . . . . . 1·115
Collier v. Mason (1858) 25 Beav. 200............ 6-096, 6·150
Collinge v. Heywood (1839) 2 A. & E. 633 . . . . . . . . . . . . . . . . . . . . . . . . . 4·265, 4·289
Collins v. Collins (1858) 26 Beav. 306; 28 L.J.Ch. 184; 5 Jur. 30; 32 L.T.(o.s.) 233; 7
W.R. 115; 122 R.R. 127. . . . . . . . . . . . . . . . . . 18·061, 18·065, 18·066
Collins Bay Co. v. New York and Ottawa Ry. (1902) 32 Can. S.C.R. 216 . . . . . . 4·026
Colonial Metals v. U.S. 494 F. (2nd.) 1353 (1974). . . . . . . . . . . . . . . . . . . . . . . . 12·015
Columbus Co. v. Clowes [1903] 1 K.B. 244, 72 L.J.K.B. 330 ......... 2· 111, 2·126, 2·159
Comdel Commodities v. Siporex Trade S.A. (No. 2) [1991] 1 A.C. 148; (1990] 3
W.L.R. 1; [1990} 2 All E.R. 552; (1990) 134 S.J. 1124; [1990] 2 Lloyd's Rep.
207; (1990) 140 New L.J. 890, H.L.; affirming [1990] 1 AllE.R. 216; [1989] 2
Lloyd's Rep. 13; The Times, April 3, 1989 C.A.; affirming in part [1988] 2
Lloyd's Rep. 590 . . . . . . . . . . . . . . . . . . . 18·057
Comet Theatre Enterprises Inc. v. Cartwright 195 F. (2d) 80 (C.A. Ninth Circuit,
1952) . . . . . . . . . . . . . . . . 4·276
Comiat v. S.A. Transport Services [1991] (4) S.A. 217, A.O .............. 8·061, 8·062
Commercial Bank ofTasmania v. Jones {1893] A.C313; 62L.J.P.C. 104; 68 L.T. 776;
57 J.P. 644; I.R. 367; 9 T.L.R. 466 . . . . . . . . . . . . . . . . . . . 17·079
Commissioner for Main Roads v. Reed and Stuart Rly. Ltd. (1974) 48 A.L.J .R....641;
(1974) 12 Build. L.R. 55, High Ct., Australia. 3·016, 4·202, 7.017/7·048, 7·202,
8·006, 8·024
--~
TABLE OF CASES lix
Commonwealth of Australia v. Austin (Australia) (1986) 5, A.C.L.R. 19 4·164
- - v. Jennings Construction Ltd. (1985) 4 A.C.L.R. 19, Sup. Ct., Viet.; [1985]
V.L.R. 586. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1·250, 1·251, 18·045, 18·054
- v. Verwayen (1990) 64 A.LJ.R.540. ......... ... 1·246
Communale v. Traders & General Insurance 328 P.(2d) 198 (1958) . . . . . . . . . . 1·197
Compagnie Algerienne de Meunerie v. Katana Societa di Navigatione Maritima
S.P.A., The Nizetti [1960] 2 Q.B. 115; [1960] 2 W.L.R. 719; 104 S.J. 327;
[1960] 2 All E.R 55; [1960] 1 Lloyd's Rep. 132; C.A.; affirming [1959] 1 Q.B ..
527; [1959]2 W.L.R. 366; 103 S.J.178; [1959) 1 All E.R. 272; [1959] 2 Lloyd's
Rep. 502; [1959] C.L.Y. 3045. . . . . . . . . . . . . . . . . . . . . . . . 3·060, 4·252
Compania Panamena Europea Navigacion v. Leyland (Frederick) & Co. [1947]
A.C. 428; [1947] L.J.R. 716; 176 L.T. 524, H.L.. . ...... 1·188, 4·116, 6-096, 6-097,
6·113, 6·115, 6·130, 6·132, 6·133, 6·139, 6-143, 6·145, 6·148, 6·149, 6·151
Company, A Re. (No. 003729 of 1982) [1984] 1 W.L.R. 1090; [1984] 3 All E.R. 78;
(1984) 128 S.J. 580; (1984) 81 L.S.Gaz. 2693 . . . . . . . . . . . . 16-003
Compton Pty. Ltd. v. Umpty Pty. Ltd. (88) 7 A.C.L.R. 38, Sup. Ct., NSW... 6·075, 6·095,
18·055
Comyn Ching & Co. (London) Ltd. v. Oriental Tube Co. [1981] Com. L.R. 67;
(1981) 17 Build. L.R. 47, C.A......... 1·061, 1.066, 1·142, 13·029, 13·065, 15·039,
15·041; 15·045, 15·057
Concorde Construction Co. Ltd. v. Colgan Co. (1984) 29 Build. L.R.120,High Ct. of
Hong Kong . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16-058
Concrete Construction v. Keidan & Co. 1955 (4) S.A.L.R. 515 . .... 1·061, 13-017, 13·032,
13·040
Concrete Developments Ltd. v. Queensland Housing Commission [1961] Qd.R.
356. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18·002, 18.052, 18·054
Connor v. Belfast Water Commissioners (1871) 5 Ir. L.R.C.L. 55 . . . . . . . . . . . 6·048
Conquer v. Boot [1928] 2 K.B. 336.... . ...... 1·252, 1·253, 1·254
Consolidated Investment and Contracting Co. v. Saponavia Shipping Co. Virgo,
The [1978] 1 W.L.R. 986; (1978) 122 S.J. 540; [1978] 3 All E.R. 988; [1978] 2
Lloyd's Rep. 167 C.A. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18·085
Constant v. Kincaid (1902) 4 (5th Ser.) Ct. of Sess. Cas. 901. ..... 13·026, 14·025, 14·026,
14-033
Consultants Group International v. Worman (John) (1987) 9 Can. L.R. 47 . . . . . 2·107
Consumers' Glass Co. v. Foundation Co. (1985) 20 D.L.R. (4th) 126. . 1·373, 2·084, 4·288
Contra Glow Heating v. Eastern Health Board (1992) 8 Const. L.J. 56 . . . . . . . . 8·079
Cook v. Ipswich Local Board (1871) L.R. 6 Q.B. 451; 40 L.J.M.C.169; 24 L.T. 579; 19
W.R.1079 . . . .. 6-170
- v . Wright (1861) 1 B. & S. 559;30L.J.Q.B. 32;4 L.T. 704;7 Jur.(N.s.) 1121; 121
E.R. 822 . . . . . . . . . . . . . . . . . 1 ·079
Cooke v. Rowe (1950) N.Z.L.R. 410. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.085, S.126
Coombe v. Green (1843) 11 M. & W. 480; 12 L.J.Ex. 291;2D.P.C.(N.s) 1023; 63 R.R.
661 . . . . . . . . . . . . . . . . . . 4·197
Coombs v. Beede 89 Me. 187; 36 A. 104 (1896), Sup. Ct., Maine . . . . . . . . . . . . 2·088
Cooperv. Langdon (1841) 9M. & W. 60; 11 L.J.Ex. 222; 1 D.P.C.(N.s.) 392; 60 R.R.
671; affirmed (1842) 10 M. & W. 785 Ex. Ch........................ 2-061
--v. Micklefield Coal & Lime Co. (1912) 107 L.T. 457; 56 S.J. 706 . 14-008
- v . Phibbs (1867) L.R. 2 H.L.149; 16 L.T. 678; 15 W.R.1049,H.L..... . . . . 1·145
- - v Uttoxeter Burial Board (1865) 1 H. & M. 680; 11 L.T. 565; 136 R.R. 292. . . 5·010,
6· 187, 12·051
Cope v. Rowlands (1836) 2 M. & W. 149 . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4·274
Coppee Lavalin SA/NV v. Ken-Ren Chemicals and Fertilizers (1994), H.L. May 5,
1994 . . . . . . . . . .... 18·082A
Corben v. Hayes (Unrep.) April27, 1964, Full Court of New South Wales....... 4·077,
4·089
Cork Corporation v. Rooney (1881) 7 L.R. Ir. 191 .... 12.087
Cornwall v. Henson [1900] 2 Ch. 298; 69 L.J.Ch. 581; 82 L.T. 735; 49 W.R. 42 ... 4·221
Corus-Wilson and Greene, Re. (1886) 18 Q.B.D. 7; 56 L.J.Q.B. 530; 55 L.T. 846;35
W.R. 43; 3 T.L.R. 22. . . . . . . 18·062, 18·066
Cory Bros. & Co. Ltd. v. "The Mecca" [1897] A.C. 286; 66 L.J.P. 86; 76 L.T. 579;45
W.R.667.. ····· 7·119
Cory (William) & Son v. Wingate Investments (London Colney); J. H. Coomes &
Partners, Third Party (1980) 17 Build. L.R. 104 C.A.; (1978) 248 E.G.
687. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5·061, 8·133, 8·149
Costain International v. Att.-Gen. [1983] Build. L.R. 48, The Hong Kong C.A..... 6-153,
6·210, 6·212, 6·213, 7.001
 Ix TABLE OF CASES
Cottage Club Estates v. Woodside EStates Co. (Amersham) [1928] 2 K.B. 463; 97
L.J.K.B. 72; 139 L.T. 353; 33 Can. Cas. 97; 44 T.L.R. 20. . . . 14·017, 14·038, 18·125
Cotton v. Wallis [1955] 1 W.L.R. 1168; 99 S.J. 779; (1955] 3 All E.R. 373 .... 2·095, 2-199.
4·127
Coulthart v. Clementson (1879) 5 Q.B.O. 42; 49 L.J.Q.B. 204; 41 L.T. 798; 28 W.R.
355 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1·030
Council of the Shire of Sutherland v. Heyman (1985) 157 C.L.R. 424 . . . . . . . . . 1·277
County & District Properties v. Jenner (C.) & Sons (1976] 2 Lloyd's Rep. 728;
(1974) 3 Build. L.R. 38; (1974) 230 E.G. 1589, D.C.......... ~-234, 1·364, 4·289,
18·018, 18·106
County Personnel (Employment Agency) v. Pulver(Alan R.) 9 Co. [1987] 1 W.L.R.
916; (1987) 131 S.J. 474; [1987] 1 AllE.R. 289; [1986] 2E.G.L.R. 246; (1987)
84 L.S.Gaz. 1409; (1986) New L.J. 1138; C.A............... 2·205, 2·209, 2·213
Courtnay v. Waterford & Central Ireland Rly. Co. (1878) 4 L.R. Ir. 11. .... 4·232, 9·008,
9.010, 10·028
Courtney &Fairbairn v. TolainiBrothers (Hotels) Ltd. [1975] 1 W.L.R. 297; (1974)
119 S.J.134; [1975] 1 AIIE.R. 716. . . . . . . . . . . . . . . . . 1·044, 1·050, 1·051, 1·054
Cowell v. Rosehill Race Course. (1937) 56 C.L.R. 605; [1937] A.L.R.
273 ..... : . : ...... : . . . . . . . . . . . . . . 12·001, 12·088, 12·089, 12·095, 12·097
Crabb v. Arun D1stnct Council [1976] Ch. 179; [1975] 3 W.L.R. 847; [1975] 3 All
E.R. 865; 119 S.J. 711; (1975) 32 P. & C.R. 70, C.A ............... 1·256, 1·257
Craig v. East Coast Bays City Council (1986] 1 N.Z.LR. 99. . . . . . . . . . . . . 1·282, 1·351
Crane v. Hegeman-Harris Co. 4 All E.R. 68; [1939] 83 S.J. 797,. C.A.; affirming
[193?] 1 All E.R. 662. . . . . . . . . . . . . . . 1·110, 1·111, 1·118, 8·075, 18·099, 18·100
Craven-Ellis v. Canons Ltd. [1936] 2 K.B. 403; [1936] 2 AllE.R.1066; 105 LJ.K.B.
. 767; 155 L.T. 376; 52 T.L.R. 657; 80 S.J. 652, C.A. . . . . . . . . . . . . . . . 1·266, 1·270
Creighton v. Law Car and General Insurance Corporation, Re [1910] 2 K.B. 738 . 18·159B
Cremdean Properties v. Nash (1977) 244 E.G. 547, C.A.; affirming (1977) 241 E.G.
837 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1·177
Crestarv. Carr(1987) 131 S.J.1154; [1987] 2F.T.L.R.135; (1987)37Build.L.R.113;
(1987) 3 Const. L.R. 286; (1987) 84 L.S.Gaz. 1966 C.A ........ 5·013, 5,016, 5·045,
5·055, 6-004, 6·035, 6·046, 6·058, 6·061, 6·062, 6-077, 6-091 6·155 6,165
Crisci v. Security Insurance 426 P. (2d) 173 (1967) . . . . . . . . . . . . . . . . ' '1·197
Crittall Manufacturing Co. v. London County Council (1910) 75 J.P. 203. 13·016,
, 13·035, 13.036, 13·039, 13·089
Croft Construction Co. v. Terminal Construction Co. (1959) 20 D.L.R. 247. . . . . . 6·042,
13·102
Crofter Hand-Woven Harris Tweed Co. v. Veitch [1942] A.C. 435; 1942S.C (H.L.)
1; 111 L.J.P.C. 17; 166 L.T. 173; 58 T.L.R. 125; [1942] 1 All E.R. 142. . . . . 3·080
Crook v. Seaford, Corporation of (1870) L.R. 109 Eq. 678, L.R. 6 Ch. 551; 25 L.T. 1;
18 W.R. 1147; 19 W.R. 938 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.304
- v . U.S. 270U.S. 4 {1926) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1·189 4·156
Crosby (J.) & Sons Ltd. v. Portland Urban District Council (1967) 5 Build. L.R. '
D.C.......... 4·134, 5·019, 7·078, 7·022, 7·118, 8·205, 8·206, 8·207, 8·208, 18·159C
Cross v. Leeds Corporation (1902) (4th ed.) Vol. 2, p. 339 ..... 2·089, 6·103, 6·136, 6·222,
6·223
Cross (K.) (Doncaster) Ltd. v. Yorkshire (East Riding) County Council (1966)
October 12, 1966 (Unrep.) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4·193 13·073
Croudace Construction v. Cawoods Concrete Products [1978] 2 Lloyd's Rep. 55; '
[1978] 8 Build. L.R. 20, C.A.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8·214
Croudace Ltd. v. Lambeth London Borough Council (1986) 33 Build. L.R. 25;
(1986), The Times, 31 March, C.A. . . . . . . . . . . . . . . . . . . . . . 1·188 4-198 6·120
The Crown v. Henrickson & Knutson (1911) 13 C.L.R. 473 . . . . . . . . . . . . '. . . '4·171
Crawshaw v. Pritchard (1899) 16 T.L.R. 45. . . . . . . . . . . . . . . . . . . . . . . . 1·018 1·022
Croydon Commercial Gas Co. v. Dickinson (1876) 2 C.P.D. 46; 46 L.J.C.P. 157; 36 '
L.T. 135; 25 W.R. 157 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17·042
Crump v. Torfaen Borough Council (1982) 19 Build. L.R. 84 [1981] L.S.Gaz. 1144 1·348
Crux v. Aldred {1866) 14 W.R. 656 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10,009
Cullen v. Thompson's Trustees (1862) 4 Macq. (H.L.Sc.) 424 . . . . . . . . . . . . . . 2·232
Culvert v. London Dock Co. (1838) 7 L.J.Ch. 90; 2 Keen 638; 2 Jur. 62; 44 R.R.
300. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17·028 17·043 17·045 17·046
Cundy v. Lindsay (1878) 3 App. Cas. 459; 38 L.T. 573; 42 J.P. 483; 26 W.R. 406; 14 '
Cox C.C. 93 sub nom. Lindsay & Co. v. Cundy 47 LJ.Q.B. 481, H.L.; affirm-
ing (1877) 2 Q.B.D. 96, C.A.; reversing (1876) 1 Q.B.D. 348, D.C. . . . ~ ., . 1·098
Cunliffe v. Hampton Wick Local Board (1892) (4th ed.) Vol. 2, p. 250; 9 T.L~R.
378. . . . . . . . . . . . . . .... . .... ... . 5·040, 5·046
TABLE OF CASES ]xi
Cunningham Brothers v. City of Waterloo 117 N.W. (2d) 46 (1962) . . . . 8·218
Cunningham-Reid v. Buchanan-Jardine [1988] 1 W.L.R. 678; [1988] 2 All E.R. 438;
[1988} L.S.Gaz. May 4, 33 C.A. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18·103
Curran v. Northern Ireland Co-ownership Housing Association Ltd. [1987] A.C.
718; [1987] 2 W.L.R.1043; [1987]2AIIE.R.13; {1987) 131 S.J. 506; {1987) 19
H.L.R. 318; (1987) 38 Build. L.R. 1; (1987) 84L.S.Gaz.1574; H.L; reversing
[1986] 8 N.I.J.B. 1, C.A.. . . . . . . . . . . . . . . . . . . . . . . . . . . . 1·282, 1·288, 1·354
Currie v. Misa (1875) L.R. 10 Ex. 153; 44 L.J.Ex. 94; 23 W.R. 450, Ex. Ch.;affinned
sub nom. Misa v. Currie (1876) 1 App. Cas. 544; [1874-80] All E.R. Rep. 686;
45 LJ.Q.B. 852;35 L.T. 414;24 W.R. 1049, H.L. .... 1·066
Curtis v. Chemical Cleaning and Dyeing Co. [1951] 1 K.B. 805; [1951] 1 All E.R 631;
[1951] 1 T.LR. 452; 95 SJ. 253; [212L.T. 60; 67 L.Q.R.153], C.A. . . . . . . 1·171
Curtis (D.H.) (Builders),Re [1978] Ch.162; [1978] 2 W.L.R.28; (1977) 121 S.J. 707;
[1978] 2 All E.R. 183. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16·014, 16·015
Cushla Re. [1979] 3 All E.R. 415; [1979] S.T.C. 615 . . . . . . . . . . . . 15·015
Cutler v. Close {1832) S.C. & P. 337 38 R.R. 824... . . . . . . . . 4.015, 8·118
Cutter v. Powell (1795) 2 Sm L. C 1; 6 T.R. 320; 3 R.R. 185. . . . . . . . . . . . . 4·006, 4·008
Cutts v. Head [1984] Ch. 290; [1984] 1 All E.R. 597; (1984) 128 S.J. 117; (1984) 81
L.S.Gaz. 509 C.A. . . . . . . . . . . . . . . . . . . . . . . 18· 188
Czarnikow v. Koufos. See Kaufos v. Czamikow.
Czamikow & Co. Ltd. v. Roth Schmidt & Co. Ltd. [1922] 2 K.B. 478; 92 L.J.K.B. 81;
38 T.L.R. 797127 L.T. 824; 28 Can. Cas. 29 C.A.. . . . . . . . 1·165, 6·106, 18·005
D. & C. Builders Ltd. v. Rees [1966] 2 Q.B. 617; [1966] 2 W.L.R. 288; [1965] 3 All
E.R. 837; 109 S.J. 971, C.A.............. 1·072, 1.075, 1·077, 1·197, 4-232, 7·025
D. & F. Estates v. Church Commissioners for England [1989] A.C. 177; [1988]
3 W.L.R. 368; [1988] 2 All E.R. 992; (1988) 132 S.J. 1092; (1988) 41 BLR 1;
(1988) 138 New L.J. 210; [1988] L.S.Gaz. September 14, 46, H.L.; affirming
[1987] 1 F.T.L.R. 405; (1987) Const. LJ.110; (1987) 36 Build. L.R. 72; (1988)
11 Con. L.R. 12, C.A.; affirming in part (1987) 7 Con. LR. 40. . . . . . l·274, 1·277,
1·292, 1·309, 1·321, 1·352, 1·353, 1·354, 1·355, 1·356, 1·357, 1·358,
1·359, 1·361, 1·363, 1·364, 1·389, 2·152, 13·044, 14·002A
Dabous v. Zuliani {1976) 68 D.L.R. (3d) 415. . . . . . . . . . . . . . . . . . . 5,057, 6-046, 6.057
Dalgety Ltd. v. Morton [1987] 1 N.Z.L.R. 411 . . 1·076
Dallman v. King (1837) 4 Bing. N.C. 105; 5 Scott 382; 7 LJ.C.P. 6; 3 Hodges283;44
R.R. 661. . . . . . . 6·021, 6·022, 6·023, 6-024, 6·035, 6·037
Dalmia Dairy Industries v. National Bank of Pakistan [1977] 121 S.J.. 442; [1978]
2-Lloyd's Rep. 223. . . . . . . ..... 18·006, 18·007
Dalton v. Angus (1881) 6 App. Cas. 740. . . . . . . . . . . . . ...... 1·343
Damond Lock Grabowski v. Laing Investments (Bracknell) (1992) 60
BLR 112. 18·145, 18·150, 18·151, 18·153, 18·154, 18·159, 18·159E, 18·160
Darkin (H.) & Co. Ltd. v. Lee [1916] 1 K.B. 566; 84 L.J.K.B 2031; 133 L.T. 903; 59
S.J. 650. . . . . . . . . . . . . . . . . . . 4·013, 4·014, 4-016, 4·019, 4·020, 4·021, 4·022
Darley Main Colliery v. Mitchell (1886) 11 App. Cas. 127. . . . . . . . . . . . . . . 1·343
Darlington B.C. v. Wiltshier Northern Ltd. C.A. 1994. . . . . . . 8·142, 8·155B, 8·226, 8·229,
14·029, 14·030, 14·031, 14·032
Dartford (Guardians of) v. Trickett (1889) 59 L.T. 754; 53 J.P. 277; 5 T.L.R. 619 . 3·066
Daun v. City of London Brewery Co. (1869) L.R. 8 Eq. 155; 38 L.J.Ch. 454; 20 L.T.
601; 33 J.P. 547; 17 W.R. 663. . . . . . . . . . . . . . . . . . . . . . . . . . . . 1·201
Davidson v. Claffey Construction (1958) 60 W.A.L.R. 29. . . . . . . 11·006, 11·020, 11·024,
11·029, 11·031, 11·035, 11·037, 11·046
Davidson & Jones v. County of New Hanover, 255 S.E. (2d) 580 (1979), North
Carolina . . .. ............ 1·305
Davies v. London and Provincial Marine Insurance Co. (1878) 8 Ch.D. 469; 38 L.T.
478; 26 W.R. 794; sub nom. London & Provincial Marine Insurance Co. v.
Davies; Davies v. London & Provincial Marine Insurance Co. 47 L.J.Ch.
511........ . . . . . . . . 1·145, 1·152
--v. Swansea Corporation (1853) 8 Ex. 808; 22 L.J.Ex. 297; 21 L.T.(o.s.) 143; 91
R.R. 775; 17 J.P. 649. 12·063, 12·064, 12·066
Davies (A.) & Co. (Shopfitters) Ltd. v. Old (William) Ltd. (1969) 67 L.G.R. 395;
(1969) 113 S.J. 262. . . ...... 1·018, 1.035, 2·068, 3·066, 13.018, 13·053
Davies, Middleton & Davies v. Cardiff Corporation (1964) 108 SJ. 74; 62 L.G.R.
134, C.A. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18·076
Davis v. Freethy (1890) 24 Q.B.D. 519; 59 L.J.Q.B. 318 . . . . . . . . . . . . . . . . . . 14·046
lxii TABLE OF CASES
r TABLE OF CASES
Davis v. Hedges (1871) L.R. 6 Q.B. 687; 40 L.R.Q.B. 276; 25 L.T. 155; 20 W.R.
60. . . . . . . . . . . . . . . . . . . . 1·253, 1·254, 5·007, 5-008
- v . Nichols [1814J 2 Chit. (K.B.) 320 . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4·010
Davis & Co. (Wines) Ltd. v. Afa-Minerva (E.M.1.) Ltd. (1973) 9 Build. L.R. 99;
. [1974]2Lloyd'sRep.27. . . . . . . . . . . . . . . . . . . . . . . . . . . . 1·130,1·141,1·214
Davis Contractors v. Fareham Urban District Council [1956] A.C. 696; [1956] 3
W.L.R. 37; lOOS.J. 378; [1956] 2All E.R.145; 54L.G.R. 289,H.L.; affinning
[1955] 1 Q.B. 302; [1955] 2 W.L.R. 388; 99 S.J. 109; [1955] 1 All E.R. 275,
C.A.; [1955J CJ.Y. 271 . . . . . . . . . . . . . . . 3·049, 3·062, 3·063, 3·064, 4·234, 4·235,
4·248, 4·252, 4°254, 4·255, 4·256, 4·257
Davison v. Reeves ((1892) 8 T.L.R. 391 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14·072
Davstone Estate's Lease, Re, Manprop v. O'Dell {1969] 2 Ch. 378; [1969] 2 W.L.R.
1287; 113 S.J. 366; [1969] 2 All E.R. 849; 20 P. & C.R. 395 ..... 6·017, 6·096, 6·149
Davy Offshore v. Emerald Field Contracting (1991) 55 BLR 1; [1992] 2 Lloyd's
Rep. 142; Financial Times, March 18, 1992, C.A.; affirming Financial Times,
January 28, 1992. (1991) 55 BLR 1. . . . . . . . . ... 1·190, 2·201, 4·095, 11 ·041
Davys v. Buswell [1913] 2 K.B. 47;82 L.J.K.B. 499; 108 L.T. 244 . . . . . . . . . . . . 17·017
Dawber Williamson Roofing v. Humberside County Council (1979) 14 Build. L.R.
70; October 22, 1979, D.C.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11·017, 11·030
Dawdy and Hartcup, Re (1885) 15 Q.B.D. 426; 54 L.J.Q.B. 574; 53 L.T. 800 . . . . 18·061
Dawnays v. Minter (F. G.) and Trollope and Colls [1971] 1 W.L.R. 1205; [1971] 2
Lloyd's Rep. 192; sub nom. Dawnays v. Minter (F. G.), 115 S.J. 434; [1971 J2
All E.R. 1389; C.A. . . . . . . . . . . . . . . . . . . . . . . . . . . 5·011, 6·004, 6·195, 10·075
Day v. Mel.ea (1899) 22 Q.B.D. 610; 58 LJ.Q.B. 293; 60 LT. 947; 53 J.P. 532; 37
W.R. 483; 5 T.L.R. 379, C.A.. . . . .......... 1.074, 1·076, 1·078
- v . Ost [1973J 2 N.Z.L.R. 385. . . . . . . . 1·130, 1·284, 1·291, 2·166, 13·110
-v.U.S.245U.S.159(1917) . . . . . . . . . . . . . '. . . . . . . . . . . . . . . . . . . . . 4·061
DeMorgan,Snell&Co. v. RiodeJaneiroF1ourMills,(1892) (4th ed.) Vol.2,p. 185;
8 T.L.R. 108, 292. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2-029, 6-033, 6·172
Dean v. Ainley [1987] 1 W.L.R. 1729; (1987) 131 S.J. 1589; [1987] 3 All E.R. 784;
(1987) 284 E.G. 1244; (1987) 84 L.S.Gaz. 2450, C.A.......... 8·135, 8·136, 8·142
Debenham v. King's College, Cambridge (1884) 1 T.L.R. 170 (1984) 1 Cab. & El.
438 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2·245, 2·257, 2·266
Degagne v. Chave (1896) 2 Terr. L.R. 210, Canada . . . . . . . . . . . . . . . . . . . . . 6·175
Deglan v. Guaranty Trust Company of Canada and Constantineau 1954S.C.R. 725;
[1954) 3 D.L.R. 785 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1·270
Demers v. Dufresne Engineering [1979] S.C.R. 146. . . . . . . . . . . . . . 1·297, 2·192, 4·056
Dempster (R. & J.) Ltd. v. Motherwell Bridge and Engineering Co.1964 S.L.T. 353;
. affirming 1964 S.C. 308; 1964 S.L.T. 113. . . . . . . . . . . . . . . . . 1·043, 1·048, 1·056
Denms& Co. v.Munn [1949]2K.B.327; [1949] L.J.R.857;65T.L.R.251;93S.J.181;
[1949] 1 All E.R. 616; C.A . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4·274, 4·277
Denny Mott& Dickson v. James B. Fraser & Co. [1944] A.C. 265; 113 L.J.P.C. 37;
171 LT. 345; 60 T.L.R. 419; 88 S.J. 203. . . . . . . . . . . . . . . . . . . . . . . . . 4·236
Department of the Environment v. Thomas Bates & Son Ltd. [1991] 1 A.C. 499;
[1990] 3 W.L.R. 457; [1990] 2 All E.R 943; [1990] 46 E.G. 115; (1990) 134 S.J.
1077; 50 Build. L.R. 61; 21 Con. L.R. 54; H._L; affirming [1989] 1 All E.R.
1075; [1989] 26 E.G. 121; 13 Con. L.R. 1; 44 Build. L.R. 88; (1989) 139 New
L.J. 39, C.A. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1·352
Derry v. Peek (1889) 14 App. Cas. 337; 58 L.J.Ch. 864; 61 L.T. 265; 38 W.R. 33; 1
Meg. 292; 5 T L.R. 625;54 J.P.148, H.L.; reversing sub nom. Peek v. Derry
(1887) 37 Ch.D. 541, C.A. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1·162, 1·280
Design 5 v. Keniston Housing Associations (1986) 38 Build. L.R. 123; (1986) 34
Build. L.R. 92. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8·226
Devonald v. Rosser & Sons [1906] 2 K.B. 728; [1904--7] All E.R. Rep. 988; 75
L.J.K.B. 688; 95 L.T. 232;22 T.LR. 682; 50S.J. 616, CA. . . . . . . . . . . . . 1·201
Dew (G.) & Co. v. Tarmac Construction (1978) 15 Build. L.R. 22, C.A.. . . 18·093, 18.094
Diamond v. McAnnany (1865) 16 U.C.C.P. 9 . . . . . . . . . . . . . . . . . . . . . . . . . 7·071
Dickinson v. Dodds (1876) 2 Ch.D. 463; 45 L.J.Ch. 777; 34 L.T. 607; 40 J.P. 532· 24
W.R. 594, C.A. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . '... 1·024
- - v Iowa State Department of Transport 300 N.W. (2d) 112 (1981) . . . . . . . . 8·218
Dies v. British and International Mining & Finance Corporation [1939] 1 K.B.
724. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4·228, 4·229, 12·022, 12·060
Dillingham Construction Pty. v. Downs [1972] 2 N.S.W.L.R. 49.......... l-_135, 1·158,
1·166, 1·169, 1·284, 1·285, 3·078, 4·142, 4;143, 4·203
Dillon v. Jack (1903) 23 N.Z.L.R. 547 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12·072
Ixiii
Dimes v. Grand Junction Canal Co. (1852) 3 H.L. Cas. 759 .... 6-101
Dimmack v.Hallett (1866)2Ch.App. 21;36LJ.Ch.146; 15 L.T.374; 31 J.P.163; 12
Jur.(N.s.)953;15W.R.933,LTJ.............................. 1·145
Dineen v. Walpole [1969} 1 Lloyd's Rep. 261; (1969)209E.G. 827;119NewL.J. 746,
C.A...... 18·169, 18·178, 18·181, 18·195
Discount Recards v. Barclays Bank [1975] 1 W.L.R. 315; (1974) 119 S.J.133; [1975]
1 All E.R 1071; [1975] 1 Lloyd's Rep. 444. . . . . . . . . . . . . . . . . . . 17·056, 17·069
District of Logan Lake v. Riutow Industries [1990] 5 W.W.R. 525 . . . . . . . . 1·292
District of Surrey v. Church (1977) 76 D.L.R. (3d) 72; aff'd. 101 D.L.R. (3d)
218. . . . . . . . . . . . . . . . . . . . . 1·276, 1·285, 2·129, 4·093, 4·113
Dixon v. Hatfield (1823) 2 Bing. 439; 10 Moo. C.P. 42; 3 L.J.C.P. 59; 27 R.R. 686 . 17·017
- - v. South Australian Railway Commissioners (1923) 34 C.L.R. 71. . . . . 6°131, 6·137,
6·144, 6·168
Dobson and Sutton v. Groves (1844) 6 A. & E.(N.s.) 637 . . . . . . . . . . . . . . . . 18·137
Docker v. Hyams [1969) 1 W.L.R.1060; 113 S.J. 381; [1969] 3 AllE.R. 808; [1969] 1
Lloyd's Rep. 487, C.A.; affirming [1969] 1 Lloyd's Rep. 333. Petition for
leave to appeal to House of Lords refused. . . . . . . . . . . . . . . . . . 6·026, 6-075
Dodd v. Churton [1867] 1 Q.B. 562; 66 L.J.Q.B. 477; 76 L.T. 438; 45 W.R. 490; 13
T.L.R. 305; 41 S.J. 383....... 6·114, 10·025, 10.032, 10·035, 10·040, 10·064, 10·074
Dodd Properties (Kent) v. Canterbury City Council [1980] 1 W.L.R. 433; (1979) 124
SJ.84; [1980] 1 All E.R. 928;(1979) 253 E.G.1335; (1979) 13 BuildL.R.45,
C.A.; reversing [1979] 2 All E.R. 118; (1978) 248 E.G. 229, D.C...... 2·205, 2·207,
2·209, 5·061, 8·132, 8·142, 8·146, 8·149
Dods v. Coopers Creek Vineyards & Co. [1987] 1 N.Z.LR. 530, Auckland High Ct. 8·093
Doe v. Essex, Goodman & Suggitt (1985) 32 B.L.R 140. . . . . . . . . . . . . . . . . . . . 2·207
Doe (Reverend E.G.) v. Canadian Surety Co. [1937] S.C.R. 1. . . . . . . . . 17·026, 17·035,
17·037, 17·043, 17·044
Doleman v. OssettCorporation [1912] 3K.B.257;81 L.J.K.B.1092; 107L.T. 581; 10
L.G.R. 915; 76 J.P. 457. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18·002, 18·068
Dominion Chain v. Eastern Construction Ltd. (1976) 68 D.L.R. (3d) 385. . . . 1·373, 1 ·382
Donkin and Leeds Canal Co., Re (1893) (4th ed.) Vol. 2, p. 239. . . . . . . . . . . . . 18·131
Donnelly v. Joyce [1974] Q.B. 454; [1973) 3 W.L.R. 514; 117 S.J. 488; [1973] 3 All
E.R. 475; [1973] 2 Lloyd's Rep. 130, C.A. . . . . . . . . . . . . . . . . . . . . . . . 8·226
Donnelly Const. v. Oberg P. (2d) 1292 (1984), Sup. Ct., Arizona . . . . . . . . . . . . 1·295
Donoghue v. Stevenson [1932] A.C. 562; [1932] All E.R. Rep. 1; 101 L.J.P.C. 119;
147 L.T. 281;48T.L.R. 494; 76 S.J. 396; 37 Com. Cas. 350; [1932] S.L.T. 317;
[1932] S.C. (H.L.) 31. ....... 1·128, 1·274, 1·279, 1·307, 1·308, 1·309, 1·322, 1·327,
' 1·329, 1·337, 1·351, 1·355, 1·356, 1·358, 1·360, 1·364,
1 ·369, 2·083, 2·084, 2· 152, 13·042
Dorset County Council v. Southern Felt Roofing Co. 48 BLR 96; (1990) 6 Const.
L.J. 37; (1990) 10 Tr. L.R. 96, C.A.; affirming 26 Con. L.R. 128.... 15·002, 15·020,
15·026, 15·039
Dove v. Banhams Patent Locks Ltd. [1983) 1 W.L.R. 1436; [1983) 2 All E.R. 833;
(1983) 127 S.J. 748; (1983) 133 New LJ. 538 ...... . 1·351
Downe (Lord) v. John Dye & Son Ltd., 1972 S.L.T. 30, Sh.Ct. 1·078
Downer Enterprises,Re [1974] 1 W L.R.1460; 118 SJ. 829; [1974] 2 All E.R.1074 16-007
Doyle v. Olby (Ironmongers) Ltd. [1969] 2 Q.B. 158; [1969] 2 W.L.R. 673; [1969] 2
All E.R. 119; 113 S.J. 128; [32 M.L.R. 556], C.A. . . . . . . . . 1·164
Doyle Construction Ltd. v. Carling O'Keefe Breweries of Canada (1988) (Unrep.)
Brit. Columbia Ct. of App. Feb. 1-21988 . . . . . . . . . . . . . . . . 4-133
Drennan v. Star Paving Co. 333 P. 2nd 757 (1958); (1958) 333 D.L.R. (2d) 757 . . 1·027,
13·107
Drew v. Drew (1855) 14Ct. ofSess. Cas. (2nd Ser.) 559;affirmedby H.L., The Times,
March 12, 1855 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18-128
- v. Josolyne (1887) 18 Q.B.D. 590; 56 LJ.Q.B. 490; 37 L.T. 5; 35 W.R. 570; 3
T.LR. 482. . . . . . . . . . . 2·257, 2·266, 12.031, 14-043, 14·044, 14·050, 16,062, 16·063
Dreyfus (Louis) et Cie v. Pamaso Cia NavieraS.A. (The Dominator) [1960] 2 Q.B.
49; [1960] 2 W.L.R. 637; [1960] 1 All E.R. 759; 104 S.J. 287; [1960] 1 Lloyd's
Rep.117, C.A.;reversing[1959J 1 Q.B.498; (1959] 2 W.L.R.405; [1959} 1 All
E.R. 502; 103 S.J. 221; [1959} 1 Lloyd'sRep.125; [26 Sol. 97; 22M.L.R. 333];
[1959] C.L.Y. 3039 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1·223
Duchess of Argyll v. Beuselinck. See Argyll (Duchess of) v. Beuselinck.
Duckworth v. Alison (1836) 1 M. & W. 412; 2 Gale II; Ty. & Gr. 742; 5 L.J.Ex.171;
150 E.R. 494 . . . . . 10·055
Dunaberg and Witapsk Railway Co. Ltd. v. Hopkins Gilkes & Co. Ltd. (1877) 36
L.T. 733. . . . . . . 6·009, 6·050
 !xiv TABLE OF CASES
r TABLE OF CASES lxv
-Dunbar Ltd. v. South African Railways [1943] A.O. 22 ... 6·124 Edward Owen Engineering v. Barclays Bank International [1978] Q.B. 159. . . 17·006,
Duncan v. Blundell (1820) 3 Stark. (N.P.) 6; 5 M. & P. 548.. 4·077, 4-082, 4·089, 17·0110, 17·054, 17·055, 17-060, 17·061, 17·063, 17·067, 17·069, 17·071,
4-101, 4· 103, 4· 124 17·073, 17-076
Duncanson v. Scottish County Investment Co., 1915 S.C. 1106, Ct. of Sess ........ 4-153, Edwards v. Bairstow and Harrison [1956] A.C.14; [1955) 3 W.L.R. 410; 99 S.J. 558;
9·010 [1955] 3 All E.R. 48; [1955] T.R. 209; 48 R. & I.T. 534; 36 T.C. 207; 34 A.T.C.
Dunlop & Ranken v. Hendall Steel Structures. Pitchers (Garnishees) [1957] 1 198; H.L.; reversing [1954] T.R. 155; 47 R & I.T. 340; 33 A.T.C. 131; T.C.
W.L.R. 1102; 101 S.J. 852; [1957] 3 All E.R. 344, D.C.. . . . . . . 6,041, 6·192, 6·193, Leaflet No. 1692; [1954) C.L.X. 1555, C.A.; restoring {1954] T.R. 65;
8· 106, 13.102, 14·066, 14·067 4 R. & I.T. 177; 33 A.T.C. 58; T.C. Leaflet No. 1680. . . . . 18·175, 18·176
Dunlop Pneumatic Tyre Co. Ltd. v. Selfridge & Co. Ltd. [1915] A.C. 847; [1914-15] ~ v. Skyways Ltd. [1964] 1 W.L.R. 349; [1964) 1 All E.R. 494; 108 S.J. 279 [80
All E.R. Rep. 333; 84 L.J.K.B. 1680; 113 L.T. 386; 31 T.L.R. 399; 59 S.J. L.Q.R 315; 152 Acct. 184]. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1·043, 1·082
439. . . . . . . . . . . . . . . . . . . . . . 1·061, 10·006 Egan v. South Australian Railway Authority (1973) 130 C.LR. 506. 1·218, 6· 131, 6·137
Dunrae Manufacturing Ltd. v. C. L. North & Co. [1988} 2 N.Z.L.R. 602 . 1·076 ~ - v. State Transport Authority (1982) 31 S.A.S.R. 481; (1979) 24 S.A.S.R. 5 .... 8·150,
Durham Brothers v. Robertson [1898] 1 Q.B. 765; 67 L.J.Q.B. 484; 78 L.T. 438... 14·013, 8·151, 8·153, 10·016, 11-026, 11·031, 11·034,
14-014, 14·015, 14·017 11·035, 11·042, 11-044, 11·060, 11·061, 12·013, 12·067, 12·083
Dutton v. Bognar Regis Urban District Council [1972] 1 Q.B. 373; [1972] 2 W.L.R. Electronic Industries v. Jones (David) (1954) 91 C.L.R. 288. . . . . . . . 9·008, 9,011, 9·012
299; (1971) 116 S.J. 16; 70 L.G.R. 57, sub nom. Dutton v. Bognar Regis Eliason v. Henshaw (1819) 1 Wheaton 225 . . . . . . . . . . . . . . . . 12·043
United Building Co. [1972] 1 All E.R. 462; [1972} 1 Lloyd's Rep. 227, C.A. Ellerine Brothers v. Klinger [1982] 1 W.L.R.1375; (1982) 126 S.J. 592; [1982] 2 All
[35 Conv. 385; [1972) J.P.L. 69; 116 S.J. 264; 136 L.G.Rev. 362); affirming E.R. 737; (1982) 79 L.S.Gaz. 987, C.A..... 18·090
[1971] 2 All E.R. 1003... 1·276, 1-277, 1·314, 1 ·345, 1·346, 1-347, 1·356, 1 ·361, 1·364 Elliott, Re.See South Devon Ry., Ex P.
Dyer v. Build/Lind Partnership [1983] Build. L.R. 23, D.C.. 10·053, 12.(109 Ellis v. Hamlen (1810) 3 Taunt. 52; 12 R.R. 595 . . . . . . . . . . . . . . . . . . . . . . . 4-010
Dyer Ltd. v. Simon Build Partnership (1982) 23 Build. L.R. 23 . . . . . . . . . . . . 1·220 ~ v. Torrington [1920] 1 K.B. 399; 86 L.J.K.B. 369; 122 L.T. 361; 36 T.L.R. 82 . 14·025
Dyer (Thomas) & Co. v. Bishop International Engineering Co. (1968) 303 F. 2nd Ellis-Don v. Parking Authority of Toronto (1978) 28 Build. L.R. 98, Sup. Ct. of
655. 13·111, 13-112, 13·113 Ontario. . . . . . . . . . . . . . . . . . 3·060, 4·168, 8· 186, 8·188, 8·220
Ellis Mechanical Services v. Wates Construction (1976) 2 Build. L.R. 57; [1978] 1
EDAC v. Moss (1985) 1 C.L.J.131 2·108 Lloyd's Rep. 33, C.A. . . . . . . . . . . . . . . . . . 18·091
E.P. Finance Co. v. Dooley [1963] l W.L.R.1313; 107 S.J. 982; [1964] 1 All E.R. 527 10·021 Elmes v. Burgh Market Co. (1891) (4th ed.) Vol. 2, p. 170 . . . . . . . . . . . . . . . . 6·153
Eads v. Williams (1854)4 DeG.M. &G. 674;3 Eq. Rep. 244;24L.J. Ch.531;3 W.R. Elphinstone (Lord) v. Monkland Iron Co. (1886) 11 App. Cas. 332 . . . 10·006
98; 1 Jur. 193; 102 R.R. 326. . . 2-186 Eisley v. Collins Insurance Agencies (1978) 83 D.L.R. (3d) 1, Can. Sup. Ct.. . . . . 10·002,
Eagle Star Insurance Company Ltd. v. Gale and Power [1955} J.P.L. 679 . . . 2-206 10,016, 10·022, 10·025, 10·042, 10-093
Emden'v. Carte (1881) 17 Ch. D.169, 768; 19 Ch.D. 311;50L.J. Ch. 492;51 L.J. Ch.
Eaglesham v. McMaster [1920] 2 K.B. 169; 89 L.J.K.B. 805; 123 L.T. 198; 84 J.P.
41; 44 L.T. 344, 636; 29 W.R. 600 . 16·059
146. . . . . . . . 6.040, 6-080, 6-095, 6·226
Empimall HoldingsPty. Ltd. v. Machon PaullPartnersPty. Ltd. (1989) 8 A.C.L.R.
Earl v. Hector Whaling [1961] Lloyd's Rep. 459; (1961) 105 S.J. 321 [24M.L.R. 800;
111 L.J. 835], C.A. . . 1·110 65, C.A., N.S.W. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1·036
Empresa Exportadora De Azucar (CUBAZUCAR) v. Industria Azucareva
~ v. Lubbock [1905] 1 K.B. 253; 74 L.J.K.B. 121; 91 L.T. 830; 553 W.R. 145; 21
Nacional S.A. (JANSA); Playa Largo and Marble Islands The [1983) 2
T.L.R. 71; 49 S.J. 83, C.A. 1·314
Lloyd's Rep. 171; [1983] Com. L.R. 58, C.A.; affirming [1982] Com. L.R.
Earl of Mexborough and Wood Re (1883) 47 L.T. 516 . . . . . . 10·010
171 . . . . . . . 18·096
Earle (G. & T.) Ltd. v. Hemsworth Rural District Council (1928) 140 L.T. 69; 44
Emson Contractors v. Protea Estates (1988) 4 Const. L.J. 119. . . . 4· 134, 7·052, 18·057
T.L.R. 758. . . . . . 14·016, 14-041, 14-044
Emson Eastern (In receivership) v. EMEDevelopment55 BLR 114; 26 Con. LR57 . 4·005,
Earth and General Contracts v. Manchester Corporation (1958) 108 L.J. 665..... 4-216,
12-061
11·022, 11·049 Enco Civil Engineering v. Zew International (1991) 56 BLR43 ......... 18-047, 18·093
East Ham Corporation v. Sunley (Bernard) & Son Ltd. [1966] A.C. 406; [1965] 3
English Industrial Estates Corporation v. George Wimpey & Co. Ltd. (1973) 1
W.L.R. 1096; [1965) 3 All E.R. 619; 109 S.J. 874; 64 L.G.R. 43; [1965] 2
Lloyd's Rep. 118, (1972) 116 S.J. 945; (1972) 71 L.G.R. 127, C.A.. 1·005, 1·227,
Lloyd's Rep. 425, H.L.; reversing [1965] 1 W.L.R. 30; [1965] 1 All E.R. 210;
108 S.J. 918; [1964] 2 Lloyd's Rep. 491; 63 L.G.R. 119; [196<tJ C.L.Y. 362, 2·169, 2·175
Enoch and Zaretsky, Bock & Co.'s Arbitration, Re [1910] 1 K.B. 327 .... 18·147
C.A....... 1·009, 1·247, 1·249, 1·300, 1·312, 2· 193, 2·195, 2·197, 2·206, 5·022, 5·024, Entores Ltd. v. Miles Far East Corporation [1955] 2 Q.B. 327; [1955] 3 W.L.R. 48;
5·059, 6·074, 6·083, 6·084, 6·092, 6·093, 6·183, 6·190, 7·031, 8·108, 8·115, [1955] 2All E.R.493; 99 S.J. 384; [1955] 1 Lloyd's Rep. 511; 72 L.Q.R.10; 19
8·117, 8·124, 8·137, 8·139, 8-146, 8·147 M.L.R. 89; 99 S.J. 446; 220 L.T. 36; [1955] C.L.J. 148; 3 S.A.L.J. 77, C.A. . . 1·040
East River Steamship v. Transamerica Delaval Inc. 106 S.Ct. 2295 (1986) . . . . . . 1·322 Equitable Debenture Assets Corp. v. Moss (William) (1984) 1 Const. L.J. 131 . . 4-103
East Suffolk Rivers Catchment Board v. Kent [1941) A.C. 74 . . . . . . . . . . . . . 1·346 Equitable Securities Ltd. v. Neil [1987] 1 N.Z.L.R. 233, New Zealand 1·076
Eastern Airlines v. Gulf Oil 415 F. Supp. 429 (1979) . . . 4-237 Eriksson v. Whalley [1971] 1 N.S.W.L.R. 397...... 12·033, 12·039, 12·040, 12·043, 12·044
Ebbetts v. Conques [1895] 2 Ch. 377; 82 L.T. 560; 16 T.L.R. 165 . . . . 4-306 Erlangerv. New Sombrero Phosphate Co. (1878) 3 App. Cas.1218;48 L.J. Ch. 73; 39
Ebdy v. McGowan (1870) (4th ed.) Vol. 2, p. 9 . . . . . 2·272 L. T. 269; 27W.R. 65; H.L. affirming sub nom. New Sombrero Phosphate Co.
Ebsworth & Tidy's Contract Re (1889) 42 Ch.D. 23 . . . . . . . 16·012 v. Erlanger (1877) 5 Ch.D. 73, C.A. . . . . . . . . . . . . . . . . . . . . . . . . . . . 1·148
Eccles v. Southern (1861) 3 F. & F. 142 . . . . . . . 13-031 Ernst Inc. v. Manhattan Construction, 551 F. (2d) 1026 (1977), 5th circuit. . 1·305
Eckersley v. Mersey Docks and Harbour Board [1894} 2 Q.B. 667;71 L.T. 308; 9 R. Ernst & Whinney v. Willard Engineering (Dagenham) (1987) 3 Const. L.J. 292;
827 . . . . . . 18·131 (1988) 40 B.L.R. 67, Official Referee. . . . . . . . . . . . . . . 1-352, 13·045
Edelman v. Boehm (1964) 26 S.A.S.R. 66, South Australia. . ..... 2·083, 2·108 Errico v. Lotter 1956 (4) S.A. 139. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6·044, 6.()45
Edgeworth Construction Ltd. v. F. Lea & Associates [1993] 3 S.C.R. 206 1·168, Esal (Commodities) and Reitan v. Oriental Credit and Wells Fargo Bank N.A.;
1·294, 1·296, 1·296A, 1-2968, 1·304, 1·306A, Banque du Caire S.A.E. v. WellsFargoBankN.A. [1985] 2Lloyd's Rep. 546;
1·3068, 2·107, 4·062, 6-097, 6·228, 7-027 [1986] FLR 70, C.A............ 17·011E, 17·062, 17·064, 17·065, 17-068, 17-071
Edgington v. Fitzmaurice (1885) 29 Ch.D. 459; 55 L.J. Ch. 650; 53 L.T. 369; 50 J.P. Esanda Finance Corporation v. Plessnig (1988) 166 C.L.R. 131, High Ct. of Aus-
52;33W.R.911;1 T.L.R.326;50J.P.52 . . . . . . . . . . . . . . . . . . . . . T·' 1·145 tralia . . . . . . . . . . . . . . . . . . . 10·018
Edgworth Construction Ltd. v. N. D. Lea and Associates (1991) 53 B.C.L.R. (2d) Eshelby v. Federated European Bank Ltd. [1932] 1, K.B. 254, 423 ........ 4-006, 4·012,
180; (1991) 6 Const. L.J. 328. . . . . . . . . 1·288, 1-296, 1·304
4·021, 4·022, 4·024
 !xvi TABLE OF CASES
Ess v. Truscott (1837) 2 M. & W. 385; M. & H. 75; 6 LJ:Ex.144; 1 Jur. 358;46 R.R.
630 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6·172
Essenden and Flemington Corporation v. Ninnis (1879) 5 Viet. L.R. (Law) 236 . . 12-048
Esso Petroleum Ltd. v. Customs and Excise Commissioners [1976J 1 W.L.R. 1;
[1976} 1 All E.R.117;(1975) 120S.J.49,H.L.;afjirming[1975J 1 W.L.R.406;
119S.J. 205, C.A.;reversing[l973J 1 W.L.R.1240; 117S.J. 680; [125NewL.J.
402] . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1·083
Essa Petroleum Co. Ltd. v. Mardon [1976] Q.B. 801; [1976] 2 W.L.R. 583; [1976] 2
All E.R. 5; 120 S.J. 131; [1976] 2 Lloyd's Rep. 305, C.A.; reversing in part
[1975] Q.B. 819; [1975] 2 W.L.R. 147; (1974) 119 S.J. 81; [1975] 1 All E.R.
. 203 ..... : .......... 1·134, 1·135, 1·141, 1·145, 1·154, 1·167, 1·214, 1·280, 1·373
Ettndge v.. Vermm Board of the District of Murat Bay [1928] S.A.S.R. 124, Aus-
traha . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4-027
Eugenia, The. See Ocean Tramp Tankers Corporation v. v/o Sorfracht.
European Assurance Association, Re, Conquest's Case (1875) 1 Ch.D. 334; 45 L.J.
Ch. 336; 33 L.T. 762. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14-023
Euston Contractors Ltd. v. Protea Estates (1987) 39 BLR 126. . . . . . . . . . . . . . 6·167
Evans v. Balog (1976) 1 N.S.W.L.R. 36. . . . . . . . . . . . . . . . . . 8·108, 8·130, 8·136, 8-141
- v . Carte (1881), (4th ed.) Vol. 2, p. 78. . . . . . . . . . . . . . . . . . . . . . . . . 2·069, 2·160
Evans, Coler_nan & Evans v. Nelson (R.A.) Construction (1958) 16 D.L.R. (2d) 123 14·046
Evans Deakms Industries Ltd. v. Queensland Electricity Generating Board (1985)
4 B.C.L.R. 334 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1·033
Evans (J.) & Son (Portsmouth) Ltd. v. Merzario (Andrea) Ltd. [1976] 1 W.L.R.
1078; {1976] 2 All E.R. 930; 120 S.J. 734; [1976] 2 Lloyd's Rep. 165, C.A.;
reversm~ [1975] 1 Lloyd's Rep. 162............ 1·083, 1·212, 1·213, 1·214, 1·225
Everglade Maritime Inc. v. Schiffahrtsgesellschaft DETLEF Von Appen m.b.H.,
Maria, The [1993) Q.B. 780. . . . . . . . . . . . . . . . . . . . . . . . . . . . . lS.187, 18·190
Ex comm v. Bamaodah [1985} 1 Lloyd's Rep. 403; (1985) 82 L.S.Gaz. 761,
C.A..... · · . . . . . . . . 18·025, 18-027
Fairclough Building Ltd. v. Borough Council of Port Talbot (1992) 62 Build. L.R.
82. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1·019, 1·022, 3·053
Fairclough Building v. Rhuddlan Borough Council (1985) 30 Build. L.R. 26; (1985)
2 Const. L.J. 55; [1985] C.I.L.L. 208, C.A.; affirming (1983) 3 Con. L.R. 20,
_ D.C................... 2·145, 2·170, 2·174, 4·195, 5·033, 7·007, 13,076, 13·082
Farrweather (H.) v. Asden Securities (1979) 12 Build. L.R. 40, D.C........ 5·028, 6·076,
6·085, 6·170, 6·181, 10·071, 10·090, 10·095
--v. Wandsworth London Borough Council (1988) 39 B.L.R. 106. . . . . . 2·116, 3·018,
4·095, 4· 108, 4· 177, 13·029
Fakes v. Taylor Woodrow Construction [1973] Q.B. 436; [1972) 2 W.L.R. 161;
(1972) 117 S.J. 13; [1973] 1 All E.R. 670. C.A. . . . . . . . . . . . . . . . . . . . . 18·107
Faraday v. Tamworth Union (1916) 86 L.J. Ch. 436; 81 J.P. 81; 15 L.G.R.
258..... - . . . . . . . . . . . . . . . . . 2·257, 2·266
Farley v. Housing and Commercial Developments Ltd. (1984) 26 Build. L.R. 66;
(1984) 81 L.S.Gaz. 2216 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14-044, 16·019
Farr (A.E.) v. Admiralty [1953] 1 W.L.R. 965; 97 S.J. 491; [1953] 2 All E.R. 512;
[1953] 2 Lloyd's Rep. 173. . . . . . . . . . . . . . . . . . . . . . . . . 15·040, 15·041, 15·042
- v. Ministry of Transport (1965) 5Build. L.R. 94,H.L. [1960] 1 W.L.R. 956; 104
S.J. 705; [1960) 3 All E.R. 88 ................ 3·012, 4·048, 4·039, 6·210, 6·212,
7·013, 8·027, 8-029, 8·034, 8·100
Farrow v. Wilson (1869) L.R. 4 C.P. 744; 38 L.J.C.P. 326; 20 L.T. 710; 18 W.R 43 2·056
Farthing v. Thompkins (1893) 9 T.L.R. 566. . . . . . . . . . . . . . . . . . . . . . . . 2·257, 2·258
Feather (Thomas) & Co. (Bradford) v. Keighley Corporation (1933) 52 L.G.R.
30. . . . . . . . . . . . . . . . . . . . . . . . . . . . 4-208, 8·113, 9·013, 9·014, 12·004, 12·059
Federal Bulle Carriers v. C. ltoh & Co.; Federal Bullcer, The [1989] 1 Lloyd's Rep.
103, C.A. ......................... . . . . . . . . . 18-032
Federal Commerce and Navigation Co. v. Molena Alpha Inc.; Nanfri, The; Benfri,
The; Lorfri, The [1979] A.C. 757; [1978} 3 W.L.R. 991; (1978) 122 SJ. 843;
[1979) 1 All E.R. 307; [1979] 1 Lloyd's Rep. 201, H.L.; affirming in part [1978]
Q.B. 927; [1978] 3 W.L.R. 309; (1978) 122 S.J. 347; [1978] 3 All E.R. 1066
C.A.; reversing [1978] 1 Lloyd's Rep. 581. ....... 4·216, 4·217, 4·222, 6·196, 6·202
Fehlhaber Corporation v. U.S. 151 Fed. Supp. 817 (1957) . 4·061
Felton v. Wharrie (1906) (4th ed.) Vol. 2, p. 396............ 4·214, 9·003;'9·023, 9·034,
12-053, 12·080
TABLE OF CASES lxvii
Felthouse v. Bindley (1862) 11 C.B.(N.s.) 869; 31 L.J.C.P. 204; 6 L.T. 157; 10 W.R.
423; (1863) 1 New Rep. 401; 7 L.T. 835; 11 W.R. 429, Ex.Ch ......... 1·033, 1,034
Fenton v. Thorley [1903] A.C. 443 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15·070
Fercometal Sarl v. MSC Mediterranean Shipping Co. S.A.; Simona, The [1989]
A.C. 788, H.L. [1988] 3 W.L.R. 200; (1988) 132 S.J. 966; [1988] 2AllE.R. 742;
(1988) 2 Lloyd's Rep. 199; (1988) 138 New L.J. 178 H.L. affirming [1987] 2
FTLR 254· [1987] 2 Lloyd's Rep. 236, C.A. affirming [1986] 1 Lloyd's Rep.
171 .... :..... ............. 4-226
Ferguson v. Sohl (1992) 62 BLR 94, C.A ............ 1·261, 4·190, 4·228, 4·231A, 8·168
Fernbrook Trading Co. Ltd. v. Taggart (1979) [1979] 1 N.Z.L.R. 556..... 10·038, 10·040,
10·085, 10-086, 10-088
Ferrara v. National Surety Co. [1917] 1 W.W.R. 719........... 17·029, 17·034, 17.050
Fibrosa Spolka Akeyjna v. Fairbairn Lawson Combe Barbour [1943) A.C. 32 . . . 4·240
Fidelitas Shipping Co. Ltd. v. V/0 Exportchleb [1966] 1 Q.B. 630; [1965} 2 W.L.R.
1059; [1965] 2 All E.R. 4; 109 S.J. 191; [1965] 1 Lloyd's Rep. 223, C.A.; revers-
ing [1965] 1 Lloyd's Rep.13 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1·251
Fidelity & Casualty of New York v. Jones Construction (1963) 325 F. (2d) 605. 2·097
L. Figuoiredo Navegacas S.A. v. Reederei Richard Schroeder K.G. (The "Ench
Schroeder") [1974] 1 Lloyd's Rep.192........... 18·169, 18·178, 18·180, 18·195
Fillite (Runcorn) v. Aqua-lift ( A firm) 45 BLR 27; 26 Con LR66; (1989) 5 Const. L.J.
197, C.A.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18·007, 18·009, 18·102
Finnegan v. Allen {1943] 1 K.B. 425; 112 L.J.K.B. 323; 168L.T. 316; [1943] 1 All E.R.
493 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2·218
Finnegan (J.F.) v. Sheffield City Council 43 BLR 124; (1989) 5 Const. L.J. 54,
O.R. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6·064, 8· 184, 8·188, 8· 189, 9·041
Finnegan (J.) Ltd. v. Ford Sellar Morris Developments Ltd. (1991) 53 BLR
38. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8·086, 16·058
Firbank's Executors v. Humphreys (1886) 18 Q.B.D. 54;56L.J.Q.B. 57;56 L.T. 36;
35 W.R. 92; 3 T.L.R. 49 . . . . . . . . . . . . . . . . . . . . . 2·080
Firma C-Trade S.A. v. Newcastle Protection and Indemnity Association; Fanti,
The; Socony Mobil Oil Inc. v. West of England Shipowners Mutual
Insurance Association; Padre Island, The (No. 2) (1991) 2 A.C. 1; [1990]
3 W.L.R. 78; [1990] 2 All E.R. 705; (1990) 134 S.J. 833; [1990] BCLC
625· [1990) 2 Lloyd's Rep. 191, H.L.; reversing [1989] 1 Lloyd's Rep. 239,
c.A.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13.113, 15-038
Fischback & Moore of Canada and Noranda Mines, Re (1971) 19 D.L.R. (3d)
329 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4-175, 18·029
Fisherv. C.H.T. Ltd. [1966] 2 Q.B. 475; [1966] 2 W.L.R. 391; [1966] 1 All E.R. 88, 109
SJ. 933, C.A.; reversing in part [1965) 1 W.L.R.1093; [1965] 2 All E.R. 601;
109 S.J. 612; [1965] C.L.Y. 3238; [236 L.T. 537] . . . . . . . . . . . . . . . . . 1·329, 1-334
- v. Wellfair (P.G.); Fox v. Wellfair (P.G.) (1981) 125 S.J. 413; [1981) 2 Lloyd's
Rep. 514; [1981] Com. L.R 140, [1982] 19 Build. L.R. 52; [1982] 263 E.G. 589,
657, C.A.; [1979] I.C.R. 834, (1979) 124 S.J. 15, E.A.T.. . . . 18-071, 18·074, 18·132,
18·139, 18·148, 18·149, 18·159, 18·161
Fl~nagan v. Mate (1876) 2 Viet. L.R. 157 . . . . . . . . . . . . . . . . . . . . . . . . . . . 2·157
Flannery v. St. Louis Architectural Iron 185 S.W. 760 (1916) 4·106
Fletcher v. Dyche (1787) 2 T.R. 32; 100 E.R. 18 . . . . . . . . . . . . . 10·007
--v. Laguna Vista Corporation (1973) 275 So. (2d) 579 7,097
Flexman v. Corbett [1930] 1 Ch. 672; (1930] All E.R. Rep. 420; 99 L.J. Ch. 370; 143
L.T. 464 . . . . . . . . . . . . 1·044
Florida Hotels v. Mayo (1965) 113 C.L.R. 588 .................. 1·312, 1·318, 2·193
Foakes v. Beer (1884) 9 App. Cas. 605; [1881-5] All E.R. Rep. 106; 54 L.J.Q.B. 130;
51 L.T. 833;33 W.R. 233, H.L.; affirming sub nom Beer v. Foakes (1883) 11
Q.B.D. 221, C.A............................. 1·074, 1-075, 1·076, 1·077
Fogelson v. Home Insurance (1987), New York Journal April 23, 1987.... 15·036, 15·037
Foley v. Classique Coaches [1934] 2 K.B. 1; 103 L.J.K.B. 550; 151 L.T. 242....... 1·043,
1.047, 1·051
- - v. Interactive Data Corp. 254 Cal. Rep. 211 (1988) . . . . . . . . . . . . . . . . . . 1·197
Ford v. Beech (1848) 11 Q.B. 852; 17 L.J.Q.B.114; 11 L.T.(o.s.) 45; 12Jur. 310; 116
E.R. 693 Ex.Ch.; reversing (1846) 11 ·Q.B. 842; subsequent proceedings sub
nom. Beech v. Ford (1848) 7 Hare 208 . . . . . . . . . . . . . . . . . . . . . . . . . 1·217
--v. ClarksonsHolidays [1971] 1 W.L.R.1412; 115 S.J. 642; [1971] 3AllE.R.454,
C.A. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18·106
 lxviii TABLE OF CASES
Ford v. White & Co. (A Firm) [1964] 1 W.L.R. 885; 108 S.J. 542; [1964] 2 All E.R.
753 .............
Ford & Co. and Bemrose & Sons, Re (1902) 18 T.L.R. 443; 4th ed., Vol. 2
p. 324 . . . . 8·021
Forestry Commission of New South Wales v. Stefanetto (1976) 133 C.L.R. 507,
High Ct. of Aus. . . . . . . . . . . . .
Forman v. The Liddesdale [1900] A.C. 190; 69 L.J.P.C. 44; 82 L.T. 331; 9 Asp.
M.L.G. 45. . . . . . . . . . . . . . . . . . . . . . . . . . 4-011, 4·019, 4·020
ForsikringsaktieselskapetVesta v. Butcher (No.1) [1989] A.C.852; [1989}2 W.L.R.
290; [1989] 1 All E.R. 402; (1989) 133 S.J. 184; 1989 Fin.L.R. 223; [1989] 1
Lloyd's Rep. 331; [(1988) 4 Const. L.J. 75], H.L.; affirming [1988] 3 W.L.R.
565; [1988] 2 All E.R. 43; (1988) 132 S.J. 1181; [1988] 1 F.T.L.R. 78; [1988]
F.L.R. 67; [1988] 1 Lloyd'sRep.19; [(1988) 4 Const. L.J. 75]; [1988] L.S.Gaz.
August 31, 33, C.A.; affirming [1986] 2 All E.R. 488; [1986] 2 Lloyd's Rep.
179 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Forsterv.Outred& Co. (a firm) [1982] 1 W.L.R.86; [1982]2AllE.R. 753;(1981) 125
S.J. 309...................... . . . . . . . 1·281, 1·307, 1·373
- v . Wilson (1843) 12 M. & W. 191 . . . . . . . . ......
Foster and Dicksee v. Hastings Corporation (1903) 87 L.T. 736; 19 T.L.R. 204 . . 12,085
Fottner v. Joseph (1859) 3 L.C.J. 233; S.C. 5 L.C.J. 226 . . . . . . . . . . . . . . . . .
Fowler v. Scottish Equitable Life Insurance Society & Ritchie (1858) 28 L.J. Ch.
225; 32 L.T.(o.s.) 119; 4 Jur. N.S. 1169; 7 W.R. 5 .
Fox, Re Oundle and Thrapston Rural District Council v. The Trustee [1948] Ch.
407; [1948] L.J.R.1733; 112 J.P. 294; 92 S.J. 310; [1948] 1 All E.R. 849; 46
L.G.R 305. . . 11·036, 11·045, 16·053
- - v. Wellfair (P.G.). See Fisher v. Wellfair (P.G.); Fox v. Wellfair (P.G.)
Francis v. Cockerell (1870) L.R. 5 Q.B. 501; lOB. & S. 950; 39 L.J.Q.B. 291;23 L.T.
466;18W.R.1205... .........
Frazer v. Jordan (1857) 8 E. & B. 303; 26 L.J.Q.B. 288; 3 Jur. 1054. . . . . . 17·035, 17.041
Frederick Betts Ltd. v. Pickfords Ltd. [1906] 2 Ch. 87; 75 L.J. Ch. 483; 94 L.T. 363; 54
W.R. 476; 22 T.L.R. 315 .
Frederik Nielsen (Canberra) Pty. Ltd. v. P.D.C. Construction (A.C.T.) Pty. Ltd.
(1984), noted in (1988) 7 A.C.L.R. 44 . . . . . . . . . . . . . . . . .
Freeth v. Burr (1874) L.R. 9 C.P. 208; 43 L.J.C.P. 91; 29 L.T. 733; 22 W.R. 370
Freeman v. Hensler (1900) (4th ed.) Vol. 2, p. 292; 64 J.P. 260. . . . . . . . . . . 4·144, 4-147
- - v. Marshall (1966) 200 E.G. 777 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Frontenac Air Systems Ltd. v. Parmac Construction Ltd. (1978) 87 D.L.R. (3d) 277
Frost v. Knight (1872) L.R. 7 Ex. 111; 41 L.J. Ex. 78; 26 L.T. 77; 20 W.R. 471. . . . . 4·225,
Fulham Borough Council and the National Electric Construction Co. Ltd. Re.
(1905)70J.P. 55 . . . .............. . 3·049
Fuller v. Patrick (1849) 18 L.J.Q.B. 236; 13 Jur.(o.s.) 561 . . . . . . . . . . . . . . . . .
--v. The Queen (1878) 3 J.R.N.S. (s.c.) 125 . . . . . . . . . . . . . . . . . . . . . . . . 10·032
Fuller (Thomas) Construction v. Continental Insurance (1973) 36 D.L.R. 3d.
336........... . . . ..... 17·028, 17-031, 17·043
Fulton v. Domwell (1885) 4 N.Z.L.R.S.C. 207 . .
G.K.N. Contractors v. Lloyds Bank (1985) 30 Build. L.R. 48, C.A.. . . . 17·067, 17·068
Galbraith's Stores v. Glasgow Corporation, 1958 S.L.T. (Sh.Ct.) 47; 74 Sh.Ct. Rep.
126 . . . . . . . 8·194
Gallagher v. Hirsch N.Y. 45 App. Div. 467 (1899) New York; 61 N.Y. Supp. 607 . 4·202,
7·046
- v . McDowell Ltd. [1961] N.I. 26; [14 N.I.L.Q. 488]. . . . . . . . . . . 1·308, 1·314, 1·316
Gallie v. Lee. See Saunders (formerly Gallie) v. Anglia Building Society
- v . Lee [1969] 2 Ch.17; [1969] 2 W.L.R. 901; [1969] 1 AllE.R.1062; 113 SJ.187;
20P.&C.R.310.......... 1·106
Gallivan v. Killarney Urban District Council [1912] 21.R. 356. . . . 10·035, 10·040, 10·041,
10.074
Gaitan v. Emuss (1844) 13 L.J. Ch. 388; 8 Jur.(o.s.) 307 . . . . . . . . . . . . 3·080
Gamer v. Strickland [1955] 4 D.L.R. 329 Ct. of App. B.C. . . . . . . . . . . . . . .,.. .-, 14·064
Garrard v. Frankel (1862) 30 Beav. 445; 31 L.J.Ch. 604; 8 Jur.(N.s.) 985; 132 R;R.
352; 26 J.P. 727; 54 E.R. 961. . . . . . . . . . . . . . . . . . . . 1·116, 1·122
TABLE OF CASES lxix
Garrett v. Banstead and Epsom Downs Railway (1864) De GJ. & S. 462; 12 L.T.
2·207 654; 13 W.R. 878; 11 Jur.(N.s.) 591; 146 R.R. 399 . . . . . . . . . . . . . . . . . . 12·084
--v. Salisbury Railway (1866) L.R. 2 Eq. 358. . . . . . . . . . . . . . 11·048, 12·063, t:z.086
Garrud, Re, ex parte, Newitt. See Newitt, ex parte
Gas & Fuel Corporation of Victoria v. Wood Hall Ltd. [1978) V.R. 385. 18·134A, 18·145,
10,015 18·146, 18·147, 18·150, 18·156, 18·159E, 18·160
Gas Light and Coke Co. v. Turner (1840) 6 Bing. N.C. 324; 8Scott 609; 9 L.J.Ex. 336;
5 Bing. N.C. 666; 7 Scott779; 9 L.J.C.P. 75; 54 R.R. 808 4·279
Gaze (W.H.) & Sons Ltd. v. Port Talbot Corporation (1929) 93 J.P.R. 89; 27 L.G.R.
200. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,154, 13,041
Geary, Walker & Co. v. Lawrence (1906) (4th ed.) Vol. 2, p. 382... 13·024, 13,101, 18·031
Gedge v. Royal Exchange Assurance Corporation [1900] 2 Q.B. 214; 69 L.J.Q.B.
506; 82 L.T. 483; 16 T.L.R. 344; 9 Asp. M.L.C. 57; 5 Com. Cas. 229 . . . . . . 4·278
Geiger v. Western Maryland Railway (1874) 41 Md. 4 . . . . . . . . . . . . . . . 10·009, t:z.069
... 1·377 General Steam Navigation Co. v. Rolt (1858) 6 C.B.(N.s.) 550,584; 6Jur.(N.s.) 801; 8
W.R. 223; 120 R.R. 264. . . . . . . . . . . . . . . . 17·028, 17·043, 17·044, 17·045, 17·046
General Surety & Guarantee Co. v. Parker (Francis) (1977) 6 Build. L.R. 16
16·014 D.C.. . . . . . . . . . . . . . . . . . ..... 17·021, 17-061, 17·078
George & Taylor & Co. Ltd. v. G. Percy Trentham Ltd. (1980) 16 BLR 15 . . 13·059
Gibbon v. Pease [1905] 1 K.B. 810; [1904-7) All E.R. Rep. 454; 74 LJ.K.B. 502; 92
2-258
L.T. 433; 53 W.R. 417; 69 J.P. 209; 3 L.G.R. 461; 21 T.L.R. 365; 49 S.J. 382,
C.A.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1·205, 2·272
1·112
Gibraltar (Government of) v. Kenney [1956] 2 Q.B. 410; [1956] 3 W.L.R. 466; 100
S.J. 551; [1956] 3 All E.R. 22. . . . . . . . 18·007
Gibson v. Manchester City Council [1979] 1 W.L.R. 294; [1979] 1 All E.R 972;
(1979) 123 SJ. 201; (1979) 77 L.G.R. 405; [1979] J.P.L. 532, H.L.; reversing
[1978] 1 W.L.R. 520; [1978] 2 All E.R. 583; (1978) 122 S.J. 80; (1978) 76
L.G.R. 365; [1978] J.P.L. 246, C.A.. . . . . . . 1·022, 1·028
4·118 Gilbert & Partners (A Finn) v. Knight. See Gilbert & Partners v. Knight
Gilbert & Partners v. Knight (1968) 112 S.J. 155; sub nom. Gilbert & Partners (A
Firm) v. Knight [1968] 2 All E.R. 248, C.A....... 1·064, 1·271, 2·237, 2·284, 7·086
:Z.063 Gilbert-Ash (Northern) v. Modem Engineering (Bristol) [1974] A.C. 689; [1973] 3
W.L.R. 421; 117 S.J. 745; (1973] 3 All E.R. 195; 72 L.G.R. 1, H.L.; reversing
1·291 subnom. Modern Engineering (Bristol) v. Gilbert-Ash (Northern) (1973) 71
4·221 LG.R. 162, C.A................ 4·222, 5·011, 5·014, 5·015, 6·004, 6·005, (5·006,
6·009, 6·031, 6·043, 6·045, 6·054, 6·058, 6·059, 6-083, 6·089, 6·093, 6·095,
:Z.206 6·190, 6·193, 6·195, 6·197, 6-198, 6·200, 6·203, 8·106, 8·107, 10·014, 12·055,
4,093 13·117, 14·066, 16·003, 17·016, 17·029, 18·041, 18·055
Gilbert Blasting & Dredging Co. v. R (1901) 7 Can. Ex. R. 221; 33 S.C.R. 21 . . . 7·045
12·077 Gillespie Brothers & Co. v. Bowles (Roy) Transport; Rennie Hogg (Third Party)
[1973] 1 Q.B. 400; [1972] 3 W.L.R. 1003; 116 S.J. 861; [1973] 1 All E.R. 193;
[1973] 1 Lloyd's Rep.10; [1973] R.T.R. 95, C.A.; reversing [1972) R.T.R. 65;
4-250 [1971] 2 Lloyd's Rep. 521. .................... 15·041, 15.o43, 15·044, 15·059
Gillespie & Co. v. Howden & Co. (1885) 22 Sc. L.R. 527 . . . . . . . . . . . . . 4-112
Gillett v. Thornton (1875) L.R. 19 Eq. 599; 44 L.J.Ch. 398; 23 W.R. 437. . 18·025, 18-026
Glanzer v. Shepard (1931) N.Y. 236 . . . . . . 1·281
12·072 Glasgow & South Western Railway v. Boyd & Forrest [1915] A.C. 526; 84 L.J. P.C.
157. . . . . . . . ......... 1·147, 3·077
Gleeson (M.J.) (Contractors) Ltd. v. Hillingdon Borough Council (1970) 215 E.G.
165. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1·228, 10·061
Gleeson (M.V.) (Contractors) Ltd. v. Sleaford Urban District Council (1953)
(Unrep.). . . . . . . . . . . . . . . . . . . . . . . . . . . . 8·021, 8·048
Glenn v. Leith (1853) I.C.L.R. 569; 21 L.T.(o.s.) 141. . . . . . . . . . . . . . . . . . 6-037, 6·043
Glenlion Construction v. Guiness Trust (1988) 39 BLR 89; (1988) 11 Con. LR. 126;
(1988) 4 Const. L.J. . . . . . . . . . . . . . . . . . . . . . . . 9-041
Gloucestershire County Council v. Richardson. See Gloucestershire County Coun-
cil v. Richardson (Trading as W.J. Richardson & Son).
--v. Richardson (Trading as W.J. Richardson&Son) [1969] 1 A.C. 480; [1968] 3
W.L.R. 645;sub nom. Glo'ucestershire County Council v. Richardson [1968]
ZAil E.R. 1181; 112 S.J. 759; 67 L.G.R. 15; [31 M.L.R. 221), H.L.; affirming
[1967]3 All E.R. 458, C.A.. . . . . . . . . . . . . . . . . . . . . 1·231, 2·145, 2·170, 4·068,
4·071, 4·073, 4·074, 4·079, 4·086, 4· 118, 4-122,
4·124, 4·125, 4·185, 4·189, 5·033, 5·036, 5·038,
7·007, 7·027, 7·031, 12·005, 12·019, 12·020, 13·008, 13·063
 !xx TABLE OF CASES
TABLE OF CASES lxxi
Glow Heating v. Eastern Health Board (1988) 6 I.L.T. 237. . . . . . 13·125, 13·127, 13·130,
Greater Nottingham Co-operative Society v. Cementation Piling and Foundations
W ~~
ynnM
v. argetson & Co. [1893] A-C?· 351; 62L.J.Q.B. 466; 69 L. T. l; 9T.L.R. 437; l [1989] Q.B. 71, C.A.; [1988] 3 W.L.R. 396; (1988) 132 S.J. 754; [1988] 2 All
fsp. M.L.C. 366; H.L., affirm mg sub nom. Margetson v. Glynn [1892] 1 Q.B. E.R. 971; (1988) 41 BLR 43; (1988) 4 Const. L.J. 216; (1988) 138 New L.J.
7 112; C.A.; reversing [1985] C.I.L.L. 160. . . . . . . . . . 13·043, 13·045, 13-058, 13·059
GoddarJ ~- ·o·Brie~· (1882). 9Q.B.D .. i1; 46 "i:T.' 30 30 W.R. ·549: D~ ·c~ y·
6:
11 1 225
1 a~;; , · Greaves & Co. Contractors Ltd. v. Baynham Meikle & Partners [1975] 1 W.L.R.
County Court Cases 110 D c ' ' 1095; [1975] 3 All E.R. 99; 119 S.J. 372; [1975] 2 Lloyd's Rep. 325, C.A.;
Goetz, Re, ex parte The Truste; [1898] i ·o.B: 787 . . . l ·075 affirming [1974] 1 W.L.R. 1261; [1974] 3 All E.R. 666; 118 S.J. 595; [1975] 1
Gold v. Pa~man & Fotheri~gham [1958] 1 W.L.R. 69·7; i02"S.i. 470; [i9s8j 2Ai1 E.R:
I ·ZOO Lloyd's Rep. 31. . . . . . . . . . . . . . . . 1·182, 2·092, 2·102, 2·104, 2·105, 3·026, 3·028
497, [1958] 1 Lloyds Rep. 587; C.A.; reversing [1957] 2 Lloyd's Rep. 319. . . 1·228, Green v. Sevin (1879) 13 Ch.D. 589; 49 L.J.Ch. 166; 41 L.T. 724 . . . . . . . . . . . . 9·022

Goldwasser v. U.S. 325 F. 2nd 722 (1963) . . . . . . . . . _ . . . . . . . . . . 15·0l4, ~I~f' - v . Fibreglass Ltd. [1958] 2 Q.B. 245; [1958] 3 W.L.R. 71; [1958] 2 AllE.R. 521;
102 S.J. 472. . . . . . . . . . . . . . . . . . . . . . 1·333, 1·387
goo~~Jn v. Layborn (1881) Roscoe, Dig. ofB.C. (4th ed.) p. 162....... .'.'6··i62 6·15~ Green (R.H.) &SilleyWeir v. British Railways Board [1985] 1 AIIE.R. 237; (1980)
oo n ge Holder v. Wyong Shire Council (1985) (SC of NSW) ' 17Build.L.R.94. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4·289,4·290
July 24 1985 · · · · ·
Goodwin v. st'ephens~~ ~~ci w;tt [19671.i N·s· wR. 6i1' . 1·351 Greene v. West Cheshire Railway (1871) L.R.13 Eq. 44; 25 L.T. 409;41 L.J.Ch.17
Greenhalgh v. British Railways Board [1969] 2 Q.B. 286; [1969] 2 W.L.R. 892; [1969]
4-302
Good~ & So~s v. Fawcett (1965) 175 E.G. ·27 .' . : ... : . . . . . . . . . . . 18: 119
Goodwms, Jardine & Co. v. Brand (1905) 7 F. (Ct. of Sess.) 995 . .... : : : . ij.i(}O
Goody~~; v. Weymouth Corporation (1865) 35 L.J.C.P. 12; H. & R. 67; 148 RR. '
43
035
i~.o 2 All E.R. 114; 113 S.J.108, C.A.
Greenhill v. Isle of Wight Railway (1871) 23 L.T. 885; 19 W.R. 345 ...... .
1·336
4-298
Greenock Corporation v. Caledonian Railway [1917] A.C. 556; 86 L.J.C.P. 185; 117
&' 2
Goold v. Ev·a~~ C~.'ri951J 'T.L.'R. '1i89· ·c 1·
047
, 6·048, 6·049, 6·050, 6-134, 7·065, 7·099 L.T. 483; 81 J.P. 269; 33 T.L.R. 531; 62 S.J. 8; 15 L.G.R. 749 ..... .
Gregg v. Bromley [1912] 2 K.B. 474 . . . . . . . . . . . . . . . . . . . . . . . . . . .
Goolden v. Anstee (1868) 18 L. T. 898 . . ' · · · · · · · · · · · · · · · · · · · · · · · · 18·133
Greswolde-Williams v. Barneby (1900) 83 L.T. 708; 49 W.R. 203; 17 T.L.R. 110.
Gordon v. Miller (1838) 1 Ct. of Sess. cas.' (·2~d ·s~~.) D. 832. ·. ·. ·. ·. . . . . . .
2·1981:~~
Griffin, Re [1899] 1 Ch. 408; 68 L.J.Ch. 220; 79 L,T. 442; 15 T.L.R. 78;
Gordon Durham & Co. v. Hayden Young (1990) 52 BLR 61; [i991J '
43 S.J. 96 14·058
S'A ·
Gorfin~?;.~·:~:~ri; i954· ( 1)
Goss v.~:.nJ1~ (1842) 3M. & G: 825;4S~ttN.R.47i; i2L."/C.P: i13; j JJ;.
0
:i;~~
· · · · · · · · · · · · · · · · · · · · · · 13·047, 13·048, 13-050
88 30 5
• 6-0 l
Grills (J.R.) Ltd. v. Dellios (1988) V.R. 136
Grinaker Construction (Transvaal) (Proprietary) v. Transvaal Provincial
Administration (1982) 20 Build L.R. 30, Supreme Ct. of South Africa;
11·031

Government ofC.e)'io~·~. Cb~~dn~. s~; C~Y1~~

'cGo~~~m~.;t ~f)· ~. cha~d~;
Government of Gibraltar v. K_enney. See Gibraltar (Government of) v. Kenne
11·014 1 S.A.L.R. 78. . . . . . . . ... 7·018, 8·003, 8·013, 8·037, 8·039
Grist v. Bailey [1967] Ch. 532; [1966] 3 W.L.R 618; [1966} 2 All E.R. 875; 110 S.J.
v.
Governors of Peabody Donation Fund Parkinson (Sir Lmdsay) & Co See
body Donation Fund v. Su Lindsay Parkinson ·
lea- 791; [30 Conv. 396] . . . . . . . . . . . . . . . .
Groom v. Crocker [1939] 1 K.B.194. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1·372, 2·083
1·105

Govindram Seksaria v. Edward Radbone (1947) L.R. 74 Ia. 295. 126 Grove v. Johnstone (1889)"24 L.R. Ir. 352 4·271
Grace v. Osler (1911) 19 W.L.R. 109, 326 (Canada) . . . . . . . . . . ·.. . . . . 4, 1·265, 4·240 Guild v. Conrad [1894] 2 Q.B. 885; 63 L.J.Q.B. 721; 71 L.T.140; 12 W.R. 642; 9 R.
Grafton v. Eastern Counties Ry. (1853) 8 Ex. 699 . 21 LT ( ) 4, ~5 o, 4 054 746; lOT.L.R.549 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17·017
91 R.R. 712 • · · o.s. 94, Gus Property Management Ltd. v. Littlewoods Mail Order Stores Ltd. 1982 S.L.T.
&
Graham v. Morris s~~s.[i974] Qd R
·1 · . . . . . . . . . . . . . . . . . . . . . . . . 6·025, 6·037
Graham & Baldwin v. Taylor, Son &D~vis '(i965) '109 S.J: 793.; i96 E:a.·3·os::: l~~2 533. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8·227, 14·032, 14-035
Gwyther v. Gaze (1875) (4th ed.) Vol. 2, p. 34. . . . . . . . . . . . . . . . . . . . . . 2·069, 2·283

Graham Roberts Ltd. v. Maurbeth Ltd. [1974J 1 N.S.W.L.R. 93. . . . . . . . . . 4·145 f32tf
Grainger v. Raybould (1840) 9 C. & P. 229 12·001,'12-09.J H. & S. Alexander v. Housing Commission of Victoria [1985] 4 A.C.L.R. 85. . . . . 1,052,
8 087
Gran Gelato Ltd. v. Richcliff (Group) Ltd: [1992f Ch.' 560; [19921· 2W.L:R.'
867; · 8·220, 8·221
[1992] 1 All E.R. 865; [1992] 1 E.G.L.R. 297; [1991] E.G.C.S.136; (1992) 142 Hackney Borough Council v. Dove [1922] 1 K.B. 431; 91 L.J.K.B. 109; 126 L.T. 375;
New L.J. 51; The Independent, December 18, 1991; The Times, December 19 86 J.P. 45; 38 T.L.R. 93; 20 L.G.R. 88 . . . . . . . . . . . . . . . . .
1991 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . • Hadley v. Baxendale (1854) 9 Ex. 341; 23 L.J.Ex. 179; 18Jur.(o.s.) 358; 23 L.T.( o.s.)
1·289
Grant (John) & Sons Ltd. v. Trocadero (1938) 60 C.L.R. 1. . ... 6·062, 6·068, 18·037, 69; 2 C.L.R. 517; 2 W.R. 302; 96 RR. 742 ....... 8·089, 8·093, 8·095, 8·096, 8·109,
18·038, 18·041 8·113, 8·123, 8·156, 8·162, 8·163, 8·164, 8·179, 8·199, 8·215
Grant Plant Hir~ v. Trickey (1961) 105 S.J. 255 ........ . --v. Droitwich Construction Co.; Pugsley (Joseph) & Sons (Third Party) [1968] 1
Gravely v. Providence Partnerships 549 F. (2d) 958 (1977) . 14-068
2·088 W.L.R. 37; 111 SJ. 849; (1967) 3 K.I.R. 578; sub nom. Hadley v. Droitwich
Graves v. Cohen (1930) 46 T.L.R. 121 . Construction Co.; (Pugsley (Joseph) & Sons, Third Party) [1967] 3 All E.R.
Gray v. Barr, Prudential Assurance Co. (Titi~d P~~tyj [197i ii (i.B.' j54; [l97i Ji
2·056
911,C.A.... 15·043
W.L.R. 133~; 115 S.J. 364; [1971] 2 All E.R. 949· [1971] 2 Lloyd's Re 1 Hagop Ardahalian v. Unifert International S.A.; Elissar, The [1984] 2 Lloyd's Rep.
C.A.; affirmmg [1970] 2 Q.B. 626; [1970] 3 W.L.R. '108; [1970] 2 All E R ~{)2'. 84, C.A.; affirming [1984] 1 Lloyd's Rep. 206; (1983) 133 New L.J. 1103. . . 18·138,
sub nom_. Gray v. Barr (1970) 114 S.J. 413; sub nom. Gray & Gra ~. Barr' 18·140, 18·142, 18·145, 18·149
Prudential Assurance Co. (Third Party) [1970] 2 Lloyd's Rep. 69 y ' 12·043 Halbot v. Lens [1901] 1 Ch. 344; 70 L.J.Ch. 125; 83 L.T. 702; 49 W.R. 214 . . . . . . 2·080
Gray (T.P.) v. Bennett & Son (1987) 43 BLR 63; 13 Con. L.R. 22..... : .': .' i.30o, 2·195, Halifax Overseas Freighters v. Rasno Export; Technoprominport; and Polskie
Linie Oceaniczne P.P.W. The Pine Hill [1958] 2 Lloyd's Rep. 146 18·111
Great Lake Dredge & Dock Co. v. City of Chicago 288 N.E. (2d) 1 (1972) ::~~
5 Hall v. Burke (1886) 3 T.L.R. 165 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4·080
Grea~N~~hi!~ ~~. ~: Wiih.~(1873).L.R. 9·c.P."i6;43 L:/C.P: i;· i2 8 ' 201 --v. Wembley Electrical Appliances [1947] 2 All E.R. 630 . . . . . . . . . . . . . . 1·255
29·L.r·47·1: --v. Wright (1859) E.B. & E. 746, 765;6Jur.193;29L.J.Q.B. 43; 8 W.R.160; 113
Greate~~:;~ c~~~cil·v: Cie~~ia~d Eirid&~ ~~d
E~gin~~;i~g C~.' ci986) ·3~ Bu'.ili
3 073
• R.R. 861, 874 . . . .
Hall & Tawse Construction v. Strathclyde·Regional Council (1990) S.L.T. 774 . . 8·098
14·071
L.~. 50, (1987) 8 Con. L.R. 30 C.A.; affirming [1984] C.I.L.L. 106; (1984-}.34
Budd. L.R. 50. · · · · · · · . . . 9·005, 9,037, 9·039 Halliday v. Hamilton's (Duke) Trustees (1903) 5 F. (Ct. of Sess.) 800...... 6·103, 6,136,
6·137
 lxxii TABLE OF CASES
r TABLE OF CASES
Hambro Life Assurance pie v. White, Young & Partners (1987) 38 Build. L.R. 16;
(1988) 4 Const. L.J. 48; (1987) 284 E.G. 227, C.A.; affirming (1987) 8 Con.
L.R. 130; (1986) 33 Build. L.R. 119; {1985] 2 E.G.LR. 165; (1985) 275 E.G.
1127; (1985) 1 Const. L.J. 287; [1985] C.I.L.L. 189, C.A . . . . . . 1·350
Hampton v. Glamorgan County Council [1917] A.C.13; 86 L.J.K.B.106; 115 L.T.
726; 81 J.P. 41; 15 L.G.R. 1; 33 T.L.R. 58, H.L....... 1·220, 13·009, 13-016, 13·017,
13·032, 13·035, 13·036, 13·037, 13-039, 13·088, 13·089, 13·092, 13·110
Hampshire v. Wickens {1878) 7 Ch.D. 555; 47 L.J.Ch. 243; 38 L.T. 408; 26 W.R.
491 .. 1·044
Hanak v. Green [1958] 2 Q.B. 9; [1958] 2 W.L.R. 755; 102 S.J. 329; [1958] 2AHE.R.
141; C.A.. . . . . . . . . . . . . . . ....... 8·118, 14·049
Hancock v. Brazier (B.W.) (Anerley) Ltd. [1966] 1 W.L.R. 1317; [1966] 2 All E.R.
901; C.A.; affirming 110 S.J. 368; [1966] 2 All E.R. 1. . . . 1·182, 1·191, 3·028, 4·071,
4·072, 4·075, 4·078, 4·097, 4· 105, 4· 118, 4·120, 5·052, 5·054, 5,056, 6·056,
6·082, 8·113
Hansen and Yuncken v. Chadmix Plastics [1985] B.C.L.R. 52, Australia . 7·084
Hanson (W.) (Harrow) v. Rapid Civil Engineering and Usborne Developments
(1987) 38 Build. L.R. 106; (1988) 11 Con. L.R. 119. . . . . . . 11·010, 11·026, 11·031,
11·044, 11·054, 11·057, 11·058
Harbottle (RD.) (Merchantile) Ltd. v. National Westminster Bank [1978] Q.B.
146; [1977] 3 W.L.R. 752; [1977] 121 S.J. 745; [1977] 2 All E.R. 862. 17·067
Harbour Assurance Co. (U.K.) v. Kansa General International Insurance Co. Ltd.
(1993] Q.B. 701. . . . ......... 18·007, 18·008, 18·009, 18·010, 18·098, 18·099
Harburg India Rubber Comb Co. v. Martin [1902} 1 K.B. 778; 71 L.J.K.B. 529; 86
L.T. 505; 50 W.R. 449; 18 T.L.R. 428
17·017
Harbutt's "Plasticine" Ltd. v. Wayne Tank and Pump Co. Ltd. [1970) 1 Q.B. 447;
[1970] 2 W.L.R.198; [1970] 1 All E.R. 225; 114S.J. 29; [1970} 1 Lloyd's Rep.
15; [33 M.L.R. 441; 86 L.Q.R. 513], C.A..... 1·231, 5·061, 8·128, 8·130, 8·144, 8·181
Hardeman (Paul) v. Arkansas Power 380 F. Supp. 298 (1974) . . . . . . . . . 1·197
Hardwick Game Farm .v. Suffolk Agricultural and Poultry Producers' Association;
Lillico (William) (First Third Party); Grimsdale & Sons·(Second Third
Party); Kendall (Henry) and Sons (First Fourth Party); Holland-Colombo
Trading Society (Second Fourth Party). See Kendall (Henry) & Sons (A
Firm) v. Llllico (William) & Sons
Hardy v. Wannsley-Lewis (1967) 203 E.G. 1039 .. 2·207
Hargreaves Transport v. Lynch [1969] 1 W.L.R. 215; 112 S.J. 54; [1969] 1 All E.R.
455; 20 P. & C.R. 143, C.A. . . . . . 3·060
Harman v. Scott (1874) 2 Johnst. N.Z. Rep. 407. . . . . .... 6·162, 6·163
Harmer v. Cornelius (1858) 5 C.B.(N.s.) 236;28 L.J.C.P. 85;4Jur. 1110; 31 L.T.( o.s.)
102, 236; 6 W.R. 749; 116 R.R. 654 ... 4·124
Harper Davidson v. Keywest Building Ltd. (1988) 7 A.C.L.R. 54 ... 18·178
Harrington v. Victoria Graving Dock Co. (1878) 3 Q.B.D. 549; 47 LJ.Q.B. 594; 39
L.T. 120; 26 W.R. 740 ........ . 2,234
Harris v. Demolition Contractors [1979] 2 N.Z.L.R. 166 ....... . 1·350
- v . Nickerson (1873) L.R. 8 Q.B. 286,42 LJ.Q.B.171;28 L.T. 410; 21 W.R. 635
37 J.P. 536 1·020
- v. Wyre Forest District Council [1990] 1 A.C. 831. See Smith v. Eric S. Bush;
Harris v. Wyre Forest District Council . . . . . . . . . . . . . . 1·241
Harris (J.W.) & Sons v. Demolition & Roading Contractors (N.Z.) [1979) 2
N.Z.L.R. 166, N.Z. Sup. Ct. . . . . . . . . . . . . . . . . . 1·373
Harris Corporation v. National Iranian Radio 691 F. 2d.1344, 1982, U.S. C.A. llth
Circuit. . . . . . . . . . . . . . . ........ 17·069, 17·071
Harrison, Re, ex parte Jay. See Jay, ex parte, re Harrison
~-v. Seymour (1866) L.R. 1 C.P. 318; Har & Ruth 567; 35 L.J.C.P. 264....... 17·042,
17-051
- v. Thompson (1989] 1 W.L.R. 1325; (1989) 133 S.J. 1345; [1989) L.S.Gaz.
November 22, 41. . . . . . . . . .... 18·181, 18·191
Harrison (M.) & Co. (Leeds) Ltd. v. Leeds City Council (1980) 14 Build. L.R. 118,
C.A.................... 13·0n
Harrison (W.F.) & Co. Ltd. v. Burke [1956] 1 W.L.R. 419; lOOS.J. 300; [1956] 2 All
E.R. 169 ..... T ., • 14·016
Hart v. Porthgain Harbour [1903] 1 Ch. 690; 72 L.J.Ch. 426; 88 L.T. 341; 51 W;R.
461....... . .......... 11·028, 11·029, 11·032, 11·035, 11·041
lxxiii
Hartley v. Hymans [1920] 3 K.B. 475; 90 LJ.K.B. 14; 124 L.T. 31; 36 T.L.R. 805; 25
Com. Cas. 365 . . . . . . . . . . . . . . . . . 9·022
- - v. Mayoh & Co. and the N.W. Electricity Board [1954] 1 Q.B. 383; [1954] 1
W.L.R. 355; [1954] 1 All E.R. 375; 118 J.P. 178; 98 S.J. 107; 52 L.G.R. 165;
[217 L.T. 164; 70 L.Q.R. 154], C.A.; affirming in part and reversing in part
[1953] 2 AllE.R. 525; 117 J.P. 369; [17 conv. 306]; [1953} C.L.Y. 2422 . . . . 1·308,
1·315
Harvey v. Facey [1893] A.C. 552; 62 L.J.P.C. 127; 1 R. 428; 69 L.T. 504; 42 W.R.
129 1·022
--v. Lawrence (1867) 15 L.T. 571. . . . . . . . . . . . . . . . . . . 6·047, 6·052, 6·058, 11·064
--v. Shelton (1844) 7 Beav. 455 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18·137
Hatrick (A.C.) (N.Z.) v. Nelson Carlton Construction Co. (In Liquidation) [1964]
N.Z.LR. 72 ...... , . . . . . . . . . . . . . . . 6·067, 6·123, 6·134, 6·142, 6·224, 6·228
Hattersley v. Hatton (1862) 3 F. & F. 116 . 18·026
Hauman v. Nortje [1914) A.D. 293 . . . . . . . . 4·019
Hawkins v. Burrell (1902) N.Y. 69 App. Div. 462 6·207
- v. Clayton (1988) 164 C.L.R. 539........ . .... 2·083, 2·108, 8·110
Hawkins (George) v. Chrysler (U.K.) and Burne Associates (A Finn) (1986) 38
Build. L.R. 36, C.A................... 1·182, 2·092, 2·093, 2,104, 2·105, 3·029
Hawthorn v. Newcastle~upon-Tyne & North Shields Railway (1840) 3 Q.B. 734 n.; 2
Rail Cas. 288; 9 L.J.Q.B. 385; 61 R.R. 381 n ........ 4·216, 11·022, 11·037, 11·049,
11·059, 11·060
Hayes v. Dodd (James & Charles) (A Finn) [1990] 2 All E.R. 815, C.A.. . . . 2·210, 8·160
Hayes, Trustee of Preload Co. of Canada v. City of Regina (1959) 20 D.L.R. (2d)
586... . ......... 4·089, 17·029, 17·035, 17·050
Head v. Head [1894] 2 Ch. 236; 63 L.J.Ch..549; 70 L.T. 608; 42 W.R. 419. . . . . . . 14·023
Heaven and Kesterton v. Sven Widaeus A/B [1958] 1 W.L.R. 248; 102 S.J. 161;
[1958] 1 All E.R. 420; [1958] 1 Lloyd's Rep. 101. . . . . . . . . . . . . . . 18·178, 18·192
Hedley Byrne & Co. Ltd. v. Heller & Partners Ltd. [1964] A.C. 465; [1963] 3 W.L.R.
101; [1963] 2 All E.R. 575; 107 S.J. 454; [1963] 1 Lloyd's Rep. 485. . . . . . 1·027,
1·128, 1·130, 1·132, 1·134, 1·135, 1·137, 1·142, 1·154, 1·157,
1·158, 1 ·159, 1·167, 1·178, 1·274, 1 ·275, 1·277, 1·278, 1 ·279,
1·280, i:281, 1·282, 1·285, 1·286, 1·287, 1·288, 1·291, 1·292,
1·292A, 1·293, 1·294, 1·295, 1 ·296, 1·296A, 1·296B, 1·297, 1·299,
1·302, 1·306, 1·307, 1·309, 1·319, 1·323, 1·326, 1·346, 1·354,
1·356, 1 ·358, 1·360, 1·366, 1·369, 1·372, 1·373, 1·374, 1·375,
1·378, 1 ·379, 2·073, 2·076, 2·083, 2·084, 2·092, 2· 106, 2· 110,
2·120, 2·159, 2·166, 2·212, 2·221, 2·232, 3·078, 4·045, 4·129,
4·131, 4·142, 4·143, 4·284, 4·287, 6·110, 6-228, 8·223, 13-021,
13·042, 13·044, 13·045, 13·110, 18·007, 18·047, 18·071
Hedlin (J.D.) Construction v. U.S. 347 F. (2d) 235 (1965) .......... 4·061, 7-088, 8·196
Heffer v. Martyn (1867) 36 L.J.Ch. 372; 15 W.R. 390 . . . . . 3·080
Heilbut, Symons& Co. v. Buckleton [1913] A.C. 30; [1911-13] AllE.R. Rep. 83; 82
L.J.K.B. 245; 107 L.T. 769; 20 Mans. 54, H.L.......... 1 ·142, 1·154, 1·167, 1·211,
1 ·212, 1·213, 13·021
Helena Curtis Industries v. U.S. 312 F. (2d) 774 (1963). . . . . . . . . . . . . . . . 1·150, 4·203
Helfand v. Royal Canadian Art Pottery (1969) 8 D.L.R. (3d) 125 . . . . . . . . . . . 15-056
Helicopter Sales (Australia) Pty. v. Rotor-Work Pty. (1974) 48 A.L.J.R. 390,
Australia High Ct. . . . . 4-123
He ls tan Securities v. Hertfordshire County Council [1978] 3 All E.R. 262,sub nom.
Hestan Securities v. Hertfordshire County Council (1978) 76 L.G.R. 735
Hemming v. Hale (1859) 7 C.B.(N.s.) 487; 29 L.J.C.P. 137; 6 Jur.(N.s.) 554; 8 W.R.
116 ................ 2·185
Henderson v. Henderson (1843) 3 Hare 100; [1843-60] All E.R. Rep. 378; 1
L.T.(o.s.) 410; 67 E.R. 313. . . . . . . . . . . . . . . . . . 1·251, 1·252
- - v. McDonald Swimming Pools Ltd. 1972 S.L.T. 37, Sh.Ct. 1·078
--v. Massey (Raymond) Builders (Schiesser, Third Party) (1963)43 D.L.R. (2d)
45..... 4·105
Hendy Lennox (Industrial Engines) v. Grahame Puttick (1984] 1 W.L.R. 485;
(1984) 128 SJ. 220; [1984] 2 All E.R.152; [1984] 2Lloyd's Rep. 422; (1984) 81
L.S.Gaz. 585. . . . . . . . . . . . . . . . . . . . . . . . . . 11·005, 11·058
Hennegan v. United States (1883) 17 Ct. of Cl. 273; U.S. Dig. (1883), p. 159 J.2.069
Henthorn v. Fraser [1892] 2 Ch. 27; 61 L.J.Ch. 373; 66L.T. 439;40 W.R. 433; 8T.L.R.
459; 36 S.J. 380; [1891-4] All E.R. Rep. 908 . . . 1·040
Hepburn v. Leather (1884) 50 L.T. 660 4·300
 lxxiv TABLE OF CASES
Herkules Piling v. Tilbury Construction, (1992) 61 BLR 107; The Times,September
21, 1992 . . . . . . . . . . . . . . . . ......... ............ 14·039
Hermcrest v. G. Percy Trentham 53 BLR 104; 25 Con. LR. 78, C.A.; affirming 24
Con. L.R.117.. ................ 6·199
Hersent Offshore S.A. v. Burmah Oil Tankers (1978) 10 Build. L.R. 1; [1978] 2
Lloyd's Rep. 565, D.C.. . . . . . . . . . . . . . . . . 4-134, 7·053
Heyman v. Darwins. [1942] A.C. 356; [1942] 1 All E.R. 337; 111 L.J.K.B. 241; 166
L.T. 306; 58 T.L.R. 169..... 1·143, 1·349, 1·354, 1·355, 1·356, 4·227, 12·008, 12·059,
18·007, 18·008, 18·041, 18·096, 18·098, 18·103, 18·108, 18·118, 18·119, 18·125
Heyman Construction v. Algrephy February 1966, (Unrep.) . . . . . . . 12·078
Heys v. Tindall (1861) 1 B. & S. 296; 30 L.J.Q.B. 362; 2F. & F. 444; 4 L.T. 403; 9 W.R.
664; 124 R.R. 564 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2·165
Heywood v. Wellers (A Firm) [1976] Q.B. 446; [1976] 2 W.L.R. 101; (1975) 120 S.J.
9; [1976] 1 All E.R. 300; [1976] 2 Lloyd's Rep. 88, C.A ................. 8·160
Hick v. Raymond [1893] A.C. 22; 62 L.J.Q.B. 98; 68 L.T.175; 41 W.R. 384; 7 Asp.
M.C. 233. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9·024, 9·025, 9·029, 9·030, 9·035
Hickman v. Kent & Romney Marsh Sheepbreeders' Association [1915] 1 Ch. 881;
84 L.J.Ch. 688; 113 L.T. 159; 59 S.J. 478 . . . . . . . . . . . . . . . . . . . . . . . . 18·025
Hickman & Co. v. Roberts [1913] A.C. 229; 821..J.K.B. 678; 108 L.T. 436 n.; sub
nom. Roberts v. Hickman & Co. (1896) (4th ed.) Vol. 2, p. 426 ...... 6·096, 6·113,
6·123, 6-130, 6·131, 6·142, 6·143, 6-144, 6·221, 6·228, 18·067
Higgs & Hill Building v. Campbell (Denis) [1983] Com. L.R. 34; (1982) 28 Build.
LR.47,D.C.. . . . . . . . . . . . . . . . . 18·006,18·117,18·155
High Mark (M) SdnBhd v. PatcoMalaysiaSdnBhd (1984) 28 Build.L.R.129,High
Ct. of Malaya . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2·281
Hill v. Berkley (1811) 18 Ves. Jun. 56 . . . . . . . 12·022
--v. South Staffordshire Railway Co. (1865) 110 12 L.T. Rep. 63 Chancery Ct. of
Appeal. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7·063, 7·076, 7·077
Hill and Hill v. Waxberg (A.E.) (1956) 2 Build. L.R. 107, U.S.C.A.. . . 1·265, 1 ·266, 3·076
Hill (Edwin) & Partners v. Leakcliffe Properties (1984) 272E.G. 63, 179; (1984) 134
New L.J. 788; (1984) 29 Build. L.R. 43, D.C .................... 2·049, 2·262
Hill (J.M.) & Sons v. London Borough of Camden, 18 Build. L.R. 31, C.A.. . . . . . 4·222,
12·004, 12-040, 12·041, 12·043, 12-058
Hill (William) Organisation v. Sunley & Sons (1983) 22 Build. L.R. 1 C.A ........ 1·300,
1·326, 2·195, 4·295, 13·043
Hillas & Co. Ltd. v. Arcos Ltd. (1932) 147 L.T. 503; [1932] All E.R. Rep. 494; 38
Com. Cas. 23,H.L.. 1·043, 1·046
Hills v. Sughrue (1846) 15 M. & W. 253; 71 R.R. 651. . . . . . . . . . . . . . . . . . 4·233, 4·245
Hipkins v. Jack Cotton Partnership [1989] 45 E.G. 163. . . . . . 2·210
Hippisley v. Knee Brothers [1905] 1 K.B. 1; 74 L.J.K.B. 68; 92 L.T. 20;
21 T.L.R. 5. ........... ........... . ...... 2·285, 13.093
Hirji Mulji v. Cheong Yue Steamship Co. Ltd. [1926] A.C. 497 4·236
Hirst v. Picture Theatres Ltd. [1915] 1 K.B. 1 C.A. . . . . . . . . . . . . . . 12·089
Hirt v. Hahn (1876) 61 Mo. (20 Post) 496; U.S. Dig. (1876), p. 131 . . . . . . . . . . 8·124
Hiscox v. Outhwaite (No. 1) [1992] 1 A.C. 562; [1991] 3 W.L.R. 297; (1991] 3 All
E.R. 641; [1991] 2 Lloyd's Rep. 435; The Times, July 29, 1991; Financial
Times, July 31, 1991, The lndependent,July 31, 1991, H.L.; affirming [1991] 2
W.L.R. 1321 [1991] 3 All E.R.124; [1991] 2 Lloyd's Rep 1; The Times, March
19, 1991, C.A.; affirming The Times, March 7, 1991; The Independent, March
12, 1991; Financial Times, March 15, 1991. . . . . . . . . . . . . . . . . . . . . . . 18·171
Hitchins (Hatfield) v. Prudential Assurance Co. [1991] 2 Lloyd's Rep. 580; (1991)
Financial Times, April 17, 1991, C.A..... . . . . ..... 1·224, 15·033
Hoare & Co. v. McAlpine (1923] 1 Ch. 167; [1922] All E.R. Rep. 759; 92L.J.Ch. 81;
128 L.T. 526; 39 T.L.R. 97; 67 S.J. 146. . . . . . . 1·315, 1·338
Hobbs v. Turner (1902) 18 T.L.R. 235 . . . . . . . . . . 13·033, 13·035, 13·036, 13·039, 13·088,
13·072, 13·124
Hochester v. De la Tour (1853) 2 E. & B. 678; 17 Jur.(o.s.) 972; 22L.J.Q.B. 455; 95
R.R. 747 ......................... 4·206
Hoenig v. Isaacs [1952] 1 T.L.R. 1360; (1952] 2 AU E.R. 176; C.A.. . . . . . . . 4·012, 4·015,
4-017, 4·018, 4·019, 4·020, 4·021,
4·022, 4·030, 5·003, 8· 118
Hoffman v. Meyer 1956 (2) S.A. 752 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2·218
Hohenzollern Actien-Gesellschaft fiir Locomotivbahn v. City of London Contract
Corporation (1886) (4th ed.) Vol. 2, p. 100; 54 L.T. 596; 2 T.L.R. 470, ., .... 6·009,
6·068, 6·091i 6·095;·6·153, 18·073
Holden v. Webber (1860) 29 Beav. 117; 131 R.R. 482. 2·235
TABLE OF CASES lxxv
Holden v. White (1982] Q.B. 679; [1982] 2 W.L.R. 1030; [1982] 2 All E.R. 328; (1982)
126 S.J. 230, C.A. . . . . . . . . . . . . . . ... 1·336
Holland Dredging (U.K.) v. The Dredging and Construction Co. and Imperial
Chemical Industries (Third Party) (1987) 37 Build. L.R. 1, C.A.. 7·019, 7·021,
7·034, 8·029
Holland Hannen & Cubitts (Northern) v. Welsh Health Technical Services
Organisation (1987) 7 Con. L.R. 1; (1987) 35 Build. L.R. 1; [1985] C.I.L.L.
217, C.A.. . .... 1·190, 2·104, 2-121, 2·155, 2·198, 2-200,
4,()95, 4· 108, 5·038, 7..035, 13·029
- - v. Yeovil Rural District Council (1964) (Unrep.) Q.B.D., Special Paper . . . 3-064
Holle bone v. Midhurst and Femhurst Builders and Eastman & White of Midhurst
[1968] 1 Lloyd's Rep. 38, (1968) 118 New L.J. 156...... 2·208, 8·108, 8·127, 8·130,
8·134, 8·140, 8·141, 8·143
Hollenbach v. U.S. 233 U.S. 165 (1914) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4·061
Hollier v. Rambler Motors (A.M.C.) [1972] 2 Q.B. 71; [1972] 2 W.L.R. 401; [1972] 1
All E.R. 399; (1971) 116 S.J. 158; [1972] R.T.R. 190, C.A. . . . . . . . . . . . . 1·202
Holman v.Johnson (1774) 1 Cowp.341............................. 4·277
Holme v. Brunskill (1877) 3 Q.B.D. 495; 47 L.J.C.P. 81; 47 L.J.Q.B. 610;
38 L.T. 838. . . . . . . . . . . . . . 17·013, 17·019, 17·034, 17·036, 17·039, 17·046, 17·053
- v . Guppy (1838) 3M. & W. 387; 1 Jur.(o.s.) 825; 49 R.R. 647. . . . . . . 9·008, 10·025,
10-027, 10·029, 10·031, 10·032, 10·035, 10·036, 10·040
Holroyd v. Marshall (1862) 10 H.L.C.191;33 L.J.Ch.193; 9 Jur.(N.s.) 213; 7 L.T. 172;
11 W.R. 171; 138 R.R. 108 . . . . . . . . . . . . . . 14·041
Holt, Re, ex parte Gray (1888) 58 L.J.Q.B. 5. . . . . . . . . . . 13·110, 13·121, 13·122, 13·123,
16..010, 16·054
--v. Heatherfield Trustil942] 2K.B.1; 111 L.J.K.B. 465; 166 L.T. 251;58T.LR.
274; 86 S.J. 174; [1942] 1 All E.R. 404 . . . . . . . . . . . . . . . . . . . . . . 14·016, 14·017
Home Office v. Dorset Yacht Co. Ltd. [1970] A.C. 1004; [1970] 2 W.L.R. 1140;
[1970] 2 All E.R. 294; (1970] 1 Lloyd's Rep. 453; (33 M.L.R. 691];sub nom.
Dorset Yacht Co. v. Home Office, 114 S.J. 375, H.L.; affirming sub nom.
Dorset Yacht Co. v. Home Office [1969J 2 Q.B. 412; [1969] 2 W.L.R. 1008;
[1969] Z All E.R. 546; 113 S.J. 227, C.A.; affirming 113 S.J. 57; [1968] C.L.Y.
2638 ....... . 1·279
Homeguard Products (N.Z.) Ltd. v. Kiwi Packaging Ltd. [1981] 2 N.Z.L.R. 322 .. 1·076
Honeywill and Stein v. Larkin [1934] 1 K.B. 91 . . . . . . . . . . . . . . . . . . . . . . . . 1·387
Hong Kong Teakwood Works Ltd. v. Shui On Construction Co. Ltd. [1984]
H.K.L.R. 235 . . . . . . . . . . . . . . . . 13·116
Hood v. Shaw (1960) 176 E.G.1291 . . . . . . . . 2·206
Hoole U.D.C. v. Fidelity and Deposit Co. of Maryland [1916] 2 K.B. 568 . . . . . . 17·053
Hooper Bailie v. President M.B.A. (1988) 8 A.C.L.R. 83. . 18·022, lS.077, 18· 136
Hopkins v. Thompson (1867) 3 L.C.L.J. 36, (Canada) . . . . . . . . . . . . . . . 2-251
Hopper, Re (1867) L.R. 2 Q.B. 367; 36 L.J.Q.B. 97; 8 B. & S. 180; 15 L.T. 66; 15 W.R.
443. . . . . . . . . . ....... 18·022, 18·066, 18·071, 18,128
Hornibrook (M.R.) (Pty.) v. Newham (Eric) (Walleraurang) Pty. (1971) 45
A.L.J.R 523, Australian High Ct.............. 1·111, 1•125, 1·259, 1·270, 3-061
Hortico (Australia) Pty. Ltd. v. Energy Equipment (Australia) Pty. Ltd. [1985] 1
N.S.W.L.R. 545.... . . . . . . . . . . . 17·055, 17,062, 17·075
Horton v. Tobin (1887) 20 Nov. Sc. R (8 R. & G.) 169; 8 C.L.T. 377 . . . . . . . . . 10·058
Hosier &Dickinson v. P.M. Kaye; Same v. Same [1970] 1 W.L.R.1611; [1971] 1 All
E.R. 301; 114 S.J. 929, C.A. . . . . . . . . . . . . . . . . . . . . . . . . . . 1·194, 1·220, 1·231
Hoskins v. Woodham [1938] 1 All E.R. 692 . . . . . . . . . . . . . . . . . . . . . . 4·105
Botham v. East India Co. (1787) 1 T.R. 638; 1 R.R.333 ...... 4·136, 6-096, 6·114, 6·115,
7·098
Hounslow London Borough Council v. Twickenham Garden Developments [1971]
Ch. 233; [1970] 3 W.L.R. 538; 114 S.J. 603; 69 L.G.R. 109;sub nom. London
Borough of Hounslow v. Twickenham Garden Developments [1970] 3 All
E.R. 326. . . . . . . . . . . . . . . . . 4·145, 4·305, 12·001, 12-036, 12·078. 12·084, 12-090,
12·092, 12·094, 12·096
Hovenden & Sons v. Millhoff (1900) 83 L.T. 41; 16 T.L.R. 506 . . . . . . . . . . . 2·233
Howard de Walden Estates v. Costain Management Design 55 B.L.R. 124; 26 Con.
LR. 141 . . . . . . . . . 7·029
Howard Marine and Dredging Co. Ltd. v. Ogden (A.) & Sons (Excavations) Ltd.
[1978] Q.B. 574; [1978] 2 W.L.R. 515; [1978] 2 All E.R. 1134; (1977) 122 S.J.
48; [1978] 1 Lloyd's Rep. 334; (1977) 9 Build. L.R. 34, C.A......... 1·034, 1·130,
1·132, 1·135, 1·136, 1·139, 1·154, 1·173,
1·174, 1·176, 1·212, 1·214, 1·242, 4·143

lxxvi
TABLE OF CASES
Howatson v. Webb (1908) 1 Ch. 7; 77 L.J.Ch. 32; 97 L.T. 730; 52 S.J. 11, C.A.; affirm-
ing [1907] 1 Ch. 537 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1·101
Howden v. Powell Duffryn Steam Coal Co., 1912 S.C. 920;49 Sc. L.R. 605 . . . . . . . 6·044,
6·045, 6·068, 6·091, 18·050, 18·052
Howe Richardson Scale Co. v. Polimex-CeKop [1978] 1 Lloyd's Rep. 161
C.A. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17,057, 17·060, 17·063
Howell v. Falmouth Boat Construction Co. [1951] A.C. 837; [1951] 2 T.L.R. 151; 95
S.J. 413; [1951] 2All E.R. 278;sub nom. Falmouth Boat Construction Co. v.
Howell [1951] 2 Lloyd's Ree. 45, H.L.; affirming sub nom. Falmouth Boat
Construction Co. v. Howell L1950] 2 K.B. 16;66 T.L.R. (Pt.1) 487; [1950] 1
All E.R. 538; 83 LLL.Rep. 320, C.A. . . . . . . . . . . . . . . . . . . . . . . . . . . 4·277
Hsin Chong Construction Co. v. Ya ton Realty Co. (1986) 40 B.L.R. 119; High Ct. of
Hong Kong. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8·080, 8·084, 16·018, 16'058
Hugall v. McLean (1884) 53 L.T. 94; 33 W.R. 588; 1 T.L.R. 445 . . . . . . . . . . . . . 5·051
Hughes v. Architects' Registration Council of the United Kingdom [1957] 2 Q.B.
550; [1957J 3 W.L.R. 119; 101 S.J. 517; [1957] 2 All E.R. 436, D.C......... 2·013,
2·014,2-015
--v. Lenny (1839) 5 M. & W. 183; 2Horn. &H.13; 8L.J.Ex.177. . . . . . . 2·270,2·271
--v. Metropolitan Railway (1877) 2 App. Cas. 439; [1874--80] All E.R. Rep. 187;
46 L.!-Q.B. 583; 36 L.T. 932; 25 W.R 680, H.L.. . . . . . . . . . . . 1·256, 1·258, 7·097
--v.PerCival(1883)8App.Cas.443 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1·389
--v. Pump House Hotel Co. [1902] 2 K.B.190; 71 L.J.K.B. 630; 86 LT. 794; 50
W.R. 660; 18 T.L.R. 654. . . . . . . . . . . . . . . . . . . . . -. . . . . . . . . . 14·013, 14-015
Hughes Brothers v. Telede Ltd. (1989) 8 A.C.L.R. 22............... 17·005, 17·075
Hulton v. Hulton [1917] 1 K.B. 813; [1916-17] All E.R. Rep. 595; 86 L.J.K.B. 633;
116 L.T. 551; 33 T.L.R. 197; 61 S.J. 268. . . . . . . . . . . . . . . . . . . . . . . . . 1·148
Humber Oil Terminals Trustees v. Harbour and General Works (Stevin) (1991) 7
Const. L.J. 333, C.A. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8·062, 8·067
- - v. Hersent Offshore (1982) 20 Build L.R. 16. . . . . . . . . . . . . . . . . . . . 4·134,
8·065
Humble v. Hunter (1848) 12 Q.B. 310; 17 L.J.Q.B. 350; 12 Jur. 1021; 76 R.R. 291 . 14·019
Humphreyv.Dale(1875)7Ex.B.66 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1·204
Hungerford v._Walker (1989) 63 A.L.J.R. 210 [1990] 171 C.L.R. 125, High Ct. of
Australia. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8·093, 8·095, 8·096, 8·097
Hunkin Conkey Construction v. U.S. (1972) 461 Fed. Rep. (2d) 1270 . . . . . . . . . 7.045
Hunt v. Bishop (1853) 8 Ex. 675; 22L.J.Ex. 337; 21 L.T.(o.s.) 92; 91 R.R. 689 . . . 4·197
--v. South Eastern Ry. (1875) 45 L.J.Q.B. 87. . . . . . 4·232, 4·243, 4·244
Hunter v. Bradford Property Trust Ltd. 1970 S.L.T. 173 . . . . . . . . . . . . . . . . . . 1·072
- - v. Fitzroy Robinson and Partners [1978] F.S.R. 167; (1977) 10 Build.
L.R. 84 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . , . 2·275, 2·276, 2-279
- - v. Hanley 1955 S.L.T. 213 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2·087
Hussey v. Eels [1990] 2 Q.B. 227; [1990] 2 W.L.R. 234; [1990J 1 AIIE.R. 449; [1990]
19 E.G. 77; (1990) 140 New L.J. 53, C.A . . . . . . . . . . . . . . . . . . S.154, 8·155, 8·227
Hutchinson v. Harris (1978) 10 Build. L.R. 19, C.A.. . . . . . . . . 2·116, 2·159, 4·017, 8·161
Hutton v. Warren (1836) 1 M. & W. 466; 5 L.J.Ex. 234; Tyr. & Cr. 646;2 Gale 71;46
R.R. 368 . . . . . . . . . . ........... ..... .. .. .... 1·204
Hyde v. Wrench (1840) 3 Beav. 334; 4 Jur. 1106; 49 E.R. 132. . . . . . . . . . . . 1·028, 1·029
Hydraulic Co. v. Spencer (1886) 2 T.L.R. 554 . . . . . . . . . . . . . . . . . . . . . . . . . 4·1i2
Hydraulic Engineering Co. v. McHaffie (1878) 4 Q.B.D. 670; 27 W.R. 221. .. 9·025, 9.028
Hydrocarbons Great Britain v. Cammell Laird Shipbuilders and Automotive
Products (t/a Ap Precision Hydraulics); Redman Broughton- Blackclawson
International 53 BLR 84, C.A.; reversing 25 Con. L.R. 131. : . . . . . 14·026, 14-036
Hyundai Heavy Industries Co. v. Papadopoulos [1980] 1 W.L.R. 1129; (1980) 124
S.J. 592 [1980] 2 All E.R. 29; [1980J 2 Lloyd's Rep. 1, H.L.; affirming [1979] 1
Lloyd's Rep. 130, C.A. . . . . . . . . . . . . . . . . . . . 4·007, 4·025, 4-228, 4·229, 12·022,
12·060, 17·011C, 17·014, 17·015
ICI pie. v. Bovis Construction (1992) 8 Const. L.J. 293. . . . . . . . . . . . . . . . . 8·207, 8·209
I.F. Contractors v. Lloyds Bank and Rafidain Bank [1990] 2 Lloyd's Rep. 496; 51
BLR 1; Financial Times,July 171990, C.A., reversing in part [1989] 2 Lloyd's
Rep. 205 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17·006, 17·056, 17·060, 17·066
IMI Cornelius (U.K.) Ltd. v.Bloor [1991J 57 BLR 108 . . . . . . . . . . . . . . . . , . .-, . 8·155
Ibmac Ltd. v. Marshall (Haines) 1968) 208 E.G. 851, C.A. . . . . 4·007,-"4·009, 4-4)13,
4·014, 4·019, 4·143
.·~
TABLE OF CASES lxxvii
Iezzi Constructions Ltd. v. Currumbin Crest Developments Ltd. (1994) 13
A.C.L.R. 39, Qd. C.A. . . . . . . . . . . . . . . . . . . . . . 12·005, 12·025, 12·083, 13·114
Imodco v. Wimpey Major Projects and Taylor Woodrow International 40 BLR 1,
C.A.. .......... .......... . ... 18·091, 18·167
Imperial Leatherware v. Macris Marcellino (1991) 22 N.S.W.L.R. 6538·211, 18·1598,
18·1590
Imperial Glass Ltd. v. Consolidated Supplies Ltd. (1960) 22 D.L.R. (2d) 759; [23
M.L.R. 691J, C.A. (Brit. Colum.) . . . . . . . . . . . . . _1·095, 1·097, 1·104, 1·108, 1·117
'i;, Independent Broadcasting Authority v. E.M.I. Electromcs and B.I.C.~. Con-
struction (1980) 14 Build. L.R. 1, H.L.; affirming (1978) 11 Budd. L.R.
29 CA.. . . . . . . . . . . . . . . . . . . . . 1·142, 1·154, 1·214, 1·287, 1·291, 1·292,
' . .... 2·092, 2·104, 2·105, 3·028, 4·073, 4·079, 4·080, 4·092, 4-094,
4·097, 4·098, 4· 108, 4·109, 4· 122, 13·008, 13·021, 13·029, 13·045
Industrial Overload Ltd. v. McWatters (1972) 24 D.L.R. (3d) 231, Saskatchewan
Q.B. . . . . . . . . . . . . . . . 4·255
Inforex v. U.S. 216 Ct. C. (1978) . . . . . . . . . . . . . . . . . . . . . . . · · · ... · · · · · 7·050
Institution of Civil Engineers v. IRC [1932] 1 K.B. 149; 100 L.J.K.B. 705; 145 L.T.
533; 47 T.L.R. 466; 16 T.C. 158 . . . . . . . . . . . . . . . . . . . . . . . . . . · · · . 2·018
Interfoto Picture Library Ltd. v. Stiletto Visual Programmes Ltd. [1989] 1 Q.B. 433;
[1988] 2 W.L.R. 615; [1988] 1 All E.R. 348; (1988) 7 Tr. L.R. 187, C.A. . . . 1·197
International Paper Co. v. Corporex Constructions Inc. 385 S.E. 2nd 553; (1990),
N.C. App. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15·054
International Tank and Pipe S.A.K. v. Kuwait A via ti on Fuelling Co. K.S.C. [1975]
Q.B. 224; [1974] 3 W.L.R 721; 118 S.J. 752; [1975] l All ER 242; [1975) 1
Lloyd's Rep. 8, C.A.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18·057, 18·085
Intraco v. NotisShippingCorp.ofLlberia;Bhoja Trader, The [1981] Cam. L.R.184;
[1"981]2Lloyd'sRep.25?,CA ... : . . . . . . . . . . . . . . ·.· .. :.: ...... 17·072
Investors in Industry Commercial Properties v. So~th Bedf?rdsh1r~ D1str1ct Coun-
cil· Eilison & Partners and Hamilton Associates (Third Parties) [1986] Q.B.
1034· [1986)2 W.L.R 937; [1986) 1 AUER 787 (1985)5 Con. LR 1; [1986] 1
E.G.'L.R. 252; (1986) 2 Const. L.J. 108; (1985) 32 Build. L.R. 1; (1986) 83
L.S.Gaz. 441 (1986) 136 New L.J. 118; C.A. . . . . . . . . . . 1·350, 2·076, 2·093, 2·151
Ireland v. Livingstone (1871) L.R. 5 H.L. 395; 41 L.J.Q.B. 201; 37 L.T. 79 . . 2·095
Irvine,Re(l928)3DL.R.268;620L.R.319......................... 1·031
ItekCorror~tion v.FirstNational Bank of Boston 730F.2d.19 (1984) U.S. C.A. lst
Circuit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17·069
Ives (E.R.) Investment v. High [1967] 2 Q.B. 379; [1967} 2 W.L.R 789;sub nom. Ives
(E.R.) Investments v. High [1967] 1 Al!E.R. 504; llOS.J. 963; [1966] C.L.Y.
6674; [31 Conv. 214; 30 M.L.R. 580], C.A. . . . . . . . . . . . . . . . . . . · · · . . 1·256
JMJ Contractors v. Marples Ridgeway (1985) 31 Build. L.R. 100 . . . . . . . . . . . . 18·086
Jackson v. Barry Railway [1893] 1 Ch. 238; 9 T.L.R. 90; 68 L.T. 472; 2 R. 207. . . . . 6·135,
6·137, 6· 138, 6· 143, fr 221, 18·130
--v. Eastbourne Local Board (1886), (4th ed.) Vol. 2, p. 81. . . . . 4-047, 4·143, 4-252
- v . Goldsmith (1950) 81 C.L.R. 446 . . . . . . . . . . . . . . . . . . . · ... · · · · . . 1·250
--v. Horizon Holidays [1975] 1 W.L.R. 1468; 119 S.J. 759; [1975] 3 All E.R. 92,
C.A. . . . . . . . . . . . . . . . . . . . .......... 8·160
Jackson Stansfield & Sons v. Butterworth [1948J W.N. 315; 64 T.L.R. 481; 112 J.P.
377; 92 S.J. 469; [1948] 2 All E.R. 558; 46 L.G.R. 410; C.A. . . . . . . . . . . . 4·277
Jacob and Youngs Inc. v. Kent 121 NE. 889 (1921) . . . . . . . . . 4·020,4·022, 7·002, 12·022,
I
13·069, 13·085, 13·088
Jacobowicz v Wicks [1956] Cnm.L.R. 697, DC. . . . . . . . . . . . 2-012
Jacobs v. City ofRegma 1964 S.C.R. 326 (Canada) . . . . . ......... 1·104
Jadis v. Porte (1915) 8 W.W.R. 768; (1915) 31 W.L.R. 234, (Canada) . . . . . . l ·115
l Jaeger's Sanitary Woollen System Co Ltd. v. Walker (1897) 77 LT. 180 14·002
James v. Kent (Thomas) & Co. [1951] 1 K.B. 551; [1951] 1 T.L.R. 552; 95 S.J. 29;
[1950] 2AIIER.1099,CA . . . . . . . . . . . . . . . . . . . . . . . . . . . . · · · 1·270,8·104
James McNaughton Paper Group Ltd. v. Hicks Anderson & Co. [1991] 2 Q.B. 113;
[1991] 2 W.L.R 641; [1991 J1 AIIE.R 134; [1990] B.C.C. 891; [1991] B.C.L.C.
235; (1990) 140 New LJ. 1311; The Independent, September 11, 1990,
C.A. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1·282,1·289
James Png Construction v. Tsu Chin Kwan Peter [1991] 1 M.L.J. 499 . . . . . . . 6·166
James Pty. Ltd. v. Dullcan [1970) V.R. 705........... . . . . . . . . . . . . . . . 1·377
 lx:xviii TABLE OF CASES
James Moore v. University of Ottawa (1978) 85 D.L.R. (3d) 186 2·062
Jameson v. Simon (1899) 1 F. (Ct. of Sess.) 1211; 7 S.L.T. 133. . . . . . . . . . . . Z.183, 2·189
Jamieson v. Mcinnes (1887) 15 R. (Ct. of Sess.) 17; 25 Sc. L.R. 32. . . . . . . . . 8-020, 8-049
Jardine Engineering Corporation v. Shimizu Corporation (1992) 63 BLR 96, Hong
Kong H.C. . . . . . . . . .. .. . . . . . . . . . . . . 13·104
Jartay Developments. Re (1983) 22 Build. L.R. 134. . . . . . . .. 8·085, 16·057
Jarvis v. May, Davies [1936] 1 K.B. 399 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1·372
Jarvis v. Swan Tours [1973] 1 Q.B. 233; [1972] 3 W.L.R. 954; 116 S.J. 822; [1973] 1 All
E.R. 71, C.A. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8·160
Jarvis (Jo~n) v. Rockdale Housing Association (1987) 3 Const. L.J. 24; (1987) 36
Build. L.R. 48; (1986) 10 Con. L.R. 51, C.A. affirming (1985) 5 Con.
L.R. 118. . . . . . . . . . . . 1·220, 1·221, 1·231, 2·145, 2·168, 2·170,
4·122, 5·036, 7·007, 7-033, 12-005, 12·019,
. ]2.020, 12·023, 12-028, 12·046, 13·008, 15-060
Jarvis (J.) & Sons Ltd. v. Westminster City Council. See Westminster Corporation
v. Jarvis (J.) & Sons Ltd.
Jay,ex parte.,re Harrison (1880) 14 Ch.D. 19;42 L.T. 600; 28 W.R. 449;44J.P. 409;
49 L.J.B.K. 47 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16-037, 16-039, 16·041
Jeavans Re, ex pa rte MacKay, ex parte Brown (1873) 8 Ch.App. 643; 42 L.J. Bey. 68;
28 L.T. 828; 37 J.P. 644; 21 W.R. 664, L.JJ. . . . . . . . . . . . . . . . . . . . . . . 8·081
Jenkins v. Betham (1855) 15 C.B. 168; 24 L.J.C.P. 94; 1 Jur. 237; 3 H.L.R. 373; 24
L.T.(o.s.) 78, 116, 260, 270. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2·155, 2·204
Jennie 0-foods v. U.S. 580 F. (2d) 400 (1978) . . . . . . . . . . . . . . . . . . . . . . . . . 4.237
Jennings v. Brighton Sewers Board (1872) 4 De G.J. & S. 735 n. . . . . . . . . . . . . 12·084
- v . Tavener [1955] 1 W.L.R. 932; 99 S.J. 543; [1955] 2 All E.R. 769..... 4·078, 4·087,
4-105
Jennings Construction Ltd. v. Birt (Q.M.) Ltd. [1987] 8 N.S.W.L.R. 18. .... 4·132, 4·134,
4·135, 18·056
Jepson (H.N.) & Partners v. Severn Trent Water Authority (1982) 20Build. L.R. 53,
C.A. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Z.252
Jeune v.Queen's Cross Properties [1974] 1 Ch. 97; [1973)3 W.L.R.378; 117S.J. 680;
[1973] 3 All E.R. 97; 26 P. & C.R. 98. . . . . . . . . . . . . . . 4·300, 4·301, 4·302, 4.304
John Manyon International Ltd. v. New Brunswick Telephone Co. (1982) 141
D.L.R. (3d) 193, C.A. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1·373
Johns & Son v. Webster & Tonks [1916] N.Z.L.R. 1020... 5·053, 6·063, 6·070, 6·082, 6·093
Johns, Worrell v. Johns Re, [1928] Ch. 737 . . . . . . . . . . . . . . . . . . 13·126, 16·045, 16·046
Johnson v. Agnew [1980] A.C. 367; [1979] 2 W.L.R. 487; [1979] 1 All E.R. 883;
(1979) 123 SJ. 217; (1979) 38 P. & C.R. 424; (1979) 251 E.G. 1167, H.L.;
affirming [1978] Ch. 176; [1978} 2 W.L.R. 806; [1978] 3 All E.R. 314; (1977)
122 S.J. 230; (1977) 38 P. & C.R. 107, C.A. [96 LQ.R. 403] . . . . . . . . . . . 1·143
- v . Raylton (1881) 7 Q.B.D. 438; 50 L.J.Q.B. 753; 45 L.T. 374; 30 W.R. 350 . . 14·008
- - v. Shrewsbury and Birmingham Railway (1853) 3 De G.M. & G. 914; 22
L.J.Ch. 921; 17 Jur. 1015; 98 R.R. 360. . . . . . . . . . . . . . . . . . . . . . . . . . 4·298
--v. Weston (1859) 1 F. & F. 693; 115 R.R. 964 . . . . . . . . . . . . . . . . . . . . . . 7·074
Johnston v. Boyes [1899] 2 Ch. 73; 68 LJ.Ch.425; 80 L.T.488; 47 W.R. 517; 43 S.J.
457 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1·020, 1·022
Johnathan Cape Ltd. v. Consolidated Press Ltd. [1954] 1 W.L.R. 1313; 98 S.J. 750;
[1954]3 All E.R. 253 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2·281
Jones,Re,exparte Nichols (1883)22 Ch.D. 782; 52L.J.Ch. 635;48L.T.492; 31 W.R.
661. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8·081, 14·044, 16·061, 16·062, 16·063
Jones v. Cannock (1850) 5 Ex. 713; 19 L.J.Ex. 371; 82 R.R. 850. . . . . . . . . . . 4·197, 5·023
--v. Hiser Construction (1984) 484 A. (2d) 302, CA . . . . . . . . . . . . . . . . 1·286, 4-131
- v . North (1875) L.R. 19 Eq. 426; 44 L.J.Ch. 388; 32 L.T. 149; 23 W.R. 68 3·080
- v . R. (1877) 7 Can. S.C. (Duval) 570. . . . . . . . . . . . . . . . . . . . . . . . . . . . 8-019
- - v. St. John's College, Oxford (1870) L.R. 6 Q.B. 115; 40 L.J.Q.B. 80; 23 L.T.
803; 19 W.R. 276. . . . . . . . 4·041, 4-245, 4·246, 6-038, 10.031, 10·032, 10·041, 10·072
- - v. Stroud District Council [1986] 1 W.LR. 1141; (1986) 130 S.J. 469; [1988] 1
All E.R. 5; (1986) 84 L.G.R. 886; (1986) 279 E.G. 213; (1986) 2 Const. L.J.
185; (1986) 34 Build. L.R. 27; (1987) 8 Con. L.R.23; [1986]2 E.G.L.R. 133,
C.A. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8·227
Jones & Lyttle v. Mackie (1918) 2 W.W.R. 82 (Canada) . . . . . . . . . . . 8·075, 8·173, 8-174
Joo Yee Construction Proprietary (In liquidation) v. Diethelm Industries
Proprietary (1991) 7 Const. L.J. 53, High Ct. of Singapore. . . . . . . . ;· ._8·079, 8·080,
8·082, 8·083, 8·086, 13·126, lf127, 14·045,
16·031, 16-045, 16-054, 16·055, 16·056, 16-057
TABLE OF CASES lxxix
Jordeson v. Sutton Southcoates and Drypool Gas Co. [1899] 2 Ch. 217. . . . . . . . 1·344
Joscelyne v. Nissen [1970] 2 Q.B. 86; [1970] 2 W.L.R. 509; [1970] 1 All E.R.1213;
(1969) 114 SJ. 55; [86 L.Q.R. 303; 34 Conv. 200], C.A. . . . . . . . . . . . . . . 1·110
Joseph Constantine Steamship Line Ltd. v. Imperial Smelting Corporation Ltd.
[1942] A.C. 154; 110 L.J.K.B. 433; 165 L.T. 27; 46 Com. Cas. 258; 57 T.L.R.
485; 70 Ll.L.Rep. 1; [1941] 2 All E.R. 165 . . . . . . . . . . . . . . . . . . . . . . . 4·249
Joshua Henshaw & Sons v. Rochdale Corp. [1944] K.B. 381; 113 L.J.K.B. 278; 170
L.T. 214; [1944] 1 All E.R. 413. . . . . . . . . . . . 9·008, 9·017, 12·011, 12.(149, 12·051
Jowett v. Neath Rural District Council (1916) 80 J.P.L. 207. . . . . . . . . . . . 18·068, 18·069
Junior Books v. Veitchi Co., The [1983] A.C. 520; [1982] 3 W.L.R. 477; (1982) 126
S.J. 538; [1982] 3 AllE.R. 201; [1982] Com. LR. 221; (1982) 79 L.S.Gaz.1413;
(1981) 21 Build. L.R. 66, H.L....... 1·292, 1·292A, 1·309, 13·044, 13·045, 13·054,
13·059
KBH Construction Ltd. v. PSD Development (1990) 21 N.S.W.L.R. 348.... 6·063, 6-075,
. 8·084, 10.069
K/S AJS Bani v. Korea Shipbuilding and Engineering Corporation [1987] 2F.T.L.R.
373; [1987] 2 Lloyd's Rep. 445, C.A. . . . . . . . . . . . . . . . . . . . . . . . . . . 18·082A
K!S Norjarl A/S v. Hyundai Heavy Industries Co. [1992] 1 Q.B. 863; [1991] 3 W L.R.
1025; [1991] 3 All E.R. 211; [1991] 1 Lloyd's Rep. 524; (1991] E.G.C.S. 20;
(1991) 141 New L.J. 343; The Independent, February 22, 1991; The Times,
March 12, 1991, The Times, March 5, 1991, C.A.; affinning [1991] 1 Lloyd's
Rep. 260; The Times, November 8, 1990 . . . . . . . . . . . . . . . . . . . . . . . . 18·156
Kaliszewska v. Clague (J.) and Partners [1984] C.I.L.L.131; (1984) Const. L.J. 137;
(1984) 5 Con. L.R 62........ 2·109, 2·222
Kamlee Construction v. Oakville (Town of) (1961) 26 D.L.R. (2d) 166..... 4-214,4-223
Kamloops (The City of) v. Nielsen, Hughes and Hughes (1984) 10 D.L.R. (4th) 64;
[1984] 5 W.W.R.1; (1984) 1 Const. L.J. 207, Supreme Ct. of Canada.. 1·349, 1·351,
1·359, 2·084, 2·222, 4·288
Kathmer Investments v. Woolworth [1970] 2 S.A. 498. . . . . . . . . . . . . . . 18-100, 18·101
Kaye (Sidney), Finnin (Eric) & Partners v. Bronesky (1973) 4 Build. L.R. 1,
C.A.. . ..... 2·042, 2·245,
3·050, 18·032, 18·033
- - v. Waghorn (1809) 1 Taunt. 428; 127 E.R. 900 . . . . . . . . . . . . . . . . . . . . . 1·090
Kaye (P.&M.) v. Hosier&Dickinson [1972] 1 W.L.R 146; (1971) 116S.J. 75; [1972)
1 AllE.R.121,H.L.;affirming[l970J 1 W.L.R.1611; 114S.J. 929; [1971] 1 All
E.R. 301, C.A.. . . . . . . 4·293, 5·021, 5·027, 5·042, 5·043, 5·049, 5·050, 6·017, 6·074,
. 6-076, 6·085, 18·002
Kealey v. Heard [1983] 1 W.L.R. 573; [1983] 1 All E.R. 973; [1983] I.C.R. 484 ..... 1·320,
1·336
Kearley v. Thomson (1890) 24 Q.B.D. 742; 59 L.J .Q.B. 288;63 L.T.150;38 W.R. 614;
54 J.P. 804; 6 T.L.R. 267. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4·276
Kearney v. Waller (Eric) Ltd. [1967] 1 Q.B. 29; [1966) 2 W.L.R. 208; [1965] 3 All
E.R. 352; 110 S.J. 13 . . . . . . . ..... 1·334
Keates v. Lord Cadogan (1851) 10 C.B. 591; 20 L.J.C.P. 76; 16 L.T.( o.s.) 367; 15 Jur.
428;138E.R.234.............. . ................. 1·145
Keen and Keen, Re, exparte Collins [1902] 1 K.B.555; 71 LJK.B.487;86L.T.235;
50 W.R. 334; 9 Hanson 145. . . . . . . . 11·027, 11·028, 11·032, 11·036, 11·037, 11·049,
11 ·050, 16-043, 16·053
Kellett v. Mayor of Stockport (1906) 70J.P. 154. . . . . . . . . . . . . . . . 4-198, 6·173, 6-180
--v. New Mills Urban District Council (1900), (4th ed.) Vol. 2, p. 298. ... 6·096, 6-129,
6-145, 6·147
Kelly (C.T.R.) & Partners v. Nortbshore Development Co. Ltd. (1963) 5 W.I.R.
379. . . . . . . . . . . . . . . . . . 1·064, 1-271, 2·237, 2·245, 2·259, 2·.268,Z.284
Kelsen v. Imperial Tobacco Co. ( of Great Britain and Ireland) [1957] 2 Q.B. 334;
[1957] 2 W.LR. 1007; [1957] 2 All E.R. 343; 101 S.J. 446; [101 S.J. 528, 638; 20
M.L.R. 499; 21 Conv. 312]. . . . . . . . . . . . . . . . . . . . . . . . . 1·341, 1·342
Kemble v. Farren (1829) 6 Bing. 141; 3M. & P. 425; 7 L.J.(o.s.) C.P. 258; 3 C. & P.
623; 31 R.R. 366. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10·006, 10·007
Kemp v. Baereselman [1906] 2 K.B. 604; 75 L.J.K.B. 873 . . . . . . . . . . . . . . . . . 14,020
- v . Rose (1858) 1 Gift. 258;32 L.T.(o.s.) 51 ;221 .P. 721;4Jur.(N .s.) 919; 114 R.R.
429... . . . . . . . . . . . . . . . 6·102, 6·140, 18·129
Kempster v. Bank of Montreal (1871) 32 U.C.Q.B. 87 . . . . . . . . . . . . . . . . . . 6·146
Kencor Holding Ltd. v. Government of Saskatchewan [1991] 1 W.W.R. 717 . . . 3·053
 lxxx TABLE OF CASES
TABLE OF CASES lxxxi
Kendall (Henry) & Sons (A Firm) v. Llllico (William) & Sons; Holland Colombo
Kingston-upon-Hull Guardians v. Petch (1854) 10 Ex. 610; 24 L.J.Ex. 23; 102 R.R. _
Trading Society v. Grimsdale & Sons; Grimsdale & Sons v. Suffolk Agricul-
tural Poultry Producers' Association [1969] 2 A.C. 31; [1968] 3 W.L.R. 110;
sub nom. Kendall (Henry) & Sons (A Finn) v. Lillico (William) & Sons;
Holland Colombo Trading Society v. Grimsdale & Sons (Consolidated
Kiriri J;~o~·c~..Ltd.' v·. i)~~·;a~i [19601 ·A.~.
i9i)i9·~~ 2!· ~·~
E.R.177; 104 S.J. 49, [23 M.L.R. 322, 104 · · ' 1 1
-~:t~~;~11i~.~~ 1~
3 057
.
1 270
7·063 7·064
Appeals); Grimsdale & Sons v. Suffolk Agricultural and Poultry Producers' Kirk v. Bromley Union (1848) 17 L.J.Ch. 127. · · · · · · ············· ]J,o
Association, 112S.J. 562; Kendall (Henry) & Sons (A Firm) v. Lillico (Wil- Kirk & Kirk v. Croydon Corporation [1956] J.P.L. 585. 4·179, 7,028, 7·074' 13·040
17
liam) & Sons;. Holland Colombo Trading Society v. Grimsdale & Sons;
Grimsdale & Sons v. Suffolk Agricultural and Poultry Producers' Associ-
ation [1968) 2 All E.R. 444; sub nom. Hardwick Game Farm v. Suffolk Agri-
Kirkwood v. Morrison (1877) 5 R (Ct. ofSess.) 79 .. 5.Qi6 ·6:o·o9. (i.()68·, 6:o?9:6··i64,
Kirsch v. Brady (1937) 58 C.L.R. 36. · · · · · · · · · · · ' '
~:!:
17·012
cultural and Poultry Producers' Association; Lillico (William) (First Third Kitchen Re (1881) 17 Ch.D. 668 · · · · · · · · · · · · · · · · · · · · · · · · ·: · · · ·] ..
--v. Royal Air Force Association [1958] 1 W.L.R. 563; 102 SJ. 363, {1958 3
A1i .
Party); Grimsdale & Sons (Second Third Party); Kendall (Henry) & Sons
(First Fourth Party); Holland-Colombo Trading Society (Second Fourth ER 241; [1958S.L.T.177], C.A........ · · · · · · · · · · · ·: · · · · ·. · · · · 4 294
Party) [1968} 1 Lloyd's Rep. 547; H.L; affirming sub nom. Hardwick Game Kitsons Sheet Metal Ltd. v. Matthew Hall Mechanical and Ele~.7~1 !:r:~nr::o. 13·134
Farm v. Suffolk Agricultural and Poultry Producers' Association (William (1989) 47BLR 82.. · · · · · · · · · · · · · · · · · · ' ' 12·015
Lillico & Son, Grimsdale & Sons, Third parties; and Henry Kendall & Sons Klein v. U.S. 285 F. 2nd 778 (1961) ......... : · · · · · · · · · · · · · · · · · · · · · :
(A Finn) and Holland Colombo, Fourth parties) [1966] 1 W.L.R. 287; 110 Kleinwort Benson v Malaysia Mining Corporation Berhad {1989] 1 W.L.R. 379,
S.J.11; [1966] 1 AJIE.R.309; [1966] 1 Lloyd's Rep. 197 C.A.affirminginpart [1989] 1 All E.R. 785; (1989) 133 SJ. 262; [1989] 1 Lloyd.s Rep. 556; (1989)
[1964] 2 Lloyd's Rep. 227. . . . . . . . . . 4·068, 4·069, 4·094, 4·117 139 New LJ 221; [1989J L.S.Gaz., April 26, 35, C.A. . . . . . . . · · · · · · · · 1·082
Kenlee Lands Inc. v. Northumberland Construction Ltd. (1973) 36 D.L.R. (3d)
270 . . . ..... 4·266
Knight v. Burgess (i864) 33 LJ.Ch. 727; lOJur. 166; 10 L.T. 9~~~.~f():g,3i(i.()Q : 2
4 1
(j~fg
Kennedy v. Barrow-in-Furness (Mayor of) (1909), (4th ed.) Vol. 2, p. 411. .. 6·065, 6·220, Kallberg v. Capetown Municipality 1967 (3) S.A. 472....... 6-121, .6·124, 18:047, 18·063
18·067, 18· 105 Kong Wah Housing Developments Sdn. Bhd. v. Desplan Constructmn Tradmg .
- - v. Collings Construction [1991] 7B + Ch. 25 ... Sdn. Bhd. [1991] 2 M.LJ.117 . . . . . . . . . . . . . . . . . . . . . . . . . . i8 i58 12 096
18166
12·044
- - v. Thomassen [1929] 1 Ch. 426; 98 L.J.Ch. 98; 140 L.T. 215; 45 T.L.R. 122; Kontek v Daveyduke Industnes (1987) 6 A.C.LR.. · · · · · · · · · · · S· ·848 b '
[1928] All E.R. Rep. 524 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1·031 Koufos v .Czarnikow (C.) [1%9] 1 A.C. 350; {1967] 3 W.L.R.1491; 111 J. ,su
Kenney v. Capper Pipe Services Co. (1967) 112 S.J. 47; sub nom. Kenney Copper n~m. Koufos v. Czarmkow (C.). Heron II, The [1967] 3 All E.R. 686; sub
Pipe Services Co. (1967) 117 New L.J. 1244. . . . . . . . . . . . 15,050, 15·053, 15·054 nom. Czarnikow (C.) v. [1967] 2Lloyd's Rep. 457, H.L ;affirming sub nom.
--v. Copper Pipe Services Co. See Kenney v. Capper Pipe Services Co. Czamikow (C.) v. Koufos [1966] 2 Q.B. 695; [1966] 2 W.L.R. 1397; [1966] 2
Kensington & Chelsea & Westminster Area Health Authority v. Wettem Com- All E.R. 593; [1966] 1 Lloyd's Rep. 595; [1966] C.L.Y. 11174, C.A. reversing ·l09
posites (1985) 31 Build. L.R. 57; [1985] 1 All E.R. 346; (1984) 134 New LJ. 110 S.J. 287; [1966] 1 Lloyd's Rep. 259 .......... · · · · · · · · · · · · · · · 8
887, D.C.. . . . . . . 1·300, 1·351, 1·378, 2·024, 2·027, 2-122, 2·182, 2·184, 2-188,
KratzJ;nann Holdings Ltd. v. University of Quee~s~a.n~. ~1.9~~). ~li~~Jo~10%i1, 10·020
v~~~~at Ce~tr~i a;~ o,: ci870) L.R.· 5. Ex: 289; 39 L.J.Ex. 197; 23 L.T. 72; 18
2·189, 2·190, 2·195
Kent v. Saltdean Estate Co. (1964) 114 L.J. 555. . . . . . . . • . . . 4·087, 5·055, 5·056, 6·082 Krehl 16·042
Kenworthy and Queen Insurance Co., Re. (1893) 9 T.L.R. 181 . . . . . . . . . . . . . 18·132 W.R. 1035 · · . · · · · · · · · · · . . . . . . . . . . . . . . . . . . . . . . 2,153
Kerr v. Dundee Gas Co. (1861) 23D. (Ct. ofSess.) 343.... 11·023, 11·025, 11·034, 11·036 Krestow v Wooster (1978) 360 So. (2d) 32 ... · . · · · · · · · · · · · · · · · · · · · · · ·
Ketteman v. Hansel Properties [1987] A.C. 189; [1987] 2 W.L.R. 312; [1988} 1 All Kruse v. Questier& Co. {1953] 1 Q.B. 669; [1953] 2 W.L.R. 850; 97 S.J.281; [1953] 1 18·007
E.R. 38; (1987) 131 S.J. 134; [1987] 1 F.T.L.R. 284; (1987) 85 L.G.R. 409;
All E.R. 954; [1953] 1 Lloyd's Rep. 310 ......... · · · · · · · · · · · · · · ·
(1987) 36 Build. L.R. 1; [1987] 1 E.G.L.R. 237; (1987) 84 L.S.Gaz. 657; (1987)
137NewL.J.100; [(1987) 84 L.S.Gaz. 3562], H.L.;affirming [1984} 1 W.L.R.
1274; (1984) 128 S.J. 800; [1985] 1 All E.R. 352; (1985) 49 P. & C.R. 257;
(1985) 27 Build. L.R. 1; [1984] C.!.L.L. 109; (1984) 271 E.G. 1099; (1984) 81
L.R.E. Engineering v. Otto Simon Carves (1981), (1983) 24 Build. L.R. 127 · · · ·
Laburnam Construction v. U.S. (1963) 325 F. (2d) 451 · · · · · · · · · · · · · · · · · · ·
;!::
L.S.Gaz. 3018, C.A.......... . . . . . . . . . . . . . . . . . . . . . . 1·348 Lacey.(William) (Hounslow) Ltd. v. Davis [1957} 1 W.L.R. 932; [1957] 2 All E.R.
Kidd v. Mississauga Hydro-Electric Commission (1979) 97 D.L.R. (3d) 535, Ont. 712. lOl s J 629· [101 SJ. 755; 107 L.J. 723; 73 L.Q.R. 443; 21 Conv. O
H.C.J....... 1·286, 2·159. 4-130 396] ..... ·. ·... .' . . . . . . . . . . . . . . . . . . . . . . . 1·264, 1·266, 1·267, 1·27 , 2· 250
Kiewit (Peter), Sons' Co. of Canada v. Eakins Construction Ltd. (1960) 22 D.L.R.
(2d) 465; [1960] S.C.R. 361, Canada. . . . . 1·063, 1·264, 1·271, 2·252, 3·219, 4·219, Laidlaw v. Hasting Pier Co. (1874), (4th e~J ~ r 7~cfu°,
0 5
1 9
~:icii, i.(t.o:~~Q.~~~; io\1°-:i~·1t~~
Laing (John) Construction Ltd. v. County & District Properties [1983} Com. L.R. ,0
4·220, 6·146, 7·004, 7·060, 7·069, 7·070
Kimberley v. Dick (1871) L.R. 13 Eq. 1; 41 L.J.Ch. 38; 25 L.T. 476; 20 W.R. 49.... 6-103, 40· (1983) 23 Build. L.R. 1 · · · · · · · · · · · · · · · · · · · · . . . . . . . . . . . . :i 2 62
6·140, 8-018 Lakeman' v. Mountstephen (1874) L.R. 7 H.L. 17; 43 L.J.Q.B. 188; 30 L.T. 437; 2 17·017
King v. Allen (David) & Sons Bill Posting [1916] 2 A.C. 54; 85 L.J.P.C. 229; 114 L.T.
762 . . . . . . . . . . . . ·. · · · · · · · · · · · · · · · · · · · · · · ·
- - v. Low (1901) 3 Ont. L.R. 234 ..... 4·206
4-253
Lakers Mechanical Services v. Boskalis Westmmster Constru~t~~~ .2~ ::.:3s,
W.R.617 . . . . . . . . . . . . . . . · · · · · · · · ·.· · · · · · · · · · · ·. · · · · · · · · ·
l8·l20
- v . ThomasMcKenna [1991}2 Q.B. 480; [1991J2W.L.R.1234; [1991] 1 Al!E.R.
653; 54 BLR 48; The Times, January 30, 1991, C.A. . . . . . . 18·168, 18·178, 18·181,
Lambe~·~· ie~i~ ii9821· A:c:225; ii98ii:i W.L:R:
7i3; [i98ij i All E ..R. 1185;
[1981] Lloyd's Rep. 17;sub nom. Lexmead (Basingstoke) v. Lewis (1981)
18·184, 18-191, 18·195, 18·198 125 s J 310· [1981] RT R 346 H.L.· reversing [1980] 2 W.L.R. 299; [1980] 1
--v. Victor Parsons [1973] 1 W.L.R. 29, C.A. . . . . . . . . . . . . . . . 4·294, 4·295 AllE:R. 978; (1979) 124s.J.5o; [1980] R.T.R.15~; [1980} l Lloyd's.Rep. 311,
King's Motor (Oxford) Ltd. v. Lax [1970] 1 W.L.R. 426; [1969] 3 AIIE.R. 665; 114 c A · reversing in part sub nom. Lambert v. Lewis; Lexmead (Basmgstoke),
S.J. 168 ....... .
1·049 Third Party; Dixon~Bate (B.), Fourth Party {1979} R.T.R. 61; [19781 1 .
King's Norton Metal Company Ltd. v. Edridge Merrett & Co. Ltd.;Same v. Roberts 1 009
083
(1897) 14 T.L.R. 98, C.A. . . . . . . . . . . . . . . . . . . . 1·098 Lloyd's Rep. 610· (78 L.S.Gaz. 597] · · · · · · · · · · · · · · . . . . . . . . . . . . .
Lamberto v Spry (1977) (Unrep.) October 6, 1977, Sup. Ct., W.A .. · · · · · · · 1·249, 5•
Kingdom v. Cox (1848) 5 C.B. 522. 4-181, 9·003, 9·009, 9·020, 9·023 Laminated Structures v. Eastern Woodworkers (1962) 32 D.L.R. (2d) 1. · · · · .4·073, 4·089
Kingston-upon-Hull Corporation v. Harding [1892] 2 Q.B. 494; 62 L.J.Q.B. 55; 97
.~~i~~
9
L.T. 539; 41 W.R. 19; 36 S.J. 624; 4 R. 7. . . . . . . . 1·297, 2·140, 2·197, 5;.0~, 5·038, Lampr~ltvJ~~I~~~: .(~~ J.i?i,x6~~J, \~o~t.. ~.~5i~~.ti1~lo~:sJ.itl,·l618, 9·020
5-059, 6·109, 6·139, 7·031, 7·037, Landles; ;. Wilson (1880) 8 R. (a. ofSess. Cas.) 289; 18 Sc. L.R. 206. · · · · · ~~14,;~4;'6
17·010, 17·024, 17·028

lxxxii TABLE OF CASES
Langbrook Properties Ltd. v. Surrey C.C. (1970] 1 W.L.R. 161; [1969] 3 All E.R.
1424; 113 S.J. 983; 68 L.G.R. 268; [34 Conv. 49] . . . . . . . . . . . . . . . . . . .
Langley Fox Building Partnership v. De Valence [1991] S.A. 1, A.O. . 1·387
1·344
Lapthorne v. St. Aubyn (1885) 1 C. & E. 486; 1 T.L.R. 279. . . . . . . . . 6-049, 7·065, 7·101
Lara v. Greely (1885) 20 Fla. 926, US. Dig. (1885) p. 119 . . J.2.069
Larkins v. Chel~er Holdings Pty. [1965] Qd R 68, (Australia)...... 1-164, 2·232, 6·111
Lashmar v. Ph1lhps & Cooper Ltd. (1960) Q.B.D., Special Paper (Unrep.) noted
(10th ed.) p. 869 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18·192
Law v. British Local Board (1892) [1892] 1 Q.B. 127 ...... , . . . . . . . . . . . . . 10.010
- - v. Hodson (1809) 11 East 300; 2 Camp. 147; 10 R.R. 513 . . . . . . . . . . . . . . 4-279
Lawford v. Billericay Rural District Council (1903] 1 K.B. 772; 72 L.J.K.B. 554; 88
L.T. 317; 51 W.R. 630; 67 J.P. 245; 19 T.L.R. 322; 47 S.J. 366; 1 L.G.R.
535 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8·104
Lawrence v. Cassell [1930] 2 K.B. 83 .................... 4·075, 4·085, 4·105, 5·056
- v . Hayes [1927] 2K.B.111; 96 L.J.K.B. 658; 137 L.T.149; 91 J.P.141;43T.L.R.
379 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14·054
Lawson v. Wallasey Local Board (1883) 11 Q.B.D. 229; 52LJ.Q.B. 302; 47 L. T. 624;
47 J.P. 437 affirmed C.A. 48 L.T. 507. . . . . . . . . . . . . 4-153 6·015 10·091 18·095
Leaf v. International Galleries [1950] 2 K.B. 86; [1950] 1 All E.R. 693; 66 T.L.R.. (Pt. '
1) 1031; [101 L.J. 61;25 A.L.J.443; 13 M.L.R. 362], C.A ...... 1·144, 1·146, 1·148,
1·153
Learoyd v. Whiteley (1887) 12 App. Cas. 727; 57 L.J.Ch. 390; 58 L.T. 93; 36 W.R.
721 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Z.204
LeBeaupin v. Crispin [1920] 2K.B. 714; [1920] AIIE.R. Rep. 353; 89 L.J.K.B. 1024;
124 L. T. 124; 36 T.L.R. 739; 64 S.J. 652; 25 Com. Cas. 335 . . . . . . . . . . . . 4·267
Lee v. Bateman (Lord) (1893) The Times, October 31 . . . . . . . . . . . . . . . . . . . 2·187
Lee and Chapman, ex parte, re Asphaltic Wood Pavement Co. (1885) 30 Ch.D. 216;
54 L.J.Ch. 460; 53 L.T. 63; 33 W.R. 513..... 14·050, 16·007, 16·008, 16-015, 16·016,
16·029
Lee and Hemingway, Re, (1834) 15 Q.B. 305 n.; 3 Nev. & M. 860. . . . . . . . . . . . 18-064
Leedsford Ltd. v. City of Bradford (1956) 24 BLR 45 . . . . . . . . . . . . . . . . . . . 5·019
Legge v. Har lock (1848) 12 Q.B.1015; 18 L.J.Q.B.45; 12L.T.(o.s.) 291; 13 Jur.( o.s.)
229; 76 R.R. 461. .............................. 10·028, 10·040, 10·041
L'Estrange v. Graucob (F.) Ltd. (1934] 2 K.B. 394; 103 L.J.K.B. 730; 152 L.T. 164;
[1934]A11E.R.Rep.16,D.C......................... 1·094 1·100 1·102
Leicester Board of Guardians v. Trollope (1911) (4th ed.) Vol. 2, p. 419 75 '1.P. '
197...................................... Z.025 2·183 Z.188 2·215
Le Lievre v. Gould [1893] 1 Q.B. 491; 62 L.J.Q.B. 353; 68 L.T. 626;41 W'.R. 468; 57 '
J.P. 484; 37 S.J. 267; 4 R. 274 sub nom. Dennis v. Gould 9 T.L.R. 243,
C.A. ........... ..... ...
Leigh and Sillavan Ltd. v. Aliakmon Shipping Co. Ltd. [1986] A.C. 785; [1986] 2
. . . . . . . . . . . . . 1·280
W.L.R. 902; [1986} 2 AIIE.R.145; (1986) 130 S.J. 357; [1986] 2Lloyd's Rep.
1; (1986) 136 New L.J. 415; [136 New L.J. 1169], H.L.; affirming [1985] Q.B.
350; [1985] 2 All E.R. 44; (1985) 129 S.J. 69; [1985} 1 Lloyd's Rep. 199; [1985]
L.M.C.L.Q. 1; (1985) 82 L.S.Gaz. 203; (1985) 135 New L.J. 285, C.A.; revers-
ing (1983] 1 Lloyd's Rep. 203 ............................... 1·322
Leighton Contractors v. Kilpatrick Green Ltd. (1992) 2 V.R. 505........ 8·097, 18·174
Leighton Contractors Ltd. v. Melbourne Board of Works (1975] V.R. 555. . 8·054, 8·055
Len Co. & Associates v. U.S. 385 F. (2d) 438 (1967). . . . . . . . . . . 4·220 7·070
Len~ Lease Homes Pty. Ltd. v. Warrigal [1970] 3 N.S.W.R. 265 . . . . . . . . . . . . '2·275
Leslie& Co. Ltd. v. Managers of Metropolitan Asylums District (1901) 68J.P. 86; 1
L.G.R. 862........ 3·020, 4·060, 4·122, 4·185, 4·187, 8.073, 13·009, 13·017, 13·032,
13·034, 13·039, 13·040, 13·089
Lester & Hughes v. White [1992] N.Z.L.R. 483 .... 1·277, 1·349, 1·359, 15·030
Lever Bros. v. Bell see Bell v. Lever Bros.
Levi v. Levi (1833) 6 C. & P. 239 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3·080
Lewis v. Anchorage Asphalt Paving Company (1975) 535 P. (2d) 1188..... 1·161, 4-101,
4· 143, 4·203
Lewis v. Averay (No. 2) [1973] 1 W.L.R. 510; [1973} 2 All E.R. 229, 117 S.J. 188,
C.A.; reversing [1972] 1 Q.B. 198; [1971] 3 W.L.R. 603; [1971] 3 AllE.R. 907;
115 SJ. 755 [35 M.L.R. 306], C.A. . . . . . . . . . . . . . 1·098
- v . Brass (1877) 3 Q.B.D. 667; 37 L.T. 738;26W.R.152 . . . . . . . . . . . . . . . 3·057
- - v. Haverfordwest Rural District Council [1953] 1 W.L.R. 1486; 97 S.J. 877;
[1953] 2 All E.R. 1599; 52 L.G.R. 44....................... 18?169, 18·178
- v . Hoare (1881)44 L.T. 66; 29 W.R. 357 ............ 6·217°, 14·054, 14·066, 17·015
r
J TABLE OF CASES lxxxiii
[ Lewisham London Borough Council v. Leslie & Co. (1978) 250 E.G. 1289; (1978) 12
Build. L.R. 22, C.A.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2· 195, 4·295
Leyland v. Panamena Europea (1943) 76 Lloyd's Rep. 113. . . . 6-097, 6·098, 6· 138, 6· 139,
!
6·148
Libra Shipping and Trading Corp. v. Northern Sales; Aspen Trader, The [1981] 1
18·057
i
Lloyd's Rep. 273, C.A........... .
Lichter v. Mellon Stuart 305 F. (2d) 216 (1962) U.S. Ct. of App ........ . 8·203
Liebe v. Molloy (1906) 4 C.L.R. 347 High Ct. Australia .... 7·073
Lillicrap, Wassenaar & Partners v. Pilkington Bros. (S.A.) (Pty.) (1984) 1 Const.
L.J. 211, South African Ct. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1·292
Liesbosch Dredger v. Edison [1933) A.C. 449 ....................... 8·132, 8·149
Lind (Peter) and Co. v. Constable Hart and Co. [1979] 2Lloyd's Rep. 248;sub nom.
Constable Hart & Co. Ltd. v. Lind (Peter) & Co. Ltd (1978) 9 Build. L.R.1,
C.A. . . . . . . . . . . . . . . . . 1·050
- v. Mersey Docks and Harbour Board [1972] 2 Lloyd's Rep 234....... 1.038, 1·039,
1·270, 3·066
Linden Garden Trust v. Lenesta Sludge Disposals; St. Martin's Properties Corp. v.
f
Sir Robert McAlpine & Sons [1994] 1 A.C. 85; [1993] 3 W.L.R 408;57 BLR
I 57; Financial Times, February 20, 1992; The Times, February 27, 1992, The
Independent, March 6, 1992, C.A.; reversing 52 B.L.R. 93; 25 Con. L.R. 28;
!
[1991] EGCS 11. ........ 1·219, 8·142, 8·155, 8·227, 8·228, 13·014, 14·001, 14·002,
14·002A, 14·004, 14·011, 14·015, 14·019, 14·041, 14·027, 14-029, 14·030,
14·032, 14·036, 14·050, 14.058, 14·060, 14·062, 16·027, 18.124, 18.125
Lindenberg v. Canning (1992) 62 BLR 147 . . 4·103
LlntestBuilders v. Roberts (1980) 13 Build. L.R. 38, C.A.;affirming (1978) lOBuild.
L.R.120 ................ .
Lister v. Romford Ice and Cold Storage Co. Ltd. [1957] A.C. 555; [1957] 2 W.L.R.
158; [1957] 1 AllE.R.125; 121 J.P. 98; 101 S.J.106sub nom. Romford Ice &
Cold Storage Co. v. Lister [1956) 2 Lloyd's Rep. 505; [73 L.Q.R. 283; 20
M.L.R. 220, 437; 22 M.L.R. 652; 121 J.P.J. 128; 24 Sol.177; 101 S.J. 217; 103
S.J. 161; 227 L.T. 67; [1957] C.LJ. 25; 94 I.L.T.R. 85], H.L.; affirming sub
nom. Romford Ice and Cold Storage Co. v. Lister [1956J 2 Q.B. 180; [1955J 3
W.L.R 631; [1955] 3 All E.R 460; 99 S.J. 794; [1955] 2 Lloyd's Rep. 325; [221
L.T. 31; 106 L.J. 4, 68, 342,; 1956 S.L.T. 1; [1956] C.L.J. 101, 72 L.Q.R. 7];
[1955] C.L.Y. 984, C.A ................................. 1·181, 15·007
--v. Stubbs (1890) 45 Ch. D.1;59 L.J. Ch. 570; 63 L.T. 75; 58 W.R. 548; 6 T.L.R.
293,317.............................................. 3·079
i Liverpool City Council v. Irwin (1977] A.C. 239; [1976] 2 W.L.R. 562; [1976] 2 All
II. E.R. 39; 120 SJ. 267; [1976J J.P.L. 427; (1976) 32 P. & C.R. 43; (1976) 74
L.G.R. 392; (1976) 238 E.G. 879, H.L.; varying [1976] Q.B. 319; [1975] 3
! W.L.R. 663; 119 S.J. 612; [1975] 3 AllE.R. 658; (1975) 74 L.G.R. 21; 31 P. &
C.R. 34, C.A......... 1·181, 1·189
Livingstone v. Rawyards Coal Co. (1880) 5 App. Cas. 25. . .... 8·110, 8·121, 8·126
Lloyd v. Grace Smith & Co. [1912] A.C. 716; 28 T.L.R. 547; 81 L.J.K.B. 1140; 107
L.T. 531; 56 S.J. 723. 2·232
Lloyd Brothers v. Milward (1895) (4th ed.) Vol. 2, p. 262.......... 6·040, 6·068, 6-079,
6-083, 6·092, 6·095, 6·177, 6·218, 6·226, 18·063
Lloyds Banlc v. Guardian Assurance and Trollope & Coils (1987) 35 Build. L.R. 34,
C.A. . . 1·339
Locke v. Morter (1885) 2 T.L.R. 121. ... ·. . . . . . . . . . . . . . . . . . . . 2·072, 2·265, 2·288
Lockie and Craggs Re (1902) 86 L.T. 388; 9 Asp.M.C. 296; 7 Com. Cas. 7 . . . . . . 9-030
Ladder v. Slowey [1904] A.C. 442; 73 L.J.P.C. 82; 91 L.T. 211; 53 W.R.131; 20T.L.R.
597, P.C........... 1·272, 2·260, 4·230, 8·104, 8·175, 9·031, 12·005, 12·025, J2.083
Lojan Properties v. Tropicon Contractors [1991] 2 M.L.J. 70. . . . . . . . . . . . 6.204, 8· 106
Lombard North Central v. Butterworth [1987} Q.B. 527; [1987] 2 W.L.R. 7; (1987) 1
All E.R. 267; (1987) 6 T.L.R 65; (1986) 83 L.S.Gaz. 2750, C.A...... 4·207, 4·211,
8·113, 9.013, 9·014, 9·015, 10.017
London, Chatham & Dover Ry. v. South Eastern Ry. [1892] 1 Ch. 120; (1893] A.C.
429; 63 L.J.Ch. 93; 69 L.T. 637; 1 R. 275; 8 T.L.R. 82. . . . . . . . . . . . . . . . 8·088
London Congregational Union Incorporated v. Harriss & Harriss (a firm) 1 All
E.R. 15; (1986) 280, E.G. 1342; (1987) 3 Const.LJ. 37; (1987) 35 Build. LR.
58; (1987) 8 Con. L.R. 52; [1986] 2 E.G.L.R. 155, C.A.; reversing in part
[1985] 1 AllE.R. 335; [1984] C.I.L.L. 85; (1984) 1 Const. L.J. 54.... 1·192, 1·1351,
1·367
 lxxxiv TABLE OF CASES
London County Council v. Boot (Henry) & Sonsl..td. [1959] 1 W.L.R. 1069; [1959]
AllE.R. 636; 103 S.J. 918;59 L.G.R. 357; [76 L.Q.R 32], HL; reversing sub.
nom Boot (Henry) & Sons Ltd. v. London County Council [1959] 1 W.L.R.
133; [1959] 1 All E.R. 77; 103 SJ. 90; 57 L.G.R. 15; [75 L.Q.R. 149; 103 S.J.
190]; [1958] C.L.Y. 343, C.A.; restoring (1957) 56 L.G.R. 51; [1957] C.L.Y.
355. · ... · · · ........ 1·099, 1·115, 1·121, 1·212, 1·214, 1·215, 3·051, 3·052, 8·054
London Export Corporation Ltd. v. Jubilee Coffee Roasting Co. Ltd. [1958) 1
W.L.R.661; [1958] 2AllE.R. 411; 102S.J. 452; [1958] 1 Lloyd's Rep. 367; [74
LQ.R 471], C.A; affirming [1958) 1 W.LR 271; [1958J 1 All E.R. 494; 102
S.J.178; [1958] 1 Lloyd'sRep.197..................... 1·202 1·206 6·228
London Gas Light Co. v. Chelsea Vestry (1860) 2 L.T. 217; 8 W.R. 416 .... '. . . '6.044
London General Omnibus Co. v. Holloway [1912] 2 K.B. 77; 81 L.J.K.B. 603· 106
=n. . .. . .. : ... ~m
London School Board v. Johnson (1891) (4th ed.) Vol. 2, p.176. . . . . 5·054, 6·051, 6·054,
6·056, 8·112
--v. Northcroft (1889) (4th ed.) Vol. 2, p. 147............ Z.230, 2·235, 2·272, 2·285
London Steam S!one Saw Mills v. Lorden (1900) (4th ed) Vol. 2, p. 301 . . . . . . . 8·020
London Steamship Owners Mutual Insurance Association Ltd. v. Bombay Trading
Co. Ltd. Felicie The, [1990] 2 Lloyd's Rep. 21 . . . . . . . . . . . . . . . . . . . . 14·039
London & North Western Ry. v. Jones [1915] 2 K.B. 35; 84 L.J.K.B.1268; 113 L.T.
724 · · · · · · · · · · · · · · .. · · · · . . . . . . . . . . . . . . . . . . . . . . . . . 18·090
London & Paris Banking Corporation Re (1874) L.R. 19 Eq. 444 . . . . . . . . . . . 16·003
London & South-Western Ra:ilway v. Flower (1875) 1 C.P.D. 77; 33 L.T. 687; 45
L.J.C.P. 54 ....................................•......... 5·051
Lonergan v. San Antonio Loan & Trust 104S.W.1061 (1917), Texas......... 4·061
Longley (James) & Co. v. Reigate and Banstead Borough (1983) 22 Build LR 31 ·
(1983) 133 New LJ. 1099, C.A ....................... 4·196 13.079 13·081
- v. South West Thames Regional Health Authority (1983) 127 S.J. 597; (1984) '
25 Build. L.R. 56; (1983) 80 L.S.Gaz 2362 . . . . . . . . . . . . . . . . . . . . . . . 2·097
Lonrho v. Shell Petroleum Co. (No. 2) [1982] A.C.173; [1980] 1 W.L.R. 627; (1980)
124 S.J. 412, H.L.; affinning [1980] Q.B. 358; [1980] 2 W.L.R. 367; (1980) 124
S.J. 205, C.A.; affinning The Times, February 1, 1978 . . . . . . . . . . . . . . . 3·080
Lorne Stewart v. Sindall (Will~am) and !f:W. Thames Regional Health Authority
seeSte":art (Lome) v. Sindall (Wilham) andN.W. Thames Regional Health
Authonty
Louis Dreyfus et Cie v. Parnaso Cia Naviera S.A. See Dreyfus (Louis) et Cie v.
Parnaso Cia Naviera S.A.
Love v. Mack (1905) 92 L.T. 345; 93 L.T. 352 ...... .
2.204
Lovell v. U.S. 59 a. Cl. 494 (1924) ..................... .
7·045
Lovelock v. King (1831) 1 Moo. & Rob. 60; 42 R.R. 764 ................. . 7.074
Lowe v. Lombank Ltd. [1960] 1 W.L.R. 196; [1960] 1 All E.R. 611; 104 S.J. 210; [76
L.Q.R.180; 23 M.L.R. 445; 104 S.J. 183, 921; 110 L.J. 200; 229 L.T.191;27 Sol.
136; 1960 S.L.T. 121; 951.L T. 137), CA . . . . . . . . . . . . . . . . . . . . . . . 1·170
Lowther v. Heaver (1889) 41 Ch.D. 248; 58 L.J.Ch. 482; 60 L.T. 310; 37 W.R.
465. · · · ... · · · ...................... 7·120, 7·122, 9·004, 12·078, 12-079
- v. Swan [1915] T.F.D. 494, (South Africa) . . . . . . . . . . . . . . . . . . . . . . . . 6·163
Lubenham Fi~elities and Investment Co. v. South Pembrokeshire District Council
and Wigley Fox Partnership (1986) 33 Build. L.R. 39; (1986) 6 Con.L.R. 85;
(1986) 2 Const.LJ. 111, C.A.; affirming [1985] C.I.L.L. 214. . . . . . . . 1·220, 2·155
2·198, 4-224, 6-042, 6·043, 6·098, 6·192 6·193 8·106 12·055 14·066
Lucas v. Godwin (1837) 3 Bing.N.C. 737; 4 Scott 502; 3 Hodges 114; 6 L:J.C.P. '
205. · · · ... · · · . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9·004 9·006 9·017 9-019
Ludbrook v. Barrett (1877) 46 L.J.C.P. 798; 36 L.T. 616; 42 J.P. 23; w.R.. 649. '. ; .. '2·073
6·110, 6·11i
Lu~lam v. Wilson 2 Ont.L.R. 549; 21 C.L.T. 554 . . . 6·103
Luna Bros. v U.S. 369 F (2d) 701 (1966). . . . . 4·182 4·183 7·085
Lyde v. Russell (1830) lB. & Ad. 394; 9 L.J. (o s.) K.B. 26; 35 RR. 327 .... '. . . it-004
LyleShippmgCo. v. Cardiff Corporation [1900] 2 Q.B. 638; 69L.J.Q.B. 889; 83 L.T.
329; 49 W.R. 85; 5 Con. Cas. 397 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9·029
Lynch v. Thorne [1956] 1 W.L.R. 303; 100 S.J. 225; [1956] 1 All E.R 744, CA .... 4·081
4.088, 4·089, 4·091, 4· I'oi, 4· 123
Lyons v. Nicholls [1958) N.Z.L.R. 409, N.Z. . . . . . . . . . . . . . . . . . .
Lyman Construction v. Village of Gurnee 403 N.E. {2d) 1325 (1980)
1·333
1·295
TABLE OF CASES Ixxxv
M. J. Peddlesden Ltd. v. Liddell Construction {1981) 128 D.L.R. (3d) 360, Supreme
Court B.C. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1·026
M.V. Myron (Owners) v. Tradax Export S.A. [1970) 1 Q.B. 527; [1969} 3 W.L.~.
292; sub nom. M.V. Myron (Owners) v. Tradax Export S.A., Panama City
R.P., 113 S.J. 404;sub nom. Myron {Owners) v. Trad ax Exports.A., Panama
City R.P. [1969] 2All E.R.1263;sub nom. Myron (Owners) v. Ttadax Export
S.A. [1969] 1. Lloyd's Rep. 411 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8·090
McAlpine v. Lanarkshire and Ayrshire Railway Co. {1889) 17 R. 113 18·095
McAlpine (A.) & Son v. Transvaal Provincial Administration (1974) 3 S.A.L.R.
506. . . . . . . . . . . . . . . . . . . . 2·134, 2·135, 4·175, 4·176, 4·183, 7.054, 7·080, 7·114
McAlpine Humberoak v. McDermott International, (1992) 58 BLR 1; Financial
Times, March 13, 1992, C.A.; reversing 51 BLR 34; 24 Con L.R. 68 ...... · 7·089,
7·118, 8·171, 8·207, 8·210, 8·211, 18·145, 18·159, 18·159A, 18·159C
McArdle v. Andmac Roofing Co.; McArdle v. Newton Bros; Same v. Same; Same v.
Same [1967] 1 W.L.R. 356; [1967] 1 All E.R. 583; 111 S.J. 37; [31 M.L.R. 74],
C.A.; varying in part, affirming in part sub nom McArdle v. Andmac Roof-
ing Co. [1966] 3 All E.R. 241; sub nom. McArdle v. Andmac Roofing;
McArdle v. Newton Bros.; Same v. Same; Same v. Same, 1 K.I.R. 761; [1966]
C.L.Y. 1097 .. ................. 1·319
McBeath v. Sheldon (1993) Aust. Tort Rep. 81-208 N.S.W. C.A............ · 2·108
McBride v. Vacher [1951] 2 D.L.R. (2d) 274 ......................... · 4·288
McCarthy v. Visser (1905) 22 Cape of Good Hope Rep. 122............ 5.046, 6-048,
6·051, 6-155, 6°163, 6·187
McOaren Maycroft v. Fletcher Development [1973] N.Z.L.R. 100.... 1·280, 1·372, 1·373
McConkey v. A.M.E.C. The Times, February 28, 1990, C.A ............... · 15·043
McCrone v. Boots Fann Sales Ltd. (1981) S.L.T. 103.................. 1·243, 1·244
McCutcheon v. MacBrayne (David) Ltd. [1964] 1 W.L.R.125; [1964] 1 All E.R. 430;
108 S.J. 93; [1964] 1 Lloyd's Rep. 16; 1964 S.C.(H.L.} 28; 1964 S.L.T. 66; [27
M.L.R. 354; 80 L.Q.R.309; 114L.J. 452; 981.L.T. 297; 81 L.Q.R. 32]; revers·
ing [1963] 1 Lloyd's Rep. 123; 1962 S.C. 506; 1963 S.L.T. 30; [1963] CLY.
519; affirming [1962] 1 Lloyd's Rep. 303; 1962 S.L.T. 231; [1962] C.L.Y.
472. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . : .. 1·202, 1·215
Macdonald v. Dennys Lascelles (1933) 48 CLR. 457, High Ct. of Australta . . . . 17·014
McDonald v. Workington Corporation {1893) 9 T.L.R. 230 (4th ed.) Vol. 2,
p. 228................................ 4048, 6·113, 6·115, 6·142, 6-221
McDonnell v. Canada Southern Rly. (1873) 33 V.C.Q.B. 313. . . ........ 6.014, 9.009
McE!roy v. Tharsis S. Co. (1877) 5 R. (Ct. ofSess.) 161. ............. 10·025, 10.031
McGarry v. Richards [1954] 2 D.L.R. 367 ........................... · 8·119
McGreevy v. Boomer (1880) Cas. Dig. (Can.) 73, 139 .................. · 6·169
Mcinnes v. Hall (1988) 7 A.C.L.R. 37. . . . . . . . . . . . . . . . . . . . . . . . . . 18·148, 18·164
Macintosh v. Great Western Ry. (No. I); 1849, 1850, 1855) 18 L.J.Ch. 94; 19LJ.Ch.
374;24L.J.Ch.469;2DeG. &Sm. 758;2Mac. &G. 74;3Sm.&G.146; 14Jur.
819; 2 H. & Tw. 250; 15 L.T.(o.s.) 321; 79 R.R. 359.... : ......... 6·107, 6·146
Macintosh v. Midland Counties Ry. (1845) 14M.& W. 548; 3 Rail. Cas. 780; 14 L.J.
Ex. 338; 5 L.T.(o.s.) 537................................ 4-152, 10.027
Mcintyre v. Gallagher (1883) 11 R. (Ct. of Sess.) 64 ................... · 5·011
MacJordan Construction v. Brookmount Erostin Ltd. 56 BLR 1; [1992] BCLC 350;
The Times, October 29, 1991, C.A. . ................. 8·085, 16·031, 16·057
MacKay ex parte (1873) L.R. 8 Ch. App. 643. . . . . . 8·079, 13· 126, 16-045, 16·046, 16·056
- - v. Barry Parochial Board (1883) 10 R. Ct. of Sess. (4th Ser.) 1046..... 6·136, 18·129
MacKay v Dick (1881) 6 App. Cas. 251; 29 W.R. 541. ... 1·187, 4·136, 6·117, 6·133, 6·145,
. 6·150
MacKender v. FeldiaA.G. [1967] 2 Q.B. 590; [1967] 2 W.L.R. 119; [1966] 3 All E.~.
847;sub nom MacKenda v. Feldia, 110 S.J. 81I;sub nom. Mac~en?er, Hill
and White v. Feldia A.G., C.H. Brachfield and SonsS.A. and D1amil S.R.L.
I
[1966] 2 Lloyd's Rep. 449; [1966] C.L. Y. 9908, C.A. . . . . . . . . . . . . . . . · 18·007
McKenna v. McNamee (1887) 15 Can. S.C (Duval) 311; 14 Ont App. 339 . . . . . 4-252
McKey v. Rorison [1953] N.Z.L.R. 498. . . . . . . . . . . . . . . . . . 4-087, 4·105, 4·124, 5·055
MacKnight Flintic Stone v. City of New York (1899) 160 N.Y. 72 . . . . . . . . . . . 4-113
McKone v. Johnson (1966) 2 N.S.W.R. 471. . . . . . . . . . . . . . 4·077, 4-089
! McLachlan v. Nourse [1928] S.A.S.R. 230 (Australia) . . . . . . . . . . . . 4-027
I Maclaine v.Gatty [1921] 1 A.C.376; [1920]AllE.R. Rep. 70;90L.J.P.C. 73; 124L.T.
385;37T.L.R.139; 26 Com. Cas.148,H.L. . . . . . . . . . . . . . . . . . . . . . · 1·246
I
lxxxvi TABLE OF CASES
McLaren Mayhew v. Fletcher Developments [1973] 2 N.Z.L.R. 100 . . . . . . . . . . 2·083
McLaughlin and Harvey Pk. v. P.J.O. Developments Ltd. (1991) 55 BLR
101. . . . . . . . . . . . . . . . . . . . . . . . . . . . 6-046, 6· 185, 18-057
MacMahon Construction v. Crestwood Estates [1971] W.A.R. 162. . . . . . 10.(184, 10·085,
10·089
McMillan v. Chapman [1953] 2 D.L.R. (2d) 671. . . . . . . . . . . . . . . . . . . . 1-113, 1·114
McNamara Construction of Ontario v. Brook University Re. (1970) 11 D.L.R. 3d.
513 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18-029
MacPherson& Kelley v. KevinJ. Prunty & Associates [1983] V.R. 573, Supreme Ct.
of Victoria . . . . . . ....................... 1-374
McQuillan v. Ryan (1922) 64 D.L.R. 482. . . . . . . . . . . . . . . . . . . . . . . . . . 4·265, 4·266
Magee v.Pennine Insurance Co. Ltd. [1969] 2 Q.B. 507; [1969] 2 W.L.R.1278; (1969]
2 All E.R. 891; 113 S.J. 303; [1969] 2 Lloyd's Rep. 378, C.A......... 1·095, 1·105
Mahmoud and lspahani Re. [1921] 2 K.B. 716; 90 L.J.K.B. 821; 125 L.T. 161; 37
T.L.R. 489; 27 Com. Com. 215 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4·278
Mahomed Jan v. Ganga Bishnu Singh (1911) L.R. 38 Ind. App. 80 . . . . . . . . . . 7·120
Mahoney v. Le Rennetel (1892) 13 N.S.W.Rep. (Equity) 7 . . . . . . . . . . . . . . . . 6·146
Major v. Greenfield [1965] N.Z.L.R. 1035........ 5-045, 6,053, 6·079, 6-083, 6-095, 6·157
Makin v. Watkinson (1870) L.R. 6 Ex. 25 . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5-051
Mallett v. Bateman (1865) L.R. 1 C.P.163; 1 H. & R.169; 35 LJ.C.P. 40; 12Jur.(N.s.)
122; 13 L.T. 410; 14 W.R. 225; 148 R.R 637 . . . . . . . . . . . . . . . . . . . . . 17-017
Malone v. Laskey [1907] 2 K.B.141; [1904-7] AllE.R. Rep. 304;76 L.J.K.B. 1134; 97
L.T. 324; 23 T.L.R 399; 51 S.J. 356, C.A. . . . . . . . . . . . . . . . . . . . . . . . . 1·314
Maltin (C.M.A.) Engineering v. Donne (J.) Holdings (1980) 15 Build. L.R.
61.................. . . . . . . . . . . . 18·137, 18-148, 18·159, 18-165
Manakee v. Brattle [1970] 1 W.L.R. 1607; [1971] 1 All E.R. 464n. . . . . . . . . . . . 2·267
Manchester (The City of) v. Fran Gerrard (1974) 6 BLR 70. . . . . . . 1·220, 5·037, 15·009,
15-026, 15.959
Manchester Diocesan Council of Education v. Commercial & General Investments
[1970] 1 W.L.R. 241; 114 S.J. 70; [1969] 3 Ail E.R. 1593; 21 P. & C.R. 38 . . 12·043
Mander Raikes & Marshall (a firm) v. Severn-Trent Water Board Authority (1980)
16 B.L.R. 34 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1·006, 1·218, 2-264
Maney v. City of Oklahoma 300 P. 642 (1931), Oklahoma.............. 4·049, 4·061
Mansal Pty. Ltd. v. Brokenshire (1982) (Unrep.) Supreme Court of Western
Australia, December 3, 1982 . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4-096
Mansfield v. Doolin (1869) 4 Ir.L.R C.L 17 . . . . . . . . . . . . . . . . . . . . . . . . 6·012
Manson v. Baillie (1855) 2 Macq. (H.L. Sc.) 149 R.R.120 ................ . 2·247
Maple Flock Company v. Universal Furniture Products Ltd. [1931] 1 K.B. 148 .. 9·003
Marentette v. City of Sudbury (1974) 45 D.L.R. (3d) 331; [1974] 3 O.R. 303 (Ontario
Ct. of App.); (1972) 31 D.L.R. (3d) 398.................. 4-162, 8·198, 8·201
Marine Contractors, Inc. v. Shell Petroleum Development Co. of Nigeria [1984] 2
Lloyd's Rep. 77; (1985) 27 Build. L.R. 127; (1984) 81 L.S. Gaz. 1044; C.A.;
affirming [1983] Com. L.R. 251. ................... 18·058, 18-081, 18·167
Markland Ass. v. Lohnes (1973) 33 D.L.R. (3d) 493, N.S. Sup. Ct. . . . . . . . . . . . 4·020
Marples Ridgeway & Partners v. C.E.G.B. [1964] Q.B.D. (Special Paper) (1970)
Hudson Building Contracts, p. 867... 18·134, 18·138, 18·140, 18·168, 18·183, 18·191
Marryat v. Broderick. (1837) 2 M. & W. 369; M. & H. 96; 6 L.J. Ex.113; 1 Jur.(o.s.)
242;46R.R.622........................................ 6-172
Marsden v. Sambell (1880) 43 L.T. 120; 28 W.R. 952. . . . . . 4·227, 12-031, 12·050, 12·051,
12-052
Marsden Urban District Council v. Sharp (1932) 48 T.L.R. 23. . ... 5·011, 5,054, 5·055,
5·056
Marshall v. Broadhurst (1831) 1 C. & J. 403; 1 Tyr. 348 . . . . . . . . . . . . . . . . . . 14-072
~-v. Macintosh (1898) 78 L.T. 750; 46 W.R. 580; 14 T.L.R. 458 10·011
i Metropoli~a~ As;lums Board v. Kingham (1890) 6 T.L.R. 217.......... · 1·028, 3.(168
I
Martin v. McNamara (1951) [1951] Q.S.R. 225, Queensland. . . . . . . . 4-085; 4·118, 4·120
Martin Grant & Co. v. Sir Lindsay Parkinson & Co. (1984) 29 B.L.R 31. .... 4-159, 4·177
Maryland Casualty Co. v. Eagle River Union High School District 205 N.W. 926
(1925) ............. 17.047
Maryon v.Carter (1830) 4 C. & P. 295. . . . . . . . . . . . . . . . . . . . . . . . . . . . 9·019, 9·021
Mason v. Clarke [1955] A.C. 778; [1955] 2 W.L.R. 853; 99 S.J. 274; [1955] 1 AIIE.R.
914; H.L.; reversing [1954] 1 Q.B. 460; [1954] 2W.L.R. 48; 98S.J. 28; [1954] J ,
All E.R.189; [1954] C.L.Y.1809, C.A. . . . . . . . . . . . . . . . . . . . . . . 4·274
Masters v. Cameron (1954) 91 C.L.R. 353; 28 A.L.J. 438 (Aus.). . . . . . . . . . 1-057, 3·056
TABLE OF CASES lxxxvii
Matania v. National Provincial Bank (1936) 106 L.J.K.B. 113 1·339
Matheson & Co. v. Tabab (A.) & Sons [1963] 2 Lloyd's Rep. 270 ........ 18·169, 18·178
Matsovkis v. Priestman [1915] 1 K.B. 681; [1914-15] All E.R. Rep. 1077; 84 L.J.K.B.
967; 113 L.T. 48; 13 Asp. M.L.C. 68; 20 Com. Cas. 252 ........... · . . 4-268
Matthew v. Ollerton (1672) 4 Mod. 220. . . . . . . . . . . . . . . . . . . . . . . . . . . 6.(122, 6-099
Matthews v. Kuwait Bechtel Corporation [1959] 2 Q.B. 57; [1959] 2 W.L.R. 702;
[1959] 2 All E.R. 345; 103 S.J. 393; [[1959] C.L.J. 163; 75 L.Q.R. 300; 22
M.L.R.521;103S.J.534],C.A. . . . . . . . . . . . : . . . . . . . . . . . . . . . . . . 1-374
May v. Lane (1894) 64 L.J.Q.B. 236; 43 W.R. 58, 193; 14 Rep. 231; 15 Rep. 432 . . 14·042
May & Butcher Ltd. v. R. [1934] 2 K.B. 17n; 103 L.J.K.B. 556n; 151 L.T. 246n,
H.L. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1·046, 3-074
Mayfield Holdings v. Moana Reef [1973) 1 N.Z.L.R. 309, Supreme Ct., of
Auckland . . . . . . . . . . . . . . . . . . . . . 4·145, 4-305, 12·001, 12·092, 12·096, 12-097
Mayor of Columbus v. Qark-Dietz, 550 Fed. Supp. 610 (1982), Mississippi 1·305
Mayor of London v. Southgate (1869) 38 L.J.Ch. 141 . . . . . . . . . . . . . . . 4-306
Meadows and Kenworthy Re (1896) (4th ed.) Vol. 2, p. 265 ............. 6-080, 6-092
Meates v. Att.-Gen. of New Zealand [1983] N.Z.LR. 385 . . . . . . . . . . . . . . . . 1·282
Mediterranean and Eastern Export Co. v. Fortress Fabrics (Manchester) [1948]
W.N. 244: [1948] L.J.R. 1536; 64 T.L.R. 337; 92 S.J. 362; [1948] 2 All E.R. 186;
81 Ll.L. Rep. 401. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18-132, 18-161
Medjuck & Budovitch v. Adi Ltd. (1980) 33 N.B.R. (::d) 271. ...... _- . . . . 2·092, 2·104
Meehan v. Jones and Others (1982) 149 C.L.R. 571, High Ct. of Australia; (1982) 42
A.L.R. 463................. . . . . . . . . . . . . . . . . . . . . . . 1-187
Meigh and Green v. Stockingford Colliery Co. Ltd. (May 25, 1922)
unreported. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8·022, 8-023
Meickle v. Maufe [1941] 3 All E.R.144; 85 S.J. 378. . . . . . . . . . . . . . . . . . · 2·274, 2·275
Mellor v. Denham (1~80) 5 Q.B.D. 4o7; 49 LJ.M.C. 89; 42 L.T. 493; 44 J.P. 472. . 2·013
Mellowes PPG v. Snelling Construction (1989) 49 BLR 109. . . . . . . . . . . 6·006, 6-199
Melville v. Carpenter (1853) 11 U.C.Q.B. 128.................. 7·063, 7,077, 7-094
Mendelssohn v. Normand Ltd. {1970] 1 Q.B.177; [1969] 3 W.L.R. 139; [1969] 2 All
E.R.1215; (1969) 113 S.J. 263, C.A. . . . . . . . . . . . . . . . . . . . . . . . · · · · 1·225
Mercers Co. v. New Hampshire Insurance Co. See Wardens and C~mmonalty of the
Mystery of Mercers of the City of London v. New Hampshrre Insurance Co.
Merchants'Trading Co. v. Banner (1871) LR.12Eq.18; 24 L.T. 861; 40 L.J.Ch. 515;
19 W.R. 707. . . . . . . . . . . . . . . . . . . . . . . . . ..... 4.297, 12·085
Mersey Docks and Harbour Board v. Coggins and Griffith (Liverpool) [1947] A.C.
1; 115 L.J.K.B. 465; 175 L.T. 270; 62 T.L.R 533; [1946] 2 All E.R. 345; H.L.;
affirming sub nom- McFarlane v. Coggins and Griffith (Liverpool) [1945]
K.B. 301 . . . . . . . . . . . . ...... ........ 2-184
Mersey Steel & Iron v. Naylor (1884) 9 App. Cas. 434; 9 Q.B.D 648;51 L.J.Q.B. 576;
53 L.J,Q.B. 497; 47 L.T. 369; 51 L.T. 637. . . . . . . . . . . . . . . . . . . . . 4·221, 4-223
Mertens v. Home Freeholds Co. [1921] 2 K.B. 526; 90 L.J.K.B. 707; 125 L.T.
355 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4-233, 4·249, 4-254, 8·115, 8-117, 8,124
Merton London Borough v. Leach (Stanley Hugh) (1985) 32 Build. L.R. 51; (1986)
2 Const. L.J. 189. . . . . . . . . . . . . . . 1·186, 1·197, 2·201, 4·095, 4·197, 6·097, 6-105,
6·113, 6·115, 6·141, 6·220, 7·118, 8·070, 8·071, 8·206, 8·207, 8-208,
10·079, 10-089
Merton London Borough v. Lowe (1982) 18 Build. L.R. 130, C.A.. . . 2-108, 2·116, 2·118,
2· 119, 2· 144, 2· 182, 2· 183
Metalimex Foreign Trade Corporation v. Eugenie Maritime Co. [1962] 1 Lloyd's
Rep. 378 . . . . . . . . . . . . . . . . . . . . . , . . . . . . . . . . . . . . . . . . . . . . . 18·048
Metcalfe Realty Co. v. Elite Interiors Ltd. and Elite Interiors of Canada Ltd. [1966]
2 O R 433 Canada . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1·097
Metropolitan Tunnel&PublicWorksv. London Electric Ry. [1926] Ch. 371; 95 L.J.
Ch. 246; 135 L.T. 35 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . · . . . 18·118
Metropolitan Water Board v. Dick.Kerr & Co. [1918] A.C.119; 87 L.J.K.B. 370; 117
L.T. 766; 82J.P. 61; 16 L.G.R.1; 23 Com. Cas.148; 62S.J.102;34 T.L.R. 113
affirming [1917] 2 K.B. 1. ............. 4·233, 4·248, 4·253, 4·262, 4-275, 11.(128
Meva Corporation v. United States (1975) 511 F. 2nd 548 ............. 13·005, 13·014
Meyer v. Gilmer (1899) 19 N.Z.L.R. 129. . . . . . . . . . . . . . . . . . . . . 1·259, 6·153, 6-156,
7·003, 7-058, 7-078, 7·080, 7,082, 7·095, 10·033, 10·040
Micklewright v. Mullock. (1974) 232 E.G. 337. . . . . . . . . . . . ...... 18·134, 18·148
 lxxxviii TABLE OF CASES
Mid-Glamorgan County Council v. The Land Authority fo~ Wales 49 BLR 61;
. (1990} 6 Const. L.J. 234. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18·046, 18.055
Midland Bank Pie. v. Bardgrove Property ,Services Ltd. [1993] 9 Const. L.J.
49, C.A.. . . . . . . . . . . . . . . . . . . . .1. . . . . . . . . . . . . . . . . . . . . . . . . 1·343
Midland Bank Trust Co. v. Hett Stubbs & Kemp (a firm) [1979] Ch. 384; [1978] 3
W.L.R. 167; (1977) 121 S.J. 830; [1978] 3 All E.R. 571. ....... 1·281, 1·373, 2·083
Midland Motor Showrooms Ltd v Newman [1929] 2 K.B. 256; 98 L J.K.B 490, 141
L.T 230; 45 T.L.R 499 .... .. ..... ...... . 17·041
Milas-Martin Pen Co. Ltd. v. Selsdon Fountain Pen Co. Ltd. (No. 2) (1950} 67
R.P.C. 64 . ...... . . . . . . . . . . . . . . . . . . . . . . . . 18·119
Miles v. New Zealand Alford Estate Co. (1886} 32 Ch.D. 266; [1866--90] All E.R.
Rep. Ext. 1726;55 L.J.Ch. 801; 54 L.T. 582; 34 W.R. 669, C.A.. . . . . . . . . 1·071
Milestone & Sons v. Yates Castle Brewery [1938] 2 All E.R. 439.... 6·068, 13·033, 13·124
Miller v. Advanced Farming (1969) 5 D.L.R. 3d 369 Supreme Court of Canada. . 4·022
- - v. Cannon Hill Estates Ltd. [1931] 2 K.B. 113; 100 L.J.K.B. 740; 114 L.T.
567. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4·075, 4·078, 4·085, 4·087, 4·105, 8·158
--v. Dames & Moore (1961) Cal. App. (2d) 305 . . . . . . . . . . . . . . . . . . . . . 1·283
--v. London County Council (1934) 50 T.L.R. 479; 151 L.T.
425 ........... 6·036, 6·041, 8·220, 10-082, 10·083, 10·084, 10·085, 10·086, 10·091
Miller (James) & Partners Ltd. v. Whitworth Street Estates (Manchester) Ltd.
[1970] A.C. 583; 2 W.L.R. 728; [1970] 1 All E.R. 796; [1970] 1 Lloyd's Rep.
269; 114 S.J. 225, H.L.; reversing sub nom. Whitworth Street Estates
(Manchester) Ltd. v. Miller (James) and Partners Ltd. [1969] 1 W.L.R. 377;
[1969] 2 All E.R. 210; 113 S.J. 126; [86 L.Q.R. 13], C.A. ........... 1-0141 1·222
Mills v. Bayley (1863) 2 H. & C. 36; 32 L.J.Ex. 179; 8 L.T. 392; 9 Jur.(N.s.) 499; 11
W.R. 598; 133 R.R. 579. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6·0361 6·176 6·177
Milner v. Field (1850) 5 Ex. 829; 20 L.J. Ex. 68; 82 R.R. 885 ............ • • • '6·037
Minifie v. Railway Passengers Assurance Co. (1881) 44 L.T. 552 -. . . . . . . . . . . . 18·104
Ministry of Housing and Local Government v. Sharp [1970] 2 Q.B. 223; [1970]
2 W.L.R. 802; [1970] lAllE.R.1009; 114S.J.109;68LG.R.187;21 P. &C.R.
166; (34 Conv. 198], C.A.; reversing [1969] 3 W.L.R. 1020; 133 J.P. 595; 113
S.J. 469; [1969] 3 All E.R. 225; 20 P. & C.R. 1101; (122 New L.J.
1149). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1·281 1·284 1·309
Minister Trust v. Traps Tractors [1954] 1 W.L.R. 963; 98 S.J. 456; [1956] 3 All £.R. '
136. . .......... 6·019, 6-022, 6·031, 6·055, 6·065, 6·112, 6·123, 6·151,
6·154, 6-156, 6·158, 6·159, 6·160
Minter (F.G.) & Welsh Health Technical Services Organisation (1980) 13 Build.
LR. 1, C.A.; reversing (1979) 11 Build. L.R. 1. ... 1·258, 7·052, 8·070,
. .. 8·071, 8·093, 8-095, 8·096, 8·215
Miramar Mant1me Corp. v. Holbom Oil Trading Ltd; Miramar, The [1984] 1 A.C.
676; [(984] 3 W.L.R. 10; [1984] 2 All E.R. 326; (1984) 128 SJ. 414; [1984] 2
Lloyds Rep. 129; (1984) 81 L.S.Gaz. 2000, H.L.; affirming [1984] 1 Lloyd's
Rep. 142; [1983) 2 Lloyd's Rep. 319, C.A. . . . . . . . . . . . . . . . . . . . . . . . 1·220
Mississippi Bank v. Nickles & Wells Construction Co. 421 So. {2d) 1056 (1982), Sup.
Ct. of Mississippi . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14·062
Mitchell v. Guildford Union (1903) 1 L.G.R. 857; 68 J.P. 84............ 4-187, 13·009,
13·034, 13·077
Mitsui Construction Co. v. Att.-Gen. of Hong Kong (1986) 33 Build. L.R. 1;
(1986) 10 Con. L.R. l; (1986) 2 Const. L.J. 133, P.C.; (1984) 26 Build. L,R.
113, C.A. of Hong Kong...... 1·220,.1·221, 2·002, 2·168, 7·018, 8·003 8·013 8·040
Mobile f!ousing Environments v. Barton 432. F. (Supp.) 1343 [1975] Colorado bis- '
tr1ct . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3·027
Modem Buildings Wales v. Limmer & Trinidad Co. [1975] 1 W.LR.1281; 119 S.J.
641; [1975] 2 All E.R. 549; [1975] 2 Lloyd's Rep. 318 C.A.......... 1·126, 1·207,
3·050, 3·051, 13·105, 18·027, 18·031
Modern Engineering (Bristol) v. Gilbert·Ash (Northern). See Gilbert-Ash (North-
ern) v. Modern Engineering (Bristol)
- - v. Miskin (C. & Son [1981] 1 Lloyd's Rep. 135; (1980} 15 Build. L.R. 820,
C.A. · · · · · · · · . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18·138 18·149 18·165
Modem Trading Co. v. Swale Building and Construction (1990) 24 Con'. L.R. '
59 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ':' J8·167
Moffat v. Dickson (1853) 13 C.B. 543;22 L.J.C.P. 265; 17 Jur.(o.s.) 1009; 1 C.L.R. ,,.
294; 93 R.R. 634 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2·249, 2·250
TABLE. OF CASES lxxxix
Moffat v. Laurie (1855) 15 c:B. 583; 1 Jur.(N.S.) 283; 24 LJ.C.P. 56; 3 W.R. 252; 24
L.T.(o.s) 259; 100 R.R. 498. . . . . . . . . . . . . . . . . . . . . . . . . . 2·247, 2·249, 2·250
--v. Scott (1863) 8 L.CJur. 310 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2·272
Mogul Steamship Co. v. McGregor, Gow & Co. [1892] A.C. 25; 23 Q.B.D. 598; 61
ts~~·~:~:~; .4~ .~:~· .3:~;.
~6. ~·~·.1.0:;. ~6. ~?'.· :: ~ ~
~-s~ .. ~:~· _1:~;. ~:~·~:
Mohan v. Dundalk Ry. (1880) 6 L.R.lr. 477; 151 L.T. 11. . . 12·048, 12·063, 12·064, 12·065
3·080
Molloy v. Liebe (1910) 102 L.T. 616 P.C......... 1·063;1·264, 1·269, 1·270, 4·220, 6·068,
6·146, 7°065, 7·066, 7·067, 7·069, 7·070, 7·076, 8·103, 8·104
Molyneux v. Richard [1906] 1 Ch. 34; 75 L.J.Ch. 39; 93 L.T. 698; 54 W.R. 177; 22
T.L.R. 76 . . . . . . . . . . . . . . . . . . . . ... 4·306
Mona Oil Equipment & Supply Co. Ltd. v. Rhodesia Railways Ltd. [1949] 2 All
E.R 1014; [1950) W.N.10; 83 Ll.L. Rep.178........... . . . . . . . . . . 1·187
Monaghan County Council v. Vaughan [1948] LR. 306 ................ 1·113, 1·119
Moncton (The City of) v. Aprile Contracting (1980) 29 N.B.R. (2d) 631, New Brun-
swick C.A.; (1977) 17 N.B.R. (2d) 678. . . . . . . . . . . . 1·297, 1·306A, 2·140, 4-052,
5·038, 10·047, 10·051, 10·052
- v. Stephen (1956) 5 D.L.R. (2d) 722, Canada. . . . . . . . . . . . . . . . . . . 1·063, 2·247
Mandel v. Steel (1841) 8 M. & W. 858; 10 L.J.Ex. 426; 1 D.P.C.(N.s) 1; 58 R.R.
890. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1·253, 1·254, 5·008, 6-201
Moneypenny v. Hartland (1826) 2 C. & P. 378; 31 R.R. 672 ............. 2·111, 2·125,
2·156, 2·158, 2·160, 2·202
Monk (A.) & Co. v. Devon County Council (1978) 10 Build. L:R. 9, C.A. . . . . . . 13·049
Monk Construction Ltd. v. Norwich Union Life Assurance Society (1992) 62 BLR
107,C.A. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1·015,3.071
Monkhouse Pty. Ltd. Re. [1968] 2 N.S.W.L.R. 664................... 8·079, 13·126
Monmouth County Council v. Costelloe & Kemple (1965) 63 L.G.R. 429, C.A.;
reversing sub nom. Monmouthshire County Council v. Costelloe & Kemple
(1964) 63 L.G.R. 131; [1965] C.L.Y. 369 ............ 1·009, 8·064, 8·065, 18-053
Monro v. Bognar Urban District Council [1915] 3 K.B. 167; 84 K.J.K.B. 1091; 112
LT.969;79J.P.286;13L.G.R.431;59S.J.348 . . . . . . . . . . . . . . . . . ·. 18·102
Montedipe S.p.A. v. JTP-RO Jugotanker; Jordan Nicolov, The [1990] 2 Lloyd's
Rep.11. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14·038, 14·039, 18·125
Montrose Contracting Company v. City of Westchester 80F. (2d) 841 (1936), 2nd
Circuit, Court of Appeals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4·061
Moody v. Ellis (Trading as Warwick & Ellis) (1984) 26 Build. L.R. 39, C.A. 1·228
Moon v. Whitney Union (1837) 3 Bing N.C. 814; 6 L.J.C.P. 305; 5 Scott 1; 1 Jur.( o.s.)
41; 3 Hodges 206; 43 R.R. 802. . . . . . . . . . . . . . . . . . . . . . . . 2·069, 2·286, 2·287
Moorcock, The (1889) 14 P.O. 64 . . 1·180
Moore v. Shawcross [1954) J.P.L. 431 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3-049
Moore (D.W.) v. Ferrier [1988] 1 W.L.R. 267; [1988] 1 All E.R. 418, (1988) 132 SJ.
227 CA.............................................. 1·307
Moore (J;m~s) & Sons Ltd. v. University of Ottawa (1974) 49 D.L.R. (3d)
666. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1·262,6·134,6·149
More (James) v. University of Ottawa (1978) 85 D.L.R. (3d) 186, Fed. Ct.,
Canada . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1·267, 2-062
Moresk Cleaners v. Hicks [1966] 2 Lloyd's Rep. 338; 116 New L.J.
1546. . . . . . 2·036, 2·074, 2·093, 2·105, 2·117, 2·118, 2·119, 2·120, 2·144, 4·073, 4·177
Morgan v. Birnie (1833) 9 Bing. 672; 3 Moo. & Sc. 76; 35 R.R. 653 ........ 6·020, 6·036,
6-153, 6·155, 6-162, 7·058
Morgan v. Morgan (1832) 2 LJ.Ex. 56; 1 D.P.C. 611; ;36 R.R. 825 . . . . . . . . . . . 18·127
--v. S. & S. Construction [1967] V.R. 149, Australia. . . . . . . . . . . 4-012, 4·014, 4·020,
4·022, 4·029, 10·059, 10·100
Morgan Grenfell (Local Authority Finance) v. Seven Seas Dredging (No. 2) 51
BLR 85. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8·063, 8·098
Morison v. Thompson (1874) L.R. 9 Q.B.480; 43 L.J.Q.B.215; 30 L.T. 869;22 W.R.
859 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2·234
Morren v. Swinton and Pendlebury Borough Council [1965] 1 W.LR. 576; [1965]
2 All E.R. 349; 63 L.G.R. 288; D.C. . . . . . . . . . . . . . . . . . . . . . . . . . · . 2·023
Morris v. Ford Motor Co.; Cameron Industrial Services (Third Party); Roberts
(Fourth Party) [1973] 1 Q.B. 792; [1973] 2 W.L.R. 843; 117 S.J. 393; [1973] 2
All E.R. 1084; [1973] 2 Lloyd's Rep. 27, C.A. . . . . . . . . . . . . . . . . . . . . 15·007
- v. Martin (C.W.) & Sons [1966] 1 Q.B. 716; [1965] 3 W.L.R. 276; 109 S.J. 451;
[1965] 2All E.R. 725; [1965} 2 Lloyd's Rep. 63; C.A......... 1·327, 2·232,4·108,
4·122, 4·125
 xc TABLE OF CASES
Morris v. Redland Bricks. See Redland Bricks v. Morris
Morris (K.D.) & Sons v. G.J. Coles (1972) 46 A.L.J.R. 464. . . . . . . . . . . . 15,018, 15·022
Morrison v. Universal Marine Insurance Co. (1873) L.R. 8 Ex. 197; 42 L.J.Ex.115;
21 W.R. 774 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12·051
Morrison-Knudsen Co. Inc. v. British Columbia Hydro and Power Authority [1978]
85 D.L.R. (3d) 186; [1978] 4 W.W.R. 193, Brit. Col.......... 4·203, 4·219, 4·230,
4·231, 4·252, 4.257, 4·263, 7·081, 8-104
Morrison-Knudsen International v. Commonwealth (1972) A.L.J.R. 265 .... 1-159, 1·169
- v. State of Alaska 519 P. (2d) 834 (1974). . . 1·156, 1·160, 1·161, 1·166, 1·306C, 4·142,
· 8·062
Mortensen v. Laing (1991) 3 N.Z.B.L.C. 102, 301; [1992] 2 N.Z.L.R. 282. . . 1·279,
1·305, 1·306
Morton Construction Co. Ltd. v. Corporation of City of Hamilton [1962] O.R. 154
(Canada) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1·063 1·084 7·067
Moschi v. Lep Air Services [1973] A.C. 331; [1972] 2 W.L.R. 1175; 116 S.J. 312; '
[1972] 2 AllE.R. 393, H.L.; affirming sub nom. Lep Air Services v. Rolloswin
Investments [1971] 3 All E.R. 45, C.A....... 17·011A, 17·011B, 17·011F, 17·012,
17·014, 17·021, 17·029, 17·035
Mosely v. Virgin (1796) 3 Ves.184 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.300
Moser v. St. Magnus and St. Margaret (Churchwardens of) (1795) 6T.R. 716 . . . 6·146
Moss v. London & North West Railway Co. (1874) 22 W.R. 532 . . . . . . . . . . . . 5-009
Mottram Consultants v. Sunley (Bernard) & Sons (1974) 118 S.J. 808; [1975] 2
Lloyd's Rep.197, H.L.; affirming sub nom. Sunley (Bernard) & Sons v. Mot-
tram Consultants (1973) 228 E.G. 723, C.A................ 1·223, 6·200, 6-201
Mounds View (The City of) v. Walijarui (1978) 263 N.W. (2d) 420. . . 2·088, 2·089, 2·103,
2·106
Mount Albert Borough Council v. Johnson [1979] 2 N.Z.L.R. 234, C.A..... 1·357, 1·384,
1·388, 1·389
Mount Albert City Council v. New Zealand Municipalities Insurance Co-op [1983]
N.Z.L.R. 190 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15·010
Mowbray v. Merryweather [1895] 2 Q.B. 640; 65 L.J.Q.B. 50; 14 R. 767; 73 L.T.459;
44 W.R. 49; 59 J.P. 804. . . . . . . . . . . . . . . . . . 1·335, 8·157, 15·049, 15·051, 15·054
Moyer v. Graham 285 So. (2d) 937 {1973) 1·295
Moyers v. Soady (1886) 18 L.R. Ir. 499. . . . . . . . . . . . . . . . . . . . 18·014 18·095 18·108
Muirv.James [1953] 1 Q.B.454; [1953] 2 W.L.R.423; 117 J.P.126;97 S.J.132· b953J '
1 All E.R. 494n; C.A. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . '. . . . . 4.277
Muirhead v. Industrial Tank Specialities [1986] Q.B. 507; [1985] 3 W.L.R. 993;
[1985] 3 AllE.R. 705; [1985] E.C.C. 225; (1985) 129 S.J. 855; {1985) 135 New
L.J.1106; {1986) 83 L.S.Gaz.117, C.A............ 1·292, 1·292A, 1·323, 13·045
Muldoon v. Pringle (1882) 9 R. (Ct. of Sess.) 915. . . . . . . . . . . . . . . . . . 6-036, 6·050
Mullin (Pty.) Ltd. v. Denade Ltd. [1952] 1 S.A.L.R. 211 . . . . . . . . . . . . . . . . . . 1·184
Multiplex Constructions Pty. Ltd. v. Abgarus Pty. Ltd. (1992) (Unrep.) Sup. Ct.,
N.S.W., 1992 Case No. 55042 . . . . . . . . . . . . . . . . . . . 8·162, 8·167, 10-018, 10·020
Munelly v. Calcon Ltd. [1978] I.R. 387, Sup. Ct. of Ire . . . . . . . . . . . . . . . . . . . 8·141
Munro v. Butt (1858) 8 E. & B. 738; 4 Jur.(N.s.) 1231; 30 L.T.(o.s.) 119; 112
R.R. 752 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4·007, 4·232, 5·003, 5·005, 6·037
--v.;yvenhoeRy. {1865) 4De G.J. & S. 723; 11 Jur.(N.s.) 612; L.T. 562, 655; 13
.R. 880; 146 R.R. 532 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12·084
Murdoch v. Luckie (1897) 15 N.Z.L.R. 296 . . . . . . . . . . . . . . . . . 10·033, 10·040, 10·041,
10·074, 10·080, 10·081, 10·089
Murphy v. Brentwood District Council [1991] 1 A.C. 398; [1990] 3 W.L.R. 414;
(1990] 2All E.R. 908; (1990) 22H.L.R. 502; {1990) 134 S.J. 1076;21 Con. L.R
1; 89 L.G.R. 24; ~1990) 6 Const. L.J. 304; (1990) 154 L.G. Rev.1010;50 BLR
1; (1991) 3 Admm. L.R. 37;H.L.; reversing [1990] 2 W.L.R. 944; [1990] 2All
E.R. 269; 88 L.G.R. 333; (1990) 134 S.J. 458; [1990] L.S.Gaz. February 7, 42,
C.A.; affirming 13 Con. L.R. 96. . . . . . . . . . . . . . . . . . 1·274, 1·277, 1·306, 1·307,
1·309, 1·327, 1·345, 1·349, 1·352, 1 ·353, 1·355, 1·357, 1·358, 1·359, 1·360,
1·361, 1·363, 1·364, 1·373, 1·388, 2·084, 2·110, 2·151, 2·152, 4·285,
4·287, 13·044, 14·002A
- - v. London Borough of Southwark (1981) 18 Build. L.R. 1 . . . . . . . . . . . . . 8·053
Murray v. Co_hen (1888) 9 N.S.W. Rep. Eq. 124. . . . . . . . . . . . . . . . . 6·036, 6·068, 6·177
--v. Rennie (1897) 24 R. (Ct. of Sess. Cas.) 965 . . . . . . . . . . . . . . . . . . . . . 3·068
Mutual Life and Citizens' Assurance Co. Ltd. v. Evatts {Clive Raleigh) [1971] A.C.
793; [1971] 2 W.L.R. 23;sub nom. Mutual Life & Citizens' Assurance Co.\{; .,
Evatts [1971] 1 All E.R. 150; 114S.J. 932; (1970] 2Lloyd's Rep. 441; [[1971]-<·
C.L.J.193], P.C... . . 1·134, 1·154, 1·282
TABLE OF CASES xci
Mutual of Omaha Insurance Co. v. Stats (1978) 87 D.L.R. (3d) 169, Can.
Sup. Ct. . . . . . . . . . . . . . . . . 15·010
Mvita Construction Co. Ltd. v. Tanzania Harbours Authority (1988) 46
BLR 19. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12·007, 12·009, 12·050
Myers v. Sari (1860) 3 E. & E. 306; 30 L.J.Q.B. 9; 9 W.R. 96; 7 Jur.(N.s.) 97; 122 R.R.
710. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7·055, 7,058, 7·059
Myers (G.H.) & Co. v. Brent Cross Services [1934] 1 K.B. 46. . . . . . . . . . . . 4·066, 4·068,
4·075, 4·085, 4·086, 4·089, 4·099, 4· 118, 4· 119, 4·120, 4·123
Myron, The. See M.V. Myron (Owners) v. Tradax Export S.A.
N.B.P. Developments v. Buildko & Sons (formerly William Townson & Sons Ltd.)
(in Liquidation) (1992) 8 Const. L.J. 377 . . . . . . . . . . . . . . . . . . . . . . . 14·039
NEIThompson v. Wimpey Construction U.K. (1988) 39 B.L.R. 65; (1988) 4 Const.
L.J. 46, C.A . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5·015, 6·006, 6·058, 6·198
N.Z. Structures Ltd. v. McKenzie [1983] N.Z.L.R. 298 C.A.; [1979] 1 N.Z.L.R.
515. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10·085, 10·086
Nabarro v. Frederick Cope & Co. Ltd. (1938) 83 S.J. 74; [1938] 4 All E.R. 565. . . 4·149
Nash Dredging v. Kestrel Marine Ltd. (1986) S.L.T. 62 . . . . . . . . . . . . . . . . . . 8·098
National Carriers v. Panalpina (Northern) [1981] A.C. 675; [1981] 2 W.L.R. 45,
(1980) 125 S.J. 46; [1981] l All E.R. 161; (1982) 43 P. &. C.R. 72, H.L...... 4·233,
4·234, 4·235, 4·236, 4·238, 4·251, 4-259
National Coal Board v. Leonard & Partners (1985) 31 Build. L.R. 117 . . . . . . . . 2·264
- v . Neill (William) & Son (1985] Q.B. 300; [1984] 3 W.L.R.1135; (1984) 128 S.J.
814; [1984] 1 Al!E.R. 555; (1984) 26Build. L.R. 81; [1984] 81 L.S.Gaz. 2930;
(1983) 133 New L.J. 938, D.C. . . . . . . . . . . . . . . . 5·013, 5·016, 5·045, 5·055, 5·057,
6·004, 6·035, 6·046, 6·049, 6·058, 6-059, 6·060, 6·061, 6·077, 6·091, 6-095
National Enterprises v. Racal Communications; Racal Communications v.
National Enterprises [1975) Ch. 397; [1975] 2 W.L.R. 222; 118 S.J. 735; (1974]
3 All E.R. 1010; [1975] 1 Lloyd's Rep. 225, C.A.; affirming [1974] Ch. 251;
[1974] 2 W.L.R. 733; (1973) 118 S.J. 329; [1974] 1 All E.R. 1118; [1974] 2
Lloyd's Rep. 21. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18·075, 18·076
National Provincial Bank of England v. Marshall (1888) 40 Ch.D. 112; 58 L.J.Ch.
229; 60 L.T. 341; 53 J.P. 356; 37 W.R. 183; 5 T.L.R. 81 . . . . . . . . . . . . . . 10·001
National Westminster Bank v. Halesowen Presswork & Assemblies [1972] A.C.
785; [1972] 2 W.L.R.455; 116 S.J.138; [1972] 1 AllE.R. 641; [1972] 1 Ll?yd's
Rep. 101, H.L.; reversing sub nom. Halesowen Presswork & Assemblies v.
Westminster Bank [1971] 1 Q.B. l; [1970] 3 W.L.R. 625; [1970] 3 All E.R.
473, C.A.; reversing [1970] 2 W.L.R. 754; 113 S.J. 939; [1970] 1 All E.R.
33 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16·015, 16.017, 16-019
- v . Riley [1986] F.L.R. 213, C.A. . . . . . . . 17·013
Natus Corporation v. U.S. 371 F. (2d) 450 (1967) . . . . . . . . . . . . . . . . 1·150, 4·203, 4·237
Nauru Phosphate Royalties Trust v. Matthew Hall (1993) 12 A.C.L.R. 99 (Supreme
Ct. of Victoria. . . . . . . . . . . . . . . . . . . . . . . . . . 8·201, 8·211, 18·159C, 18·1590
NeaAgrexSA v. Baltic Shipping Co. [1976] Q.B. 933; [1976] 2 W.L.R 925; 120 S.J.
351; [1976] 2 All E.R. 842; [1976] 2 Lloyd's Rep. 47, ~.A. . . . . . . . . . . . . 18·028
Neale v. Richardson (1938] 1 All E.R. 753; (1938) 54 T.L.R. 539; 158 L.T. 308; 82 S.J.
331, C.A.. . . . . . . . . . . 1·220, 6·063, 6·066, 6·067, 6·073, 6-091, 6·093, 6·096, 6·131,
6·147, 18-069
Neilsen (Canberra) Pty. Ltd. v. PDC Constructions (1987) B. & C. Const. L.J.
m....... 1=
Nelson v. Spooner (1861) 2 F. & F. 613; 121 R.R. 819. . . . . . . . . . . . . . . . . . . . Z.157
Nene Housing Society Ltd. v. National Westminster Bank Ltd. [1980] 16 B.L.R.
22 . . . . . . . . . . . . . . . . . . . . . . . . . 4·003, 4·004, 5·028, 17·011B, 17·012, 17·012A
Neodox Ltd. v. Swinton & Pendlebury Borough Council (1958) Build. L.R.
34. . . . . . . 2·017, 2-133, 2·141, 4·043, 4·157, 4·176, 4·177, 6·081, 6·097, 6·105, 6·113,
6·115, 6·141, 7·037, 7·039, 18°051
Neptusky v. Dominion Bridge Company Ltd. (1969) [1969] 68 W.W.R. 529
Canada . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2·275, 2-276
Nesbitt v. U.S. 345 F. 2nd 583 (1965) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12·016
Nevill (H.W.) (Sunblest) Ltd. v. William Press & Son (1982) 20 Build. L.R 78.... 4·005,
5·028, 5·042, 5-043, 5·049, 5·059, 6-017, 6·076, 6·085, 8·158
 xcii TABLE OF CASES
New Pueblo Construction v. State of Arizona 696 P. (2d) 185 (1985) ....... 4-061, 8·198
New Zealand Shipping Co. Ltd. v. Satterthwaite (A.M.) & Co. Ltd. [1975] A.C. 154;
[1974} 2 W.L.R. 865; [1974} 1 All E.R. 1015; 118 S.J. 387; sub nom. New
Zealand Shipping Co. Ltd. v. Satterthwaite (A.M.) & Co. Ltd.; Eurymedon,
The [1974] 1 Lloyd's Rep. 534, P.C. . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.065
Newbigging v. Adam. See Adam v. Newbigging.
Newfoundland Government v. Newfoundland Ry. (1888) 13 App. Cas. 199; 57
L.J.P.C. 35; 58 L.T. 285; 4 T.L.R. 292. . . . . . . . . . . . . . . . . . . . . , . 4·026, 14-051
Newham London Borough Council v. Taylor Woodrow-Anglian Ltd. (1981) 19
Build. L.R. 99, C.A. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1-045, 1·217, 4·115
Newitt, ex parte, re Garrud (1881) 16 Ch.O. 522; 51 LJ.Ch. 381; 44 L.T. 5; 29 W.R.
344. . . . . . . . . 11·025, 11·033, 11·041, 11·049, 12·051, 12·053, 12·063, 12·066, 16·042
Newman, Re, ex parte Capper (1876) 4 Ch.D. 724; 46 L.J.B.K. 57; 35 L.T. 718; 25
W.R. 244 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10-010
Newton v. Forster (1844) 12 M. & W. 772 . . . . . . . . . . . . . . . . . . . . . . . . . . . 8-087
Newton Abbot Development Co. Ltd. v. Stockman Brothers (1931) 47 T.L.R.
616. . . . . . . . . . . . . . . . . . . . 6·052, 6·055, 6-056, S.125, 8·127, 8·137, 8·227, 8·228
Ng v. Clyde Securities [1976] 1 N.S.W.L.R. 443 . . . . . . . . . . . . . . . . . . . . . . . . 2·278
Nichols v. Marsland (1875) L.R. 10 Ex. 255; (1876) 2 Ex. D. 1; [1874--80] All E.R.
Rep. 40; 46 L.J.Q.B. 174; 35 L.T. 725; 41 J.P. 500; 25 W.R. 173, C.A ....... 1·338,
4-266
Nicholson-Brown v. City of San Jose, 62 Cal. App. (3d) 526 (1976) 1·305
Nicholson and Venn v. Smith Marriott (1947) 177 L.T. 189 . . . . . . . . . . . . . . . . 1·096
Nico Jene Ltd. v. Simmonds [1953] 1 Q.B. 543; [1953] 2 W.L.R. 717; [1953} 1 All E.R.
822; 97 S.J. 247; [1953] 1 Lloyd's Rep.189. . . . . . . . . . . . . . . . 1·045, 1-148 1·180
NitriginEireann Teoranta v. IncoAlloysLtd. [1992] 1 W.L.R.498; [1992] 1 AllE.R. '
854; (1992) 135 S.J.(L.B.) 213; [1992} L.S. Gaz., January 22, 34; [1991] N.P.C.
17; (1991) 141 New L.J. 1518; The Times, November 4, 1991; The Indepen-
dent, November 28, 1991. . . . . . . . . . . . . . . . . . . . . . . 1·351, 1·360, 1·364, 1·369
Nixon v. Taff Vale Railway (1848) 7 Hare 136; 12L.T.(o.s.) 347 . . . . . . . . . . . . 7·064
Nocton v. Ashburton [1914] A.C. 932 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1·159
Nokes v. Doncaster Amalgamated Collieries [1940] A.C. 1014; 109 L.J.K.B. 865;
163 L.T. 343; 56 T.L.R. 988; [1940] 3 All E.R. 549 . . . . . . . . . . . . . . . . . 14·003
Nolan Brothers v. U.S. 405 F. 2nd 1250 (1969) . . . . . . . . . . . . . . . . . . . . . . . . 12·016
Norair Engineering Corporation v. U.S. 666 F. 2nd 546 (1981) . . . . . . . . . . . 7·050, 8·199
Norjal A/S v. Hyundai Heavy Industries Co. See K!S Norjarl A/S v. Hyundai Heavy
Industries Co.
Normoyle-Berg v. Village of Deer Creek 350 N.E. (2d) 559 (1976), Illinois . . . . . 1-305
Norsk Pacific Steamship v. Canadian National Railway [1992] 1 S.C.R. 1021; 91
D.L.R. (4th), 289. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1·277, 1·322, 1·324
Norta Wallpapers (Ireland) v. Sisk and Sons (Dublin) [1978] LR. 114; 14 Build. L.R.
49, Sup. Ct. of Ireland. . . . . . . . . . . 4-073, 4·074, 4·079, 4·092, 4·094, 4-098, 4·108,
13·008, 13·029, 13·063
North v. Bassett[1892] 1 Q.B.333;61 L.J.Q.B.177; 66 L.T.189;40W.R. 223;561.P.
389; 36 S.J. 79, 0.C. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1·204, 2·286
North Australian Territory Co., Re, Archer's Case [1892J 1 Ch. 322; 61 L.J.Ch. 129;
65 L.T. 800; 40 W.R. 212 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3·079
North British Railway v. Wilson 1911 S.C. 738; 19111 S.L.T. 327. . . . . . . . . . . . 18·068
North West Metropolitan Regional Hospital Board v. Bickerton (T.A.) & Son Ltd.
[1970] 1 W.L.R.607; [1970] 1 AllE.R.1039; 114S.J.243; 68L.G.R.447,H.L.;
affirming sub nom. Bickerton & Son Ltd. v. Norton West Metropolitan
Regional Hospital Board [1969] 1 All E.R. 977; 112 S.J. 922; 67 L.G.R. 83,
C.A.; Reversing sub nom. Bickerton (T.A.) & Son v. North West Metropoli-
tan Regional Hospital Board (1968) 66 L.G.R. 597; 207 E.G. 533.... 1·009, 1·220,
1·228, 2·144, 2·170, 2·175, 2·177, 4-060, 4-179, 4·190, 4·193, 4·194, 4-195,
4·196, 7-007, 13·008, 13-012, 13·013, 13·036, 13·055, 13·061, 13·062, 13·066,
13·067, 13·069, 13-070, 13-071, 13-072, 13·073, 13-075, 13-076, 13-078,
13·080, 13·081, 13·082, 13-083, 13-084, 13-085, 13·086, 13·087, 13-088
North Western Salt Co. Ltd. v. Electrolytic Alkali Co. [1914J A.C. 461; 83 L.J.K.B.
530; 110 L.T. 852; 30 T.L.R. 313; 58 S.J. 338 4-278
TABLE OF CASES xciii
Northampton Gas Light Co. v. Parnell (1855) 15 C.B. 630; 1 Jur. 211;24L.J.C.P. 60;
3 C.L.R. 409; 3 W.R. 179; 100 R.R. 520. . . . . . . . . . . 6-011, 6·065, 17·011E, 18·084
Northern Collstruction Co. Ltd. v. Gloge Heating and Plumbing Ltd. (1986) 27
D.L.R. (4d) 265; [1986] 2 W.W.R. 649, Alberta C.A.; (1984) 1 Const. LJ.
144 . . . . . . . . . . . . . . . . . . . . . . . . . . . . ... ...... 1·026
Northern Regional Health Authority v. Crouch (Derek) Construction Co. [1984}
Q.B. 644; [1984] 2 W.L.R. 676; (1984) 128 279; [1984] 2All E.R.175; (1984)
26 Build. L.R. 1; C.A.; affirming (1983) 24 Build. L.R. 60, D.C.. . . . . 2·078, 2·217,
6-010, 6·063, 6-064, 6·093, 6·094, 6-095, 6·182, 6·185, 6·192, 6·193, 6·218,
6-220, 10·069, 12·045, 13·048, 13·050, 13.051, 18-012, 18·112, 18-114,
18·122, 18-193, 18-194
Northumberland Avenue Hotel Co., Re, Fox and Braithwaite's Claim (1887) 56
L.T. 833. . . .......................... .... 6-021
Northwood Development Co. v. Aegon Insurance (1994) 66 BLR. . . . 17·011C, 17·011E,
17·011F, 17·012A
Norwich City Council v. Harvey (Paul Clarke) [1989] 1 W.L.R. 828; (1989) 133 S.J.
694· [1989] 1 All E.R. 1180; 45 BLR 14; (1989) 139 New L.J. 40, C.A....... 1·326,
' 13-043, 15·011, 15·014
Norwood v. Lathrop (1901) 178 Massachusetts Rep. 208 . . . . . . . . . . . . . . . . . 7·078
Nu-West Houses Ltd. v. Thunderbird Petroleums Ltd. (1975) 59 D.L.R. (3d)
292. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8·119, 8·129
Nunes (J.) Diamonds v. Dominion Electric Protection Co. (1972) 26 D.L.R. (3?)
699; Canadian Supreme Ct.; affirming (1971) 15 D.L.R. (3d) 26, Ontano
C.A. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1-372
Nuttal v. Manchester Corporation (1892) (4th ed.) Vol. 2, p. 203; 8 T.L.R. 513. 18·130,
18-131
Nuttall and Lynton and Barnstaple Ry. Re (1899) 82 L.T. 17; (4th ed.) Vol. 2,
p.279. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4·041,4·049,8-017
Nye Saunders & Partners (a firm) v. Bristow (1987) 37 Build. L.R. 92 2·159
O'Brien v. The Queen (1880) 4 Can. S.C. (Duval) 529 . . . . . . . . . . . . . . . . . . . 4·052
O'Connor v. Norwich Union Insurance [1894] 2 Ir. R. 723 . . . . . . . . . . . . . . . . 18·096
O'Connor and Whitlaw's Arbitration Re (1919) 88 L.J.K.B. 1242 . . . . . . . . 6·228
O'Dea v. Allstates Leasing System (1983) 152 C.L.R. 359. . . . . . . . . . . . . . 10·018
O'Driscoll v. Manchester Insurance Committee [1915} 3 K.B. 499. . . . . . . . 14·064,
14-065, 14-067, 14-069
O'Grady v. Westminster Scaffolding [1962] 2 Lloyd's Rep. 238 . . . . . . . . . . . . . 8·138
Ocean Tramp Tankers Corporation v. V!O Soufracht. The Eugenia [1964] 2 Q.B.
226; [1964} 2 W.L.R.114; 107 S.J. 931; [1964] 1 All E.R.161 [1963) 2 Lloyd's
Rep. 381; C.A.; reversing [1963] 2 Lloyd's Rep. 155; [1963] C.L.Y. 3200.... 4·234,
4·237
Ogilvie v. Cooke & Hannah [1952] Ont. R. 862 . . . . . . . . . . . . . . . . . . . . . . . . 8·118
Ogilvie Builders Ltd. v. Glasgow City D.C. T.N. 4.5. 1994, ~.L. Scotian~ ..... · 8-095
Oinoussian Virtue, The. See Schiffahrtsagentur Hamburg Middle East Line GmbH
Hamburg v. Virtue Shipping Corp. Monrovia; Oinoussian Virtue, The
Olanda The (1919] 2 K.B. 728 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . · 7·086
Old Gr~vebury Manor Farm v. Seymour (W.) Plant Sales and Hire (No. 2) [1979] l
W.L.R. 1397; (1979) 123 S.J. 719; [1979] 3 All E.R. 504; (1979) 39 P. & C.R.
99; (1979) 252 E.G. 1103, C.A.; affirming (1979) 38 P. & C.R 374 . . . . . . 14·058
Oldschool v. Gleesons (Construction) Ltd. (1976) 4 Build. L.R.103, O.C.... 1·311, 1·319
One Hundred Simcoe Street v. Frank Burger Contractors [1968] 1 Ont. L.R. 452
(Canada) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4·281, 17-023
Onerati v. PhillipsConstructionsPty. Ltd. ((Unrep.)May 12, 1989,N.S.W. Sup. Ct. 1·254
Ormes v. Beadel (1861) 2 Giff.166; 2De G.F. &J. 333;30 L.J.Ch. l; 2 L.T. 308;3 L.T.
344; 6Jur.(N.s.) 550, 1103; 9 W.R. 25; 128 R.R. 77 . . . . . . . . . . . . . . . . . 3·077
Osborn v. Leggett (1930) S.A.S.R. 346.............................. 13·101
Osborne Panama S.A. v. Shell & B.P. South African Refineries [1980] 3 S.A. 653,
affirming [1982] 4.S.A. 890 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1·322
OscarChessv. Williams [1957] 1 W.L.R.370; 101 S.J.186; [1957] 1 AllE.R.325; [101
S.J. 292; 91 LL.T. 213; 73 L.Q.R. 144; 20 M.L.R. 410; [1958] C.L.J. 22]
C.A. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1·142
Osenton (Charles) & Co. v. Johnston [1942] A.C. 130; 110 L.J.K.B. 420; 165 L.T.
235; 57 T.L.R. 515; [1941] 2 All E.R. 245 . . . . . . . . . . . . . . . . . . . . . . . 18· 104
Oshawa (The City of) v. Brennan Paving [1955] S.C.R. 76. . . . . . 6·096, 6·133, 6·149
 xciv TABLE OF CASES
Ottawa Northern and Western Railway Co. v. Dominion Bridge Co. (1905) 36
S.C.R. 347. · · . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10·035 10·040
Otto v. Bolton & Norris [1936] 2 K.B. 46; 105 L.J.K.B. 602; 154L.T. 717; 52 T.L.R. '
438; 80S.J. 306; [1936] 1 All E.R. 960..................... . . 1·314, 1·316
Overbrooke Estates Ltd. v. Glencombe Properties Ltd. [1974] 1 W.L.R. 1335;
. [1974] 3 All E.R. 511; 118 S.J. 775 . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1·177
Owmt Homes Pty. Ltd. v. Mancuso unreported, Federal Court of Australia,
Queensland Registry, April 29, 1988: see (1988) 7 A.C.L.R. 358. . . . . 2·274, 2·280
Oxford v. Provand (1868) L.R. 2 P.C. 135; 5 Moo. P.C.C.(N.s.) 150 . . . . . . . . . . 4·303
P. & M. Kaye v. Hosier & Dickinson. See Kaye (P. & M.) v. Hosier & Dickinson
Pacific Associates v. Baxter [1990] 1 Q.B. 993; [1989] 3 W.L.R.1150; (1989) 133 S.J.
123; [1989] ~ All E.R. 159; 44 BLR 33; 16 Con. L.R. 90; (1989) New L.J. 41,
C.A.; affirming 13 Con. L.R. 80. . . . . . . . . . . . . . . . . . . . . . . 1·130, 1·278, 1·288,
1·290, 1·295, 1·296, 1·296A, 1·296B, 1·303, 1·305, 1·306, 1·306A, 1·306B, 1·325,
2·073, 2·221, 3·078, 4·200, 6-097, 6·111, 6·228, 7·027, 18·071, 18·047
Page v. Llandaff and Dinas Powis Rural Council (1901) Hudson, (4th ed.) Vol. 2,
p. 316... · · . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6·119, 6·121, 6·142, 6·222
Paget v. Marshall (1884) 28 Ch.D. 255; 54 L.J.Ch. 575; 51 L.T. 351; 49 J.P. 85; 33
W.R. 608 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1·116
Palgrave Gold Mining Co. v. McMillan [1892] A.C. 420 . . . . . . . . . . . . . . . . . . 18·077
Panama and South Pacific Telegraph Co. v. India Rubber, etc. Co. (1875) L.R. 10
Ch. App. 515; 45 L.J.Ch. 121; 32 L.T. 517; 23 W.R. 585 ....... 2·233, 3·079, 6-109,
6· 128, 12·078
Panamena Europea Navegacion (Compania Limitada) v. Frederick Leyland & Co.
Ltd. See Compania Panamena Europea Navegacion v. Frederick Leyland &
Co. Ltd. (J. Russell & Co.).
Pantalone v. Alaovie (1989) 18 N.S.W.L.R. 119, N.S.W. Supreme Ct ....... 5·060, 8·108,
8·136
Pao On v. Lau Yiu Lang [1980] A.C. 614; [1979] 3 W.L.R. 435; [1979] 3 AllE.R. 65;
(1979) 123 S.J. 319, P.C. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1·068, 1·077
Paramatta.City Council v. Lutz [1988] 12 N.S.W.L.R. 293 .......... 8·108, 8·136, 8·143
Parker Games & Co. Ltd. v. Turpin [1918] 1 K.B. 358 . . . . . . . . . . . . . . . . . . . 18-121
Parkinson (Sir Lindsay) & Co. Ltd. v. Commissioners of His Majesty's Works and
Public Buildings [1949] 2 K.B. 632; [1950] 1 All E.R. 208; [210 L.T. 25; 100
L.J. 677], C.A.; affirming [1948J W.N. 446; 93 S.J. 27. . . . . . . . 1·271, 3·045, 4·262,
7·090, 8·075, 8·219
Parle v. Leistikow (1883) 4 N.S.W.L.R. 84 . . . . . . . . . . . . . . . . . . . . . . . . . . . 10·033
Parsons v. Sexton (1847) 4 C.B. 899; 16 L.J.C.P. 181; 2 C. & K. 266; 11 Jur. 849; 149
R.R. 822. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6·011, 6-024
--v. Way and Waller [1952} C.P.L. 417; 159 E.G. 524. . . . . . . . . . . . . . . 2·203, 2·204
Parsons (H.) (Livestock) v. Uttley Ingham & Co. [1978] Q.B. 791; [1977] 3 W.L.R.
990; (1977) 121 S.J. 811; [1978] 1 All E.R. 525; [1977] 2 Lloyd's Rep. 522,
C.A. - .. · · - . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8·110
Parsons Bros. Ltd. v. Shea (1965) 53 D.L.R. (2d) 86 .............. 1-068, 1·264 4-255
Partington Advertising Co. v. Willing & Co. (1896) 12 T.L.R. 176 . . . . . . . . . . . ll-016
Partington & Son (Builders) v. Tameside Metropolitan Borough Council (1985)
2 Const. L.J. 67; (1985) 5 Con. L.R. 99; [1985] C.I.L.L. 213; (1985) 32 Build.
L.R. 150 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6·063
Paskby v. Birmingham Corporation (1856) 18 C.B. 2; 107 R.R. 176........ 6-161, 6·187
Paterson v. Gand~sequi (1812) 15 East 62; 13 R.R. 368 ............... 13·031, 13·110
Patman & Fothermgham Ltd. v. Pilditch (1904) (4th ed.) Vol. 2, p. 368. . . . . 8·022, 8·023
Pauling v. Dover Corporation (1855) 10 Ex. 753; 24 L.J.Ex. 128; 102 R.R.
811. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12·034, 12·035
- - v. Pontifex (1852) 20 L.T.(o.s.) 126; 2 Saund. & M. 59; 16 J.P. 792; 1 W.R.
64 · · .... · . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3-053
Pavey & Matthews v. Paul (1987) 162 C.L.R. 221, High Court of Australia . . . . . 1·268,
1·269, 1·270, 4·274, 4-282, 7-076, 8·104
Pawley v. Turnbull (1861) 3 Giff. 70; L.T. 672; 7 Jur.(N.s.) 792; 133 R.R. 20 .... Y· 6·096,
6-128,6·143
TABLE OF CASES xcv
Payne v. Wheeldon (1954) 104 L.J. 844. . . . . . . . . . . . . . . . . . . 1·262, 2-265
Peabody Donation Fund Governors v. Parkinson (Sir Lindsay) & Co. [1985] A.C.
210; [1984] 3 W.L.R. 953; [1984] 3 AIIE.R. 529; (1984) 128 S.J. 753; [1985] 83
LG.R. 1; (1984) 28 Build. L.R. 1; [1984) C.I.L.L. 128; (1984) 81 L.S. Gaz.
3179, H.L.; affirming [1983] 3 W.L.R. 754; [1983] 3 AIIE.R. 417; (1983) 127
S.J. 749; (1984) 47 P. & C.R. 402; [1984] 82 L.G.R. 138; (1984) 25 Build. LR.
108, C.A.; [(1984-85) 1 Const. L.J.175] . . . . . . . . . . . . . . . . . . 1·350, 1·359, 1·384
Peachdart, Re [1984] Ch.131; [1983] 3 W.L.R. 878; (1983) 127 S.J. 839; [1983] 3 All
E.R. 204; (1984) 81 L.S. Gaz. 204. . . . . . . . . . . . . . . . . . . . . . . . . 11·053, 11·056
Peacock Construction Co. v. West (1965) 142 S.E. (2nd) 332...... 13·111, 13-112, 13·113
--v. Modem Air Conditioning (1977) 353 So. (2nd) 840 . . . . . . . . . . . . . . . . 13-112
Peak Construction (Liverpool) Ltd. v. McKinney Foundations Ltd. (1970) 69
LG.R. 1. . . . . 2·175, 8-059, 10·021, 10·026, 10·034, 10,036, 10·038, 10·040, 10·091A
Pearce v. Brooks (1866) LR. 1 Ex. 213; 12 Jur. 342; 35 L.J.Ex. 213; 14 W.R. 614;
4 H. & C. 358; 14 L.T. 288 . . . . . . . . . . . . . . . . . . . . . 4·273
- v . Tucker (1862) 3 F. & F. 136. . . . . . . . . . . . . . . . . . . . . 4-082, 4·101, 4·107, 4·124
Pearce (C.J.) & Co. v. Hereford Corporation (1968) 66 L.G.R. 647. . . . . . . 2·138, 4-050,
4·179, 7·007, 7·030
Pearson & Son Ltd. v. Dublin Corporation [1907] A.C. 351 {1904--7] All E.R. Rep.
255; 77 L.J.P.C. 1; 97 L.T. 645. . . . . . . . . . . . . . . . . .. 1·165, 1·166, 2·232, 3·077
Pearson Bridge (N.S.W.) v. State Rail Authority of New South Wales (1982) 1
A.C.L.R. 81. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17·072,17·073, 17-075
Pearson-Building v. Pioneer Grain Co. (1933) 1 W.W.R. 179 . . 8·125
Peek v. Gurney (1873) L.R. 6 H.L. 377; 43 L.J.Ch. 19; 22 W.R. 29, H.L.; affirming
(1871) L.R. 13 Eq. 79 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . J.145
Penn Bridge v. City ofNewOrleans 222F. 733 (1915), 5th Circuit, Court of Appeals 4·061
Penvidic Contracting Co. v. International Nickel of Canada [1975] 3 D.L.R. (3d)
748, Canada Supreme Ct. ......... 4-144, 4·148, 4·154, 4·168, 8·197, 8·198, 8·206
Pepper v. Burleigh (1792) 1 Peake N.P. 139; 3 RR. 665. . . ...... 7·084, 7·090
Perar B.V. v. General Surety & Guarantee Co., (1994) 66 BLR 72, C.A., May
1994. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16·022, 16·047, 16·056, 17·012A
Percy Bilton Ltd. v. Greater London Council [1982] 1 W.L.R. 794 . . . . . . . . . . . 13-074
Percival v. Dunn (1885) 29 Ch.D. 128; 54 L.J.Ch. 570; 52 L.T. 320 . . . . . . . . . . . 14·048
--v. London City Council Asylums (1918) 87 L.J.Q.B. 677 . . . . . . . 3·073
Perini Corporation v. Commonwealth of Australia (1969) 12Build. L.R. 82, N.S.W.
Sup. Ct. [1969} 2 N.S.W.R. 530. . . . . . . . . . . . . . 1·188, 4-197, 4-201, 6·097, 6·115,
6·132, 6·133, 6·145, 6-151, 6-168, 8·054, 8·199, 8·206, 10·078, 10·079, 10-087
Perini Pacific v. Greater Vancouver Sewerage and Dr_ainage District (1966) 57
D.L.R. (2d) 307................. 8·221, 10·024, 10·025, 10,036, 10·038, 10·040
Perl (P.) (Exporters) v. Camden London Borough Council [1984] Q.B. 342; [1983]
3 W.L.R. 769; [1983] 127 S.J. 581; (1980) 80 L.S.Gaz. 2216, C.A. . . . . . . . 1·321
Perryv. Phillips (Sidney) & Son (A Firm) [1982] 1 W.L.R.1297; (1982) 126S.J. 626;
[1982] 3 All E.R. 705; (1983) 22 Build. L.R.120; (1982) 263 E.G. 888; (1982)
79 L.S. Gaz. 1175, C.A.; reversing [1982] 1 All E.R. 1005; [1981] 260 E.G.
389................ 2·207, 2·209, 2-210, 2-211, 8·141, 8·149, 8·150, 8·160, 8·188
- v. Sharon Development Co. [1937] 81 S.J. 1021; 4 All E.R. 390. . . . . . . 4-078, 4·105
- v . Stopher [1959] 1 W.L.R. 415; 103 S.J. 311; [1959] 1 AIIE.R. 713... 18·169, 18·178,
18·192
- - v. Tendering District Council; Thurbon v. Same (1984) 30 Build. L.R. 118;
[1985] 1 E.G.L.R. 260; [1985] C.I.L.L. 145; (1984) 1 Const. L.J. 152; (1984)
3 Con. L.R. 74 . . . . . . . . . . . . . . . 2· 151
Peterlin v. Allen (1975) 49 A.L.J.R. 239 . . . . . . . . . . . 1·107
Peters v. Quebec Harbour Commissioners (1891) 19 Can. S.C. (Duval) 685 . . . . 6·016,
6·096, 6·129, 6-144, 6·149, 6·151
Pethick Brothers v. Metropolitan Water Board Hudson Building Contracts (4th
ed.), Vol. 2, p. 456, C.A. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18·044
Petrie v. Hunter (1882) 2 Ont. Rep. 233 . . . . . . . . . . . . . . . . . . . . . . . . . . 6-217, 17-017
Petrofina S.A. of Brussels v. Compagnia Italiana (1937) 53 T.L.R. 650; 42 Com. Cas.
286. . . . . . . . . . . . . . . . . . . . . . . . . 5-014, 5·057, 6·052, 6·055, 6·056, 6·058, 6-059
Petrofina(U.K.) v. Magnaload [1984] Q.B.127; [1983]3 W.L.R. 805; (1983) 127 S.J.
729; [1983] 3 All E.R. 35; [1983] 2 Lloyd's Rep. 91; (1984) 25 Build. L.R. 37;
(1983) 80 L.S. Gaz. 2677. . . . . . . . . . . ................ 15·009, 15·060
Petty v. Cooke (1871) L.R. 6 Q.B. 790; 40 L.J.Q.B. 281; 25 L.T. 90; 19 W.R. 1112. 17·024
Peyman v. Lanjani [1985] Ch. 457; [1985] 2 W.L.R.154; [1984] 3 AIIE.R. 703; (1984)
128 S.J. 853; (1984) 48 P. & C.R. 398; (1985) 82 L.S. Gaz. 43, C.A. . . . . . . 1-146
 xcvi TABLE OF CASES
Philadelphia Ry. v. Howard (1851) 13 How. (U.S.) 307 . . . . . . . . . . . . . . . 12-068
Philips (Hong Kong) Ltd. v. Att.-Gen. of Hong Kong (1993) 61 BLR 41. . . . . . . 10·019,
10·060, 10·061
Philips v. Ward [1956] 1 W.L.R. 471; 100 S.J. 317; [1956] 1 All E.R. 874..... 2-206, 2·207,
2·209, 2·210, 2·2.1,1, 8·117, 8·128, 8·132, 8·145, 8·146
Phillips v. Alhambra Palace Co. [1901] 1 K.B. 59; 70 LJ.K'.B. 26; 83 L.T. 431; 44
W.R. 223 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4·270, 14·072
--v. Britannia Laundry [1923] 1 K.B. 539 ........ , . . . . . . . . . . . . . . . . . 1·387
- v . Brooks Ltd. [1919} 2 K.B. 243; [1918-19} All E.R. Rep. 246; 88 L.J.K.B. 953;
121 L.T. 249; 35 T.L.R. 470; 24 Com. Cas. 263 . . . . . . . . . . . . . . . . . . . . 1·098
Phillips Products v. Hyland [1987] 1 W.L.R. 659; (1987] 2 All E.R. 620; (1985) 129
S.J. 47; (1988) 4 Const. L.J. 53; [1985] Tr. L. 98; (1985) 82 L.S. Gaz. 681, C.A. 1·241
Phipps v. Edinburgh Ry. (1843) 5 D. (Ct. of Sess. Cas.) 1025 . . . . . . . . . . . . . . . 18,127
Photo Production Ltd. v. Securicor Transport Ltd. [1980] A.C. 827; [1980] 2 W.L.R.
283; [1980] 1 All E.R. 556; (1980) 124 S.J. 147; [1980] 1 Lloyd's Rep. 545,
H.L.;reversing[1978] 1 W.L.R.856; [1978] 3 AllE.R.146; (1978) 122S.J.315;
[1978] 2 Lloyd's Rep. 172, C.A.................... 1·231, 1,232, 1·233, 4·227
Pickering v. Ilfracombe Ry. (1868) L.R. 3 C.P. 235; 37 L.J.C.P. 118; 17 L.T. 650; 16
W.R. 458. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6·206, 6·207, 14·046
--v. Sogex Services (U.K.) Ltd. (1982) 263 E.G. 770; (1982) 20 Build. L.R. . . . 2·267
Pierce v. Dyke [1952] 2 W.L.R. 30 (Jamaica). . . . . . . . . . . . . . . . . . . . . . 6·066, 18.()69
Pierce (Fred.) v. Troke (1957) 8 D.L.R. (2d) 5 4·020
Piggott v. Townsend (1926) 27 S.R. (N.S.W.) 25 ...... 6·063, 6·071, 6-093, 10·069, 12·045
Pigott Construction v. W.J. Crowe Ltd. (1961) 27 D.L.R. 258. ...... 4·147, 4·148, 4·158,
4·214, 9·003, 12·050, 12-080, 13·134
Pigott Structures v. Keillor Construction Co. (1965) 50 D.L.R. (2d) 97 (Canada) . 1·028,
1,029, 3·058
Pillar P.G. v. Higgins (D.J.) Construction (1986) 10 Con. L.R. 46; (1986) 2 Const.
L.J. 223; (1986) 34 Build. L.R. 43, C.A. . . . . . . . . . . . . . . . . . . . . . . . . 6·199
Pillings (C.M.) & Co. v. Kent Investments (1985) Build. L.R. 8.0; (1985) 1 Const. L.J.
393; [1985] C.I.L.L. 181, C.A.. . . . . . . . . . . . . . . . . . . . . . . . 4·222, 6·006, 6·213
"Pine Hill", The. See Halifax Overseas Freighters v. Rasno Export; Technopromin-
port; and Polskie Linie Oceaniczne P.P.W. The "Pine Hill."
Pinnel's Case (1602) 5 Co. Rep. 117a; [1558-1774] All E.R. Rep. 612; 77 E.R. 237;
sub nom. Penny v. Care Moore K.B. 677 . . . . . . . . . . . . . . . . . . . . . . . . . . 1·074
Pinnock Brothers v. Lewis & Peat Ltd. [1923} 1 K.B. 690 . . . . . . . . . . . . . . . . . 18·048
Pinto Leite & Nephews, Re, ex parte Des Olivaes (Visconde) [1929] 1 Ch. 221; 98
L.J.Ch. 211; 140 L.T. 587; [1928] B. & C.R. 188 . . . . . . . . . . . . . . . . . . . 14·052
Pioneer Shipping v. B.T.P. Tioxide; Nema, The [1982) A.C. 724; [1981] 3 W.L.R.
292; (1981) 125 S.J. 542; (1981] 2 All E.R.1030; [1981] 2 Lloyd's Rep. 239;
[1981] Com. L.R. 197; H.L.; affirming [1980] Q.B. 547; [1980] 3 W.L.R. 326;
[1980] 3 All E.R. 117; sub nom. B.T.P. Tioxide v. Pioneer Shipping and
Armada Marine S.A.; Nema, The [1980} 2 Lloyd's Rep. 339, C.A.; reversing
[1980] 2 Lloyd's Rep. 83. . . . . . . . . . . . . . . . . . . . . . . . . . . 4·236, 4-259, 18·004,
18·005, 18·011, 18·017, 18·022, 18·044, 18·062, 18·115, 18·120, 18·151, 18·159A,
18·173, 18·174, 18·175, 18·176, 18·177, 18·181, 18·194, 18·195, 18·199
Pirelli General Cable Works v. Faber (Oscar) & Partners [1983] 2 A.C. 1; [1983] 2
W.L.R. 6; (1983) 127 S.J.16; [1983] 1 AUE.R. 65; (1983)265 E.G. 979; (1983)
133 New L.J. 63, H.L.; reversing (1982) 263 E.G. 879, C.A.. . . . . . . . 1·348, 1·349,
1·360, 2·084, 2·110, 2·222, 4·288
Pitcaithly & Co. v. Mclean & Son (1911) 31 N.Z.L.R. 648 . . . . . . . . . . . . . . . . 3.074
Pitchers Ltd. v. Plaza (Queensbury), 162 L.T.213; 56T.L.R. 257; 84S.J. 76; [1940] 1
All E.R. 151. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18· 121, 18· 122
Planch6 v. Colborn (1831) 8 Bing.14; 1 L.J.C.P. 7; 1 Moo. & Sc. 51;5 C. & P. 58; 34
R.R. 613 . . . . . . . . . . . . . . 8· 104
Platt v. Parker (1866) 2 T.L.R. 786. . . . . . . . . . . . . . 9·016, 12·050, 12·051, 12.()53
Plimsaul v. Lord Kilmorey (1884) 1 T.L.R. 48. . . . . . . . . . . . . . . . . . . . . 2·072, 2·288
Plucis v. Fryer (1967) 41 A.L.J.R. 192. . . . . . . . . . . . . . . . . . . . . . . . . 18-038, 18·041
Pompe v. Fuchs (1876) 34 L.T. 800 . . . . 18·048
Pontifex v. Wilkinson (1845) 1 C.B. 75; 2 C.B. 349. . . . . . . . . . . . . . . . . . . 4·032, 4·216
Port Glasgow Magistrates v. Scottish Construction Co., 1960 S.L.T. 319. . . . 6·016, 6·087,
10,(170, 10·074
Port Line v. Ben Line Steamers [1958] 2Q.B.146; [1958] 2 W.L.R. 551; 102 S.J. 232;
[1958] 1 All E.R. 787; [1958] 1 Lloyd's Rep. 290 .................., 4·234
Port of Melbourne Authority v. Anshun Pty. Ltd. (1981) 147 C.L.R. 589, High
Court of Australia 326 A.L.R. 3 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1·250
TABLE OF CASES xcvii
Porter v. Hannah Builders [1969] E.R. 673 ... 4·305, 12·001, 12,089, 12·091, 12·095, 12·097
--v. Tottenham Urban District Council [1915] 1 K.B. 776; 84 L.J.K.B.1041; 112
L.T. 711; 79 J.P. 169; 31 T.L.R. 97; 13 L.G.R. 216....... 4·165, 4-167, 4·168, 4·175
Portsmouth, The [1912] A.C. 1 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . , . . 13· 100
Portuguese Plastering Contractors (Pty.) v. Bytenski 1956 (4) S.A. 812. . . . . . . . 6·157
Patton Homes v. Coleman Contractors (Overseas) (1984) 128 SJ. 282; (1984) 28
Build. L.R.19; (1984) 81 L.S. Gaz.1044, C.A....... 17·072, 17-073, 17·074, 17·075
Poucher v. Treahey (1875) 37 U.C.Q.B. 367 . , . . . . . . ... . . . . . . . . . . . . . . 17·017
Powell v. Evan-Jones & Co. [1905] 1 K.B. 11; 74 L.J.K.B. 115; 92 L.T. 430; 53 W.R.
277; 10 Com. Cas. 36; 21 T.L.R. 55. . . . . . . 3·079
Powell River Paper Co. v. Wells Construction [1912] 2 D.L.R. 340 . . . . . . . 17·012
Pratt v. St. Albert Protestant Separate School District No. 6. (1969) 5 D.L.R. (3d)
451, Supreme Ct.; affirmed Supreme Ct. of Canada (1969) 7 D.L.R. (3d)
560 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2-158
--v. Swanmore Builders and Baker [1980} 2 Lloyd's Rep. 504. . . . . . . 18·077, 18·135,
18·146, 18·147, 18·155, 18·158
Pratt (Valerie) v. Hill (George) (a firm) (1987) 38 Build. L.R. 25, C.A.. . . . . 1·130, 2·166
Prenn v. Simmonds [1971] 1 W.L.R.1381; [1971] 3 All E.R. 237; 115 S.J. 654, H.L. 1·216
President of India v. La Pintada Compania Navigacion S.A. [1985] A.C. 104; [1984]
3 W.L.R.10; (1984) 128S.J. 414; (1984] 2AllE.R. 773; [1984} 2Lloyd'sRep.
9; [1984] C.I.L.L.110; [1984] L.M.C.L.Q.365; (1984) 81 L.S. Gaz.1999, H.L.;
reversing [1984] 1 Lloyd's Rep. 305, D.C.. . . . . . . . . . 8·088, 8·092, 8·093, 18·010
Prestige & Co. Ltd. v. Brettell, 55 T.L.R. 59; 82 S.J. 929; [1938] 4 All E.R.
346. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6·067, 6·072, 6·091
Price v. Strange [1978] 1 Ch. 337; [1977) 3 W.L.R. 943; (1977) 121 S.J. 816; [1977] 3
All E.R. 371; (1978) 36 P. & C.R. 59; (1977) 243 E.G. 295, C.A. . . . . . . . . 4·301
Price (S.J. & M.M.) v. Milner (1968) 206 E.G. 313. . . . . . . . . . . . . . 4-182, 4·210, 7·092
Priestley v. Stone (1888), 4th ed., Vol. 2, p. 134; 4 T.L.R. 730 . . . . . . . . . . . . . . 6·111
Prince Albert (The City of) v. Underwood and Mclellan & Associates (1969) 3
D.L.R. (3d) 385 ................ 2·093, 2·097, 2·139, 2· 182, 2· 184, 2· 192, 4·056,
8·224, 14·034, 15·007
Prince Albert Pulp Co. v. Foundation Co. of Canada (1976) 68 D.L.R. (3d)
283.. . ........... 5·057, 6-017, 6·046, 6·057
Printing Machinery Co. v. Linotype and Machinery Ltd. [1912] 1 Ch. 566; 81 L.J.Ch.
422; 106 L. T. 743; 28 T.L.R. 224; 56 S.J. 271. ................. 18·099, 18·100
Pritchett and Gold and Electrical Power Storage Co. v. Currie [1916] 2 Ch. 515; 85
L.J.Ch. 753; 115 L.T. 325 ............... 11·009, 11·054, 11·062, 13·039, 13·132
Promenade Investments v. State of New South Wales (1992) 26 N.S.W.L.R.
203................ . .. 18·005, 18·022, 18·174
Property Investments (Development) v. Byfield Building Services (1985) 31 Build.
L.R. 47.... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18·115, 18·122, 18·196
Prosser v. Edmonds (1835) 1 Y. & C. (Ex.) 481; 160 E.R.196 . . . . . . . . . . . . . . 14·024
Provident Accident v. Dahne & White [1937] 2 E.R. 255 . . . . 17·023
Public Works Commissioner v. Hills [1906] A.C. 368; 75 L.J.P.C. 69; 94 L.T.
833. . . . . . . . . . . . . . . . . . . . . . 10·006, 10,012
Purity Dairy Ltd. v. Collinson (1966) 57 W.W.R. 737; (1966) 58 D.L.R. (2d) 67,
Canada . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1·247
Purser & Co. (Hillingdon) Ltd. v. Jackson [1977] Q.B. 166; [1976] 3 W.L.R. 700;
[1976] 3 All E.R. 641; (1976) 242 E.G. 689; 120 S.J. 351. . . . . . . . . . . 1·252, 1·253
Pye v. British Automobile Commercial Syndicate [1906] 1 K.B. 425;75 L.J.K.B. 270;
22 T.L.R. 257 . . . . . . . . . . . . . . . . . . 10.012
Pyrok Industries v. Chee Tat Engineering Co., 41 BLR 124........ 2·119, 6·160, 10-076
Qantas Airways Ltd. v. Joseland and Gilling (1987) 3 Const. L.J. 299, New South
Wales Supreme Ct. Ct. of Appeal. . . . . .... 5·039, 18·174
Queen, The v. Ron Engineering. . . . . . . . . . . . . . . . . .............. 8·047, 8·048
--v. Walter Cabott Construction Ltd. [1975} 69 D.L.R. (3d) 54 . . . . . . . . 1·155
Queen in the Right of Ontario v. Ron Engineering and Construction Eastern Ltd.
[1981] 1 S.C.R.111; (1981) 119 D.L.R. (3d) 267... 1·019, 1-025, 1·030, 1·058, 1·108
Queensland Construction Ltd. v. Commonwealth (1985) 4 A.C.L.R. 94 1·159
Queensland Gov't Rly. v. Manufacturer's Mutual Insurance (1968) 118 C.L.R.
314. . . . . . . . . . . . . . . . . . . . . . . . . . 15·031, 15-032
Quercetti v. Tranquilli [1941] 4 D.L.R. 63 . . . . . . . 14·065
R. v. Architects' Registration Tribunal, ex parte Jaggar [1945] 2 All E.R. 131. 2·012, 2·007
xcviii TABLE OF CASES
R. v. Breeze [1973] 1 W.L.R. 994; [1973] 2All E.R.1141; (1973] Crim. L.R. 458;sub
nom. Architects Registration Council v. Breeze, 117 S.J. 284; 57 Cr. App. R.
654, C.A.. . . . . . . . . . . . . . . . . . . . . . . . 2·013, 2·019
- - v. Commissioners of Sewers for Essex (1885) 14 Q.B.D. 561 . . . . . . . . . . . 4·265
- - v. Enfield London Borough Council ex parte T.F. Un win (Roy don) 46 BLR 1;
[1989] C.0.D. 466; (1989} 1 Admin. L.R. 51; (1989} 153 L.G. Rev. 890,
D.C. . . . . . . . . . . . . . . . . . . . . . 3·082
- - v. Henrickson & Knutson (1911} 13 C.L.R. 473 ....... : . . . . . . . . . . . . 15·061
--v. London Borough of Enfield, ex parteT.F. Un win (Roydon). See R. v. Enfield
London Borough Council ex parteT.F. Unwin (Roydon)
- - v. London Borough of Islington ex parte Building Employer's Confederation
[1989] IRLR 382; 45 BLR 45 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3·082
- - v. Ontario Tobacco Growers Marketing Board, ex parte Grigg [1965] 2 O.R.
411 (Canada) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1·105
--v. Paradis and Farley Inc. [1942] S.C.R. 10. . . . . . . . . . . . . . . . . 1·168, 4-050, 4·052
1
i:t~e~82.~t~}t
=i:(3d) I~!s{~~;i'a~L~1'. lii11\ 69 T:L.R: (3d) 54i; (i964j 440:L:RC:0 ' ' 2 7 044
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4·143, 4·145, 4-148, 4·154, 4·155
- - v. Watson (1976) 9 A.L.R. 551. . . . . . . . . . . . . . . . . . . . . . . . . . . . 18·147, 18·164
R.I.C.S. v. Shepheard [1947] E.G., May 31 . . . . . . . . . . . . . . . . . . . . . . . . . . . 2·033
Radford v. De Froberville (Lange third party) [1977] 1 W.L.R.1262subnom. Rad-
ford v. De Froberville [1978] 1 AllE.R. 33; (1977)121 S.J. 319; (1977) 35 P. &
C.R. 316; (1977) 7 Build. L.R. 35 .... 2·207, 5·061, 8·130, 8·132, 8·135, 8·136, 8·141,
8·149, 8·153
Raffles v. Wichelhaus (1864) 2 H. & C. 906; 33 L.J.Ex. 160; 159 E.R. 375 .... 1·099, 1·101
Rainer (John) & Co. v. U.S. 325 F. 2nd 438 (1963) . . . . . . . . . . . . . . . . . . 12·015, 12·016
Ralph M. Lee-Ltd. v. Gardner & Naylor Industries, February 11, 1993 (Unrep.).. 8·211A,
18·1590
Ramac Construction Co. v. J.E. Lesser (Properties) Ltd. [1975] 2 Lloyd's Rep.
430. . . . . . . . . . . . . . . . . . . . . 6·007, 6°075, 6·087, 10·041, 10·077, 10·095, 18·092
Ramada Development Co. v. U.S. Fidelity and Guaranty Co. (1980) 626 F. (2d)
517 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17·047
Ramsay v. Brand (1898) 25 R. (Ct. of Sess.) 1212; 35 Sc. L.T. 927 . . . . . . . . . . . 6·015
Ramsden and Carr v. Chessum & Sons (1913) llOL.T. 274; 78J.P.49;58 S.J. 66;30
T.L.R 68. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13.037, 13·039
Ramsgate Victoria Hotel Co. v. Montefiore; Ramsgate Victoria Hotel Co. v. Gold-
smid (1866) L.R.1 Ex.109;4H. & C.164; 13 L.T. 715;35 L.J.Ex. 90; 14 W.R.
335; [1861-73] All E.R. Rep. Ext. 2232; 13 L.T. 715; 12Jur.(N.s.) 455 .. 1·028, 3·068
Randall v. Trimen (1856) 18C.B. 786;25L.J.C.P. 307;27L.T.(o.s.)57, 173; 107R.R.
516. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2·080, Z.082
Ranger v. Great Western Rly. Co. (1854) 5 H.L.C. 72; 24 L.T.(o.s.) 22; 18Jur. 795;
3 Rail. Cas. 298; 101 R.R. 46 . . . . . . . . . . . . . . . . 2·029, 6·033, 6·099, 6·102, 6·104,
6-105, 6-140, 10·008, 12·082, 18·128
Rapid Bu~lding Group Ltd. v. Ealing Family Housing Association Ltd. (1984) 24
Budd. L.R. 5, C.A. . . . . . . . . . . . . . . . . . . . . . . . . 10·025, 10,038, 10·040, 10·065
RasboraLtd. v. J.C.L. Marine Ltd.; Atkinson v. J.C.L. Marine Ltd. [1977] 1 Lloyd's
Rep. 645, D.C. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1·241
Rashleigh v. South Eastern Railway (1851) 10 C.B. 612; 84 R.R. 725 . . . . . . . . . 4-250
Rawlings, ex parte; re Davis (No. 3) (1888) 22 Q.B.D. 193; 37 W.R. 203; 5 T.L.R.
119 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . : . . . . . . . 14·037
- - v. General Trading Co. [1921] 1 K.B. 635; 90 L.J.K.B. 404; 124 L.T. 562; 26
Com. Cas. 171; 65 S.J. 220; 37 T.L.R. 252 . . . . . . . . . . . . . . . . . . . . . . . J.080
Rayack Construction Ltd. v. Lampeter Meat Co. Ltd. (1979) 12 Build. L.R
30.. ·.... : . . . . . . . . . . . . . . . . . . . . . . . . . . 8·084, 8·085, 8·086, 14·045, 16·058
Reardon Smith Lme v. Hansen-Tangen; Hansen-Tangen v. Sanko Steamship Co.;
Diana Prosperity, The [1976] 1 W.L.R. 989; 120 S.J. 719; [1976] 3 All E.R.
750; [1976] 2 Lloyd's Rep. 621, H.L. . . . . . . . . . . . . . . . . . . . . . . . . . . . 1·216
Redland Bricks Ltd. v. Morris [1970} A.C. 652; [1969} 2 W.L.R. 1437; [1969] 2 All
E.R. 576; 113 S.J. 405, H.L.; reversing sub nom. Morris v. Redland Bricks
Ltd. [1967] 1 W.L.R. 967; [1967] 3 All E.R.1; 111 S.J. 373, C.A...... 1·343, 4-304
Redmond v. Wynne (1892) 13 N.S.W. Rep. (Law) 39...... . . . . . . . . . . . . . . 6·106
Redpath Doorman Long v. Cummins Engine Company [1982J S.L.T. 489, Ct. of
Sess. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4·222, 6·202, (i:21.4, 12-057
Reed Publishing Holdings v. King's Reach Investments Ltd. (Unrep.) May 25, 19&3,
C.A. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14·059, 14·060, 14·062
TABLE OF CASES xcix
Rees v. Lines (1837) 8 C. & P. 126. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4·032, 4-216
Rees Hough Ltd. v. Redland Reinforced Plastics Ltd. (1985) 27 Build. L.R. 136;
(1984} C.I.L.L. 84; (1984) Const. L.J. 67; (1984) 134 New LJ. 706. . . . . . . 1·240
Rees and Kirby v. Swansea City Council (1985) 30 Build. L.R.1; (1985) 129 S.J. 622;
(1985] C.I.L.L.188; (1985) 1 Const. L.J. 378; (1985) 5 Con. L.R. 34; (;985) 82
L.S. Gaz. 2905, C.A.; reversing in part (1984) 128 S.J. 46; (1984) 35 Bwld. L.R.
129. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1·258, 8·071, 8·093, 8·096
Reeves v. Barlow (1884) 12 Q.B.D. 436; 53 L.J.Q.B. 192; 50 L.T. 782; 82 W.R.
672. . . . . . . . . . . . . . . . . . . 11·026, 11·027, 11·028, 11·029, 11·035, 11·041, 11·046
Reg:Glass v. Rivers Locking Systems Pty. (1968) 120 C.L.R. 516 Australia High Ct. 4·089
Reid v. Batte (1829) Moo. & M. 413 . . . . . . . ... . . . . . . . . . . . . . . . . . . . . . . 7-093
- v . Macbeth (1904] A.C. 223; 73 L.J.P.C. 57; 90 L.T. 422; 20 T.L.R. 316; 6 F.
(H.L.) 25 . . . . . . . . . . . . . . . . . . . . . . . .- . . . . . . . . . . . . 11·009, 11·012, 11·040
Reigate v. Union Manufacturing Co. (Ramsbottom) [1918] 1 K.B. 592; [1918--19]
All E.R. Rep. 143; 87 L.J.K.B. 724; 118 L.T. 479, C.A. . . . . . . . . . . 1·180, 1·184
Reilly (J.M.) Ltd. v. Belfast Corporation (June 28, 1968, Unrep.). . . . . . . . 4·193, 13·073
Renard Constructions (M.E.) Pty. Ltd. v. Minister of Public Works (1992) 26
N.S.W.L.R. 234. . . . . . . . . . . . . . . . . . . 1·197, 1·198, 1·199, 1·272, 12--025, 12·083
Restal Drilling Co. v. Commissioner of Internal Revenue 127 F. (2nd) 355 . . . . . 3·027
Reynolds v. Atherton (1921) 125 L.T. 690; affirmed (1922) 127 L.T. 189; sub nom.
Atherton v. Reynolds 66 S.J. 404, H.L. . . . . . . . . . . . . . . . 1·031
1·280
Rhosina, The (1884) 10 P.O. 24
Rich v. Pierpont (1862) 3 F. & F. 35; 130 R.R. 806 . . . . . . . . . . . . . . . . . . . . . . 2·086
Richard Roberts Holdings Ltd. v. Douglas Smith Stimson Partnership (No. 2)
(1988) 46 BLR 50; 22 Con. L.R. 69. . . . . . . . . . . . . . . . . . . . . . . . . 2·119, 8·143
Richards v. May (1883) 10 Q.B.D. 400; 52 L.J.Q.B. 272; 31 W.R. 708. . . . . 6-011, 6·015,
6·049, 7·065, 7·100
Richards (Michael) Properties v. Corporation of Wardens of St. Saviour's Parish,
Southwark [1975] 3 All E.R. 416. . . . . . . . . . . . . 1·049, 1·057, 3·056, 3·059, 3·060
Richardson v. Beale (1867) The Times, June 29. . . . . . . . . . . . . . . . . . . . . . . . 2·069
--v. Buckinghamshire County Council, 115 S.J. 249; (1971) 69 L.G.R. 327; sub
nom. Richardson v. Buckinghamshire County Council, Sydney Green (Civil
Engineering), and Roads Reconstruction (Contracting) [1971] l Lloyd's
Rep. 533, C.A.; reversing (1970) 68 L.G.R. 662 . . . . . . . . . . . . . . . . . . . 15·056
--v. Dumfriesshire Road Trustees (1890) 17 Sess. Cas. 805, Scotland....... 4-172
- v . Silvester(1873) L.R. 9 Q.B. 34;43 L.J.Q.B.1;29L.T. 395;22 W.R. 74;38J.P.
628. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 ·020, 3·075
Rickards (Charles) v. Oppenheim [1950] 1 K.B. 616; 66 T.L.R. (Pt. 1) 435; 94 S.J.
161; [1950] 1 All E.R 420, C.A. . . . . . . . . . . . . . . . . . . . . . . 1·258, 9·011, 9·022
Ricker v. Fairbanks (1855) 40 Me. 43 . . . . . . . . . . . . . . . . . 12,068
Rigge v. Burbridge (1846) 15 L.J.Ex. 309; 15 M. & W. 598; 4 Dav. & L. 1; 153
E.R. 988. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1·253, 5·008
Rimmer v. Liverpool City Council [1985] Q.B.1; [1984] 2 W.L.R. 426; [1984] 1 All
E.R. 930; (1984) 128 SJ. 225; (1984) 47 P. & C.R. 516; (1984) 269 E.G. 319;
(1984) 82 L.G.R. 424; (1984) 12 H.L.R. 23; (1984) 81 L.S. Gaz. 664,
C.A. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1·321, 1 ·363
Ripley v. Lordon (1860) 2 L.T. 154; 6 Jur. 1078 . . . . . . . . . . . . . . . . . . . . . . . . 6-012
- v . M'Clure (1849) 4 Ex.Ch. 345; 18 LJ.Ex. 419; 14 L.T.(o.s.) 180 4·227
Riverlate Properties Ltd. v. Paul [1975} Ch. 133; [1974] 3 W.L.R. 564; (1974] 2 All
E.R. 656; 28 P. & C.R 220;sub nom. Riverplate Properties v. Paul, 118 S.J.
644, C.A.; affirming (1973) E.G. 333. . . . . . . . . . . . . . . . . . . . . . . . 1·116, 1·122
Roach (or Rouch) v. Great Western Ry. (1841) 1 Q.B. 51; lOL.J.Q.B. 89;4 P. & D.
686; 2 Rail. Cas. 505; 5 Jur.(o.s.) 826; 55 R.R. 203. . . . . . . . 12·063, 12·064
Robbins v. Myers Trading Post 117 S.E. (2nd) 438 (1960) . . . 3·027
Roberts Re. [1900] 1 Q.B. 122 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16·059
--v. BuryCommissioners(1870) L.R. 4C.P. 755;L.R. 5 C.P. 310;39L.J.C.P.129;
22 L. T. 132; 34 J.P. 821; 18 W.R. 702 ...... 1·187, 4·146, 4·176, 6-013, 6·015, 6-027,
6·114, 6·115, 6·117, 10°030, 10·031, 10·034,
10·070, 10·091, 12·063, 12·078, 12-079, 12·081
- v . Davey (1833) 4 B. & Ad. 664; 1 N. & M.443;2L.J.K.B.141;38 R.R. 348 . 12,031
--v. Havelock (1832) 3 B. & Ad. 404; 37 R.R. 452......... 4·016, 4·018, 4·032, 4.033
- v . Smith (1859) 4 H. & N. 315; 28 L.J.Ex. 164; 32 L.T. 320; 118 R.R. 462 . . . 2·248
- v . Watkins(1863) 14C.B.(N.s.) 592;32LJ.C.P.291;8L.T.460; 11 W.R. 783; 10
Jur.(N.s.)128;2N.R.246;135R.R.827 . . 6·153
 c TABLE OF CASES
Roberts (A.) & Co. Ltd. v. Leicestershire C.C. [1961] Ch. 555; [1961] 2 W.L.R. 1000;
105 S.J. 425; [1961] 2 All E.R. 545; 59 L.G.R. 349. . . . . . 1·113, 1-121, 1-122, 2·065.
. 3·052
Robms v. Goddard [1905] 1 K.B. 294; 74 L.J.K.B. 167; 92 L.T. 10; 21 T.L.R.
120... · · . . . . . . . . . . . . . . . . . . . 5·053, 6-002, 6·063, 6-067, 6,069, 6-070, 6-071,
. . 6·091, 6-093, 6·182
R obmson v. Davison (1871) L.R. 6 Ex. 269; 40 L.J.Ex. 172· 24 L.T 755- 19 WR
1036 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . '. ..... · ... •.... .°. : 4-271
--v. Evans Brothers [1969] V.R. 885 . . . . . . . . . . . . . . . . .- . . . . . . . . . . . . 15·010
- v. Harman (1848) 1 Exch. 850........ 8·110, 8·114, 8·130, 8·170, 8·172, 8·173, 8-191
- - v. Owen Sound (Corporation of) (1888) 16 Ont Rep. 121. . . . . . . . . . . 6-161 6-176
Robson v. Drummond (1831) 2 B. &_Ad. 303; 9 L.J.(o.s.) K.B. 187; 36 R.R. '
569. · · · · · · · · · · · · · · · · . . . . . . . . . . . . . . . . . . . . . . . . . . 14-007 14·008
Rogersie{/arteCollinsRe. [1894) 1 Q.B.425;63L.J.Q.B.178; 10 R469; 70L.T.107; '
anson 387 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16·060
- - v. East Suffolk County Council [1953] Q.B.D., R. No. 269 (Unrep.) : : : : : : 7·029
- v. James (1891) 4th ed., Vol. 2, p. 172; 56 J.P. 277; 8 T.L.R. 67 . . . . . . . . 2·215, 6·216
Rolls Razor Ltd. v. Cox[1967] 1 Q.B.552; [1967]2 W.L.R.241; llOS.J. 943; [1967) 1
All E.R. 397; [1966) C.L.Y. 641, C.A . . . . . . . . . . . . . . . . . . . . . . . 16·015 16·019
Roscorla v. Thomas (1842) 3 Q.B. 234; 2 Gal. & Dav. 508· 11 L.J .Q.B 214· 6 Jur 929· '
114 E.R. 496 . . . . . . . . . . . . . . . . . . . . . . . . '... . ' . ' 1·068
Rose (Frederick E.) (London) Ltd v. Pimm (William H.),.r~i~r·&
2 Q.B. 450; [1953] 3 W.L.R. 497; [1953] 2 All E.R. 739, 97 S.J. 556; [1953] 2
eo: Ltd [i953j
Lloyd's Rep. 238; 70 R.P.C. 238; [[1954] C.L.J. 32; Sec., December 1953,
r· 529; 33 Can. Bar R.164; 17 M.L.R.154; 17 Conv.(N.s.) 433], C.A.; revers-
ing [1953] 1 Lloyd's Rep. 84. . . . . . . . . . . . . . . . . 1·094, 1·099, 1·103, 1·112, 1·120
Rose & Frank Co. v. Crompton (J.R.) & Brothers Ltd. [1925] A.C. 445; [1924] All
E.R. Rep. 245; 94 L.J.K.B. 120; 132 L.T. 641; 30 Com. Cas. 163, H.L. . . . . 1·083
Rosebaugh Stanhope (Broadgate Phase 6) plc v. Redpath Dorman Long Ltd
(1990) 50 BLR 69. . . . . . . . . . . . . . . . . . . . . . . . 6,018, 6·064, 6·090, 6·i98, 6·204
Ross v. Caunters [1980] Ch. 297; [1979] 3 W.L.R. 605· [1979] 3 AUER 580· (1979)
12~ S.J..605 . . . . . . . . . . . . . . . . . . . . . . : . . . . . . . . . . ·. : .. .' . . . . l ·278
Ross Eng1neenng Co. v. Pace (1946) 153 Fed. Rep. (2d) 35 . . . . . . . . . . . . . . . 7·096
RossdaJ; v. Denny [1921] 1 Ch.57; 90L.J.Ch.204; 124L.T. 294;65 S.J. 59;37T.L.R.
· · · - · · · · · · - · - · · - - - - - - . - - - - . - - . - . - , - . . . . , . . . . . . . . 3-055 3-058
Rossmoor Sanitation Inc. v. Pylon Insurance 532 P. 2nd 97, [1975] . . . . . . . . 1·235 15·053
Rothfield v. Monolakos [1989] 2 S.C.R. 1259 . . . . . . . . . . . . . . . . . . . . . . . . ' 1·359
Routledge v. Grant (1828) 4Bing. 653; 1 Moo.& P. 717· 6L.J (o s) c p 16fr 3C &.
P. 267; 29 R.R. 672 . . . . . . . . . . . . . . . . . . . .' ... .° . .°. ·.. : .° .. .'.. i.oz9 3·072
Roux v. Colonial Government (1901) 18 Cape of Good Hope (S.C.) Rep. 143 .... '5·040,
5.044
Rover International v. Cannon Films [1989] 1 W.L.R. 912; [1988} BCLG710· [1989]
3 All E.R. 423, C.A., reversing . ......................... ' . 4·229 4·230
Rowe v. Tum~r Hopkins & Partners [1980] 2 N.Z.L.R. 550. . . . . . . . . . . : . 1.373' 1·377
Rowerson Aucraft Corporation v. Fairchild Industries 632 F. Supp. 1494 '
(1986). - · · - - - - - .. - - - ... - .... - - - . - - - - ...... - . . . . . 12-014 12-015
Rowlands (Mark) v. Berni Inns [1985] Q.B. 211; [1985] 3 W.L.R. 964; (1985) i29S.J. '
811; [1986] 3 All E.R. 473; [1985] 2 E.G.L.R. 92; (1985) 276 E.G. 191; [1985] 2
Lloyd'.s Rep. 437; (1985) 135 New L.J. 962; (1986) 83 L.S. Gaz. 35, C.A.;
. affirmmg (1984) 134 New L.J. 236. . . . . . . . . . . . . . . . . . . . . . . . . 2·139, 15·021
Rowhng v. TakaroProperties. [1988] A.C. 473; [1988] 2 W.L.R.418; (1988) 132S.J.
126~ [1988] 1 AllE.R 163; (1988) 85 LS. Gaz 35 P.C . . . . . . . . 1·301, 1·385 2·129
Royal Design Studio Ltd. v. Chang Development Ltd. [1991] 2 M.L.J. 229 . . . . . i7·074
Royscott Trust v. Rogerson [1991 J2 Q.B. 297; [1991] 3 W.L.R 57; [1991 J3 All E.R.
294; (1991) _135 S.J. 444; [1992] R.T.R. 9~; (1992) ~1 Tr. L.R. 23; {1991]
C.C.L.R.15, (1991) 141 NewLJ.493; The Times,Apri13, 1991; The Indepen-
dent, Apnl 1~, 1?91; Daily Telegraph, April 25, 1991, C.A. . . . . . . . . . . . 2·205
Ii
Royston Urban D1stnct Council v. Royston Builders Ltd. (1961) 177 E.G.
589. · · · · · · .... 1·112, 1·115, 1·121, 1·214, 1,247, 2·060, J.048, 3,052, 5·010, 6·187,
. 6-188, 7·057, 7·123
Rozelle Childcare Centre v. Update Constructions (1988) 17 A.C.L.R. 31. . . . . . . 1 ·223
1·264, 1·270, 1·27i.
Roz1;1y v. Marnul, 250 N.E. (2d) 656 (1969). . . . . . . . . . . . . . . . . . . l•281 1·283
Rubm v. Coles 253 N.Y.S. 808-811 (1931). . . . ,(100' 4·101
Ruffv. Rinaldo (1873) 55 N.Y. 664 ·::::... io,055
TABLE OF CASES ci
Rum belows Ltd. v. A.M.K. (A Firm) and Firesnow Sprinkler Installations (1982) 19
Build. L.R. 25. . . . . . . . . . . . 1·327, 4·108, 4·122, 4-125, 13·043
Rumput (Panama) S.A. v. Islamic Republic of Iran Shipping Lines, The League
[1984] 2 Lloyd's Rep. 259. . . . . . . . . . . . . . . . . . . . . . 14·038, 18·122, 18·125
Rushbrook v. O'Sullivan [190811 Ir. R. 232 . . . . . 4-303
Russell v. Russell (1880) 14 Ch.D. 471; 49 LJ.Ch. 263; 42 L.T.112.. 18·102
- - v. Viscount Sa da Bandeira (1862) 13 C.B.(N.s.) 149; 9 Jur.(N.s.) 718; 32
L.J.C.P. 68; 7 L.T. 804. . . . . . . . . . . . . . . 4·182, 6"')12, 7·063, 7-064, 7·093, 10·029,
10·032, 10·035, 10·040
Ruxley Electronics and Construction v. Forsyth [199411 W.L.R. 650, December 16,
1993,C.A. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S.136,8·142,8·153
Ryde v. Bushell [19671 E.A. 817. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4·265, 10·042
Rylands v. Fletcher (1868) L.R 3 H.L. 330; [1861~73] All E.R. Rep. 1; 37 L.J.Ex.
161; 19 LT. 220; 33 J.P. 70, H.L.; affirming sub nom. Fletcher v. Rylands
(1866) L.R. 1 Exch. 265; 4 H.C.C. 263; 35 L.J.Ex. 154; 14 L.T. 523; 30J.P. 436;
12 Jur.(N.s.) 603; 14 W.R. 799, Ex. Ch. . . . . 1·274, 1·310, 1·315, 1·337, 1·338, 4·265
S.C.M. (United Kingdom) Ltd. v. Whittall (W.J.) & Son Ltd. [1971] 1 Q.B. 337;
[1970] 3 W.LR 694; [1970] 3AllE.R 245; 114S.J. 706, C.A.;affirming[1970]
1 W.L.R. 1017; [1970] 2AllE.R. 417; 114 S.J. 268; 8 K.I.R. 1073; [86 L.Q.R.
455; 115 SJ. 255]..
S.L. Sethia Liners v. Naviagro Maritime Corp., Kostas Me las, The [1980] Com. LR
. .. 1·316, 1·323
3; [1981] 1 Lloyd's Rep. 18. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18·091, 18·167
S.M.K. Cabinets v. Hili Modem Electrics Pty. [1984] V.R. 391 (1984) 1 Const. LJ.
159 Supreme Ct. of Victoria.... . .. 10·037, 10-039, 10·044, 10·046A, 10·047
Sabemo Ltd. v. De Groot (1991) 8 B.CL. 132. . . . . . . . . . . . . . . . . . 6·006, 6·197, 6,203
Sabemo Pty. Ltd v. North Sydney Municipal Council [1977] 2 N.S.W.L.R.
880. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1·267,1·270,3·076,8·104
Sacher v. African Canvas & Jute Industries 1952 (3) S.A.LR. 31. . 4·009, 5,002
Saddler v. U.S. (1961) 227 F. (2d) 411.... . . . . . . . . . . . . . 7·083, 7·092, 7·093, 7·114
St.John Shipping Corporation v. Rank (Joseph) [1957] 1 Q.B. 267; [1956] 3 W.L.R.
870; 100 S.J. 41; [1956} 3 All E.R. 683; [1956] 2 Lloyd's Rep. 413. . . . 4·274, 17·048
Saint Line Ltd. v. Richardsons Westgarth & Co. Ltd. [1940] 2 K.B. 99; 109 LJ.K.B.
959; 163 L.T. 175; 56 T.L.R. 716; 84 S.J. 574; 45 Com. Cas. 208. . . . . . 8·096, 8·214
Salford Corporation v. Lever [1891] 1 Q.B. 168; 25 Q.B.D. 363; 60 L.J.Q.B. 39; 63
L.T. 658; 39W.R. 85; 55J.P. 244;7T.L.R.18 3·079
Salsbury v. Woodland [1970] 1 Q.B. 324; [1969] 3 W.L.R. 29; [1969] 3 All E.R. 863;
113 S.J. 327, CA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1·320, 1·387
Salter(Robert) ConstructionPty. Ltd. v. Elmbee Pty. Ltd., (Unrep.) Supreme Ct. of
Victoria, June 29, 1990, noted in [1990] A.C.L.D. 874. . . . . . . . . . . . 4·305, 12·096
Samson & Samson Ltd. v. Procter [1975] N.Z.L.R. 655 ... 8.129, 8·136, 8·137, 8·138., 8·140
Samuels v. Davis [1943] 1 K.B. 526; 112 L.J.K.B. 561; 168 L.T. 296; [1943] 2 All E.R.
3............. 4·119
San Sebastian Pty. Ltd. v. Minister Administering the Environment Planning and
Assessment Act 1979 (1987) 68 A.L.R. 161; (1987) 3 Const. L.J. 212; (1986)
61 ALJ.R 41, High Ct. of Australia; (1986) 162 C.L.R 340. . . . . . . . 1·282, 1·288
Sanders (Arthur) Re. (1981) 17 Build. L.R. 125. . . . . 8·080, 8·084, 13·130, 16·017, 16·018,
16·055, 16·058
Sanders Construction v. Eric Newham [1969] Qd R 29. . . . . . . . . . . . . . . . 8·054, 8·055
Sandy v. Yukon Construction Co. (1961) 26 D.L.R. 254. . . . . . . . . .. 6·192, 14-067
Sanson Floor Company v. Forst'sLtd. [1942] 1 W.W.R. 553; [1942] 1 D.L.R. 451;57
B.C.R. 222, Canada. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1·205, 4-101
Sassoon (M.A.) & Sons Ltd. v. International Banking Corporation [1927] A.C. 711;
96 L.J.P.C. 153; 137 L.T. 501, P.C. . . . . . . . . . 1·223
Sattin v. Poole (1901) Hudson Building Contracts (4th ed.), Vol. 2, p. 306. . . . . . . 10·029,
10-034, 10·083, 12·081
Satyabrata Ghoes v. Mujneeran Bangor & Co. [1954] A.S.C. 44, S.C.R. 310 India 4·239
Saunders v. Anglia Building Society. See Saunders (Executrix of the Estate of Rose
Maud Gallie) v. Anglia Building Society
--v. Brading Harbour Improvement Co. (1885) [1885] W.N. 36; 52 l,.T. 426 . . 4-299
--v. Broadstairs Local Board (1890) (4th ed.) Vol. 2, p. 164. . . 2·187, 2·215
- v . Edwards [1987] 1 W.L.R 1116; (1987) 131 SJ. 1039; [1987] 2 All E.R. 651;
(1987) 84 L.S. Gaz. 2193; (1987) 137 New L.J. 389; (1987) 84 L.S. Gaz. 2535,
C.A.. . . . . . . . . . . . . . . . . 4·276, 4·278, 4-282
cii TABLE OF CASES
Saunders (Executrix of the Estate of Rose Maud Gallie) v. Anglia Building Society
[1971] A.C. 1004; [1970} 3 W.L.R. 1078; sub nom. Saunders v. Anglia Build-
ing Society, 114 S.J. 885;sub nom. Saunders (Executrix of the Estate of Rose
Maud Gallie) v. Anglia Building Society (formerly Northampton Town and
County Building Society) [1970] 3 All E.R. 961; [88 L.Q.R. 190],
H.L............... . .......... 1·100, 1·106
Sauter Automation v. Goodman(H.C.) (Mechanical Services) Ltd. (1986)34Build.
L.R. 81. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1·035, 13·103
Savage v. Board of School Trustees (1951) 3 D.L.R. 39 2·158
Savage Brothers Ltd. v. Shillington Heating Ltd. (1985) 5 Const. L.J. 295. . 6-075, 6°088,
6·160, 10·070, 10·076, 10·077, 10·095
Savannah etc. Railway v. Callahan (1876) 56 Ga. (lOJackson) 331 U.S. Dig. (1877)
p. 156 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10.009
Savory v. Holland & Hannen & Cubitts (Southern) [1964] 1 W.L.R. 1158; [1964] 3
All E.R.18; 108 S.J. 479, C.A ............................. 1·329, 1·334
Scammell v. Ouston [1941] A.C.251; [1941] 1 AllE.R.14; llOL.J.K.B.197; 164L.T.
379; 57 T.L.R. 280; 85 S.J. 224; 46 Com. Cas. 190. . 1·043, 1·044, 1·046
Scarborough Rural District Council v. Moore (1968) 112 L.J. 986; 118 New L.J.1150
The Times, November 26, 1968, C.A. . . . . . . . . . . . . . . . . . . . . . . . . . . 18·104
Scarf v. Jardine (1882) 7 App. Cas. 345; 51 L.J.Q.B. 612; 47 L.T. 258; 30 W.R. 893 14·023
Schiffahrtsagentur Hamburg Middle East Line G.m.b.H. Hamburg v. Virtue Ship-
ping Corporation Monrovia, (No. 2) Oinioussian Virtue, The. [1981] 2
Lloyd's Rep. 300 Com. L.R. 165.................... 18·004, 18·173, 18·194
Schiltz v. Cullen-Schiltz 228 N.W. (2d) 10 (1975) . . . . . . . . . . . . . . . . . . . . . . 1·295
Schindler Lifts (Hong Kong) v. Shui On Construction Co. {1984) 29 Build. L.R. 95
C.A. of Hong Kong. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13·116
Schofield (A.) (Builders) v. Scarborough Corporation (1958) 172 E.G. 809,
C.A. . . . . . . . . . . .... 1·203
Schonekess v. Bach (1968) 66 D.L.R. (2d) 415; (1968) 62 W.W.R. 673, Canada, Sup.
Ct. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1·148
Schuler (L.) A.G. v. Wickman Machine Tool Sales [1974] A.C. 235; [1973] 2 W.L.R.
683; 117 S.J. 340; [1973] 2 All E.R. 39; [1973] 2 Lloyd's Rep. 53, H.L.; affirm-
ing sub nom. Wickman Machine Tool Sales v. Schuler (L.) A.G. [1972] 1
W.L.R. 840; 116 S.J. 352; [1972] 2 All E.R. 1173, C.A.. . . . . . . 1·014, 1·222, 4-212,
18·084
Schwebel v. Telekes (1967) 61 D.L.R. (2d) 470, C.A., Ontario. . . . . . . 1·372, 4·288
Scotson v. Pegg(1861) 6H.&N.295;30L.J.Ex.225;3 L.T. 753;9W.R.280; 158E.R.
121. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1·065, 1·066
Scott v. Avery (1856) 5 H.L.C. 811; 25 L.J.Ex. 308; 2 Jur. 815. . ......... 6·040, 6·063,
6·093, 6·095, 8·092, 18-003, 18-036, 18-039, 18·040, 18-041, 18-048,
18·052, 18·065, 18·102, 18·108, 18·109, 18·110, 18·111
- - v. Carluke Local Authority (1879) 6 R. (Ct. of Sess. Cas.) 616. . . . . . . 6·013, 6·136,
6·137, 18·129
--v. Corporation of Liverpool (1858) 28 L.J.Ch. 230. . . . . . 6-078, 6,126, 6·146, 18·065
- v. Coulson [1903] 2 Ch. 249; 72 L.J.Ch. 600; 88 L.T. 653; 19 T.L.R. 440, C.A. 1·096
- v. Pattison [1923] 2 K.B. 723; 92 L.J.K.B. 886; 129 L.T. 830; 39 T.L.R. 557 . 8·104
Scott Lithgow v. Secretary of State for Defence (1989) 45 BLR 1, H.L...... 1-220, 4-269,
5.037, 7·007, 9·026, 10·040, 10·063, 13·008, 13·010, 13·026, 15·060
Scottish Special Housing Association v. Wimpey Construction U.K. [1986] 1
W.L.R. 995; (1986) 130S.J. 592; [1986] ZAllE.R. 957; (1986) 34 Build. LR. I;
(1986) 2 Const. L.J. 149; (1987) 9 Con. L.R.; (1986) 136 New L.J. 753; (1986)
83 L.S. Gaz. 2652, H.L.; reversing (1985) 31 Build. L.R 17, Ct. of Session . 15.020
Scri~ener v. Pask (1866) L.R. 1 C.P. 715 ...................... 2·059, 2·063, 8-018
Seal Tite Cap v. Ehret 589 S. Supp. 701 (1984) New Jersey D.C. . . . . . . . . . . . . 13·112
Sealand of the Paci.fie v. McHaffie (Robert C.) (1974) 2 Build. L.R. 74; British
Columbia, C.A.................................. 1·291, Z.117, 13·020
--v. Ocean Cement Ltd. [1973) 33 D.L.R. (3d) 625 . . . . . . . . . . . . . . . . . . . 1·154
Seaman's Direct Buying Service v. Standard Oil of California 686 P. (3d) 1158
(1984) . . . . . . . . . . . . . . . . . . . . . . 1·197
Seath v. Moore (1886) 11 App. Cas. 350; 55 L.J.P.C. 54; 54 L.T. 690; 5 Asp. M.C.
586. . . 11·009, 11·011, 11·012, 11·030, 11·040
Secretary of State for the Environment v. Essex Goodman & Suggitt [1986] 1
W.L.R.1432; [1985] 2E.G.L.R.168; [1986) 130S.J.574; (1985)275 E.G.308;
(1985) 32 Build. L.R.140; (1985) 1 Const. L.J. 302; (1986) 83 L.S. Gaz. 2155,
Official Referee l ·307
TABLE OF CASES ciii
Secretary of State for Transport v. Birse-Farr Joint Venture (1992), (1993) 62 BLR
36............ 8·099
Seddon v. North Eastern Salt Co. Ltd. [1905] 1 Ch. 326; [1904-7] All E.R. 817; 74
L.J.Ch. 199; 91 L.T. 793; 53 W.R. 232; 21 T.L.R. 118; 49 S.J. 119. 1·148
Sedleigh-Denfield v. O'Callaghan [1940] A.C. 880; 3 All E.R. 349; 164 L.T. 72; 50
T.L.R. 887; 84S.J. 651;sub nom. Sedleigh Denfield v. St. Joseph's Society for
Foreign Missions, 109 L.J.K.B. 893. . ..... 1-339, 4·266
Seely v. White Motor Co. 403 P. (2d) 245 (1965), California Sup. Ct. . . . . . . . . . l ·309
Sellar v. Highland Railway [1919) S.C. (H.L.) 19..................... 6·102, 6-103
Selway v. Fogg (1839) 5 M. & W. 83; 8 L.J.Ex 199; 52 R.R. 650 . . . . . . . . . 3·077
Senanayake v. Cheng [1966] A.C. 63; [1965] 3 W.L.R. 715; [1965] 3 All E.R. 296; 109
S.J. 756, P.C.... . . . . . . . . . . .......... 1·147, 1·153
Sethia (1944) Ltd. v. Partabmull Rameshwar [1951} 2 All E.R. 352n.; [1951] 2
Lloyd's Rep. 89. . . . . . . ............ 3·060, 4-252
Shaddock & Associates Pty. v. Parramatta City Council (No. 1) (1980-81) 150
C.L.R. 225, High Ct. of Australia . . . . . . . . 1-282
--v. Parramatta City Council (1981) 36 A.L.R. 385, High Ct. of Australia. . 1·134
Shaffer (James) v. Findlay Durham & Brodie (sued as a finn) [1953] 1 W.L.R.106;
97 S.J. 26; C.A. . . . . . . . . . . . . . 4·216
Shamrock S.S. Co. v. Storey & Co. (1899) 81 L.T. 413; 16 T.L.R. 6; 8 Asp. M.L.C.
590; 5 Com. Cas. 21. ............ 1·044, 1·047
Shanklin Pier Co. v. DetelProducts {1951] 2K.B. 854; [1951] 2AllE.R. 471; 95 S.J.
563; [1951] 2 Lloyd's Rep. 187; [212 L.T. 149]. . . . . . . . . . . . . . 1·291, 13,020
Sharpe v. San Paulo Ry. (1873) L.R. 8 Ch. App. 597, 605n., 27 L.T. 699; 29
L.T. 9........................... 4-041, 6-039, 6·042, 6·127, 7·024, 12·072
Sharpley v. Louth and E.C. Ry. (1876) 2 Ch.D. 663; 46 L.J.Ch. 259; 35 L.T. 71 . . . 3·077
Shaw (Tom) & Co. v. Moss Empires (1908) 25 T.L.R. 190 . . . . . . . . . . . . . . . . 14-058
Shayler v. Woolf[1946] Ch. 320; [1947] L.J.R. 71; 175 L.T. 170; 90 S.J. 357; [1946] 2
AIIE.R. 54; [1946] W.N.106. . . . . . . . .... 14·038, 18·125
Sheffield Corporation v. Barclay [1905] A.C 392. . . . . . . . . . . . . . 4·171, 15·039, 15·061
Sheldon v. McBeath, Australian Tort Rep. {1993] 81-209 (1994) 11 I.C.L.R. 76 .... 2-083,
2·193
Shell U.K. Ltd. v. Lostock Garage Ltd. {1976] 1 W.L.R.1187; [1977] 1 All E.R. 481;
120 S.J. 523, C.A. . . . . . . . . . . 1·181
Sherren v. Harrison (1860) (4th ed.) Vol. 2, p. 5 . . . . . . . . . . 8-017
Sherry, Re,Londonand County Bank v. Terry (1884) 25 Ch.D. 692; 53 L.J.Ch. 404;
49L.T.36;50L.T.227;32W.R.270,394 . . . . . . 17-019
Shiloh Spinners Ltd. v. Harding [1973] A.C. 691; {1973] 2 W.L.R.28; (1972) 117 S.J.
34; [1973] 1 All E.R. 90; 25 P. & C.R. 48, H.L.; reversing [1972] 1 Ch. 326;
[1971] 3 W.L.R. 34; 115 S.J. 248; [1971] 21 All E.R. 307; 22 P. & C.R.
447. . . . . . . . . . . . . 4·022, 12·022, 12·023, 12·028, 12-029
Shipley Urban District Council v. Bradford Corporation [1936] Ch. 375; 105 L.J.Ch.
225; on appeal [1936] Ch. 399; 154 L.T. 444, C.A. . . . . . . . . . . . . . . . . . . 1-110
Shipway v. Broadwood [1899] 1 Q.B. 369; 68 L.J.Q.B. 360; 80 L.T. 11; 15 T.L.R.
145 . . . . . 2·233
Shipway (James) & Co. v. Wyndham & Albery, (1908) The Times, December 1,
1908, Digest, Vol. VII p. 386. . . . . . . . . . . . . . . . . . . . . . . 6·025
Shire of Sutherland v. Heyman (1985) 157 C.L.R. 424............. 1-353, 1·359, 2·084
Shirlaw v. Southern Foundries (1926) Ltd. [1939] 2 K.B. 206; affinned [1940] A.C.
701, H.L. . . . . . . . . . . . . 1·180
Shore & Horwitz Construction Co. v. Franld of Canada (1964) S.C.R.
589.. . ................ 8·187,8·189,8·192,8·194
Shore v. Wilson (1842) 9 Cl. and Fin. 355; 11 Sim 615n; 4 Stat.Tr.N.S. App. 1370; 5
Scott, N.R. 958; 7 Jur. 787n; 8 E.R. 450, H.L.; subsequent proceedings sub
nom. Att.-Gen. v. Shore (1843), 11 Sim. 592; 1 L.T.O.S.166;7 J.P. 392; 7 Jur.
781; 59 E.R. 1002; sub rwm. Att.-Gen. v. Wilson (1848), 16 Sim. 210 . 1·212
Sika Contracts Ltd. v. Gill B.L. and Closeglen Properties (1978) 9 BLR 11. .. 2·067, 2·080
Simaan General Contracting Co. v. Pilkington Glass [1988] Q.B. 758; [1987]
1 W.L.R. 516; [1987] 1 All E.R. 345; (1987) 131 S.J. 297; (1987) Const. L.J.
300; (1987) 84 L.S.Gaz. 819; (1986) 136 New L.J. 824, Official Referee . . . 1·280
-v.PilkingtonGlass (No.2) [1988] Q.B. 758; [1988]2W.L.R. 761; (1988) 132S.J.
463; [1988] 1 All E.R. 791; [1988] F.T.L.R. 469; (1988) 40 Build. L.R. 28;
(1988) 138 New L.J. 53; (1988) L.S.Gaz. March 16, 44, C.A.. . . . . . . 1·292, 1·352,
4· 121, 13·045
Simon Builders Ltd. v. H.D. Fowles Ltd. (1992) 11 A.C.L.R. 23 . . . . . . . . . . . . 6·203
civ TABLE OF CASES
Simplex Concrete Piles v. Mayor, Aldermen and Councillors of the Metropolitan
Borough of St. Pancras (1958) 4 Build. L.R. 80, D.C . . . . . . . . . . . . . . . 7·029
Simplex Floor Finishing Appliance Co. Ltd. v. Duranceau [1941] 4 D.L.R. 260 7·047,
7.045
Simpson v. Kerr (1873) 33 U.C.Q.B. 345 . . . . . . . . . . . . . 10·072
- - v. Metcalfe (1854) 24 L.T.(o.s.) 139; 3 W.R. 88 . . . . . . . . . . . 1·118
--v. Trim Town Commissioners (1898) 321.L.T. 129. . . . . 8·114, 9·016, 10·050 10·052
Simpsons Ltd. v. Pigott Constructions (1974) 40 D.L.R. (3d) 47 . . . . . . . . . . . . . ' 5·056,
5·057, 6-046, 6-056, 6·067
Sims v. Foster Wheeler [1966] 1 W.L.R. 769; 110 S.J. 189; (1966] 2 All E.R.
313. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15,049, 15·050, 15·054
- - v. London Necropolis Co. (1885) 1 T.L.R. 584 . . . . . . . . . . . . . . . . . . . . . 11·004
Sims& Co. v.MidlandRy. (1913] 1 K.B.103;82L.J.K.B. 67; 107 L.T.100;29T.L.R.
81; 18 Com. Cas. 44 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9·029
Sinclair v. Bowles (1829) 9 B. & C. 92; 4 M. & Ry. 1; 7 L.J.(o.s.) K.B. 178; 32 R.R.
589 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4-010
- v. Logan (1961) 1961 S.L.T. (Sh.Ct.) 10; 76 Sh.Ct. Rep. 161. ......... 2·250, 3·076
S~nclair Sc?t! & Co. Ltd. v. Naughten (1929) 43 C.LR. 310, Australia...... 1-058, 3·056
Smdall (W1lliam) v. North West Thames Regional Health Authority [1977] !.C.R.
. 294; (1977) 121 SJ. 170; (1977) 4 Build. L.R. 151, H.L.. . . . . . . . . . . 1·220, 8·054
S1porex Trade S.A. v. Banque lndosvez [1986] 2 Lloyd's Rep. 146 . . . . . . . . 17·065
Sist Constructions v. State Electricity Commission of Victoria [1982] V.R. 547,
Supreme Ct. of Victoria ...... 2-163, 2·169, 2-175, 2-226, 7-103, 8·006, 8·010, 8-011,
8·041
Skips A/S Nordheim v. Syrian Petroleum Co.; Varenna, The [1984] Q.B. 599; (1984]
2 W.L.R. 156; (1983) 127 S.J. 840; [1983] 3 All E.R. 645; [1983] 2 Lloyd's Rep.
592; [1984] L.M.C.L.Q. 194, C.A.; [1983] 2 All E.R. 357; [1983] 1 Lloyd's
Rep. 416; [1983] Com. L.R. 30. . . . . . . . . . . . . . . . . . . . . . . . . . . 3·050, 18·032
Slater v. Hoyle & Smith [1920] 2 K.B. 11 8·226
Slower v. Loddey (1900) 20 N.Z.L.R. 321. . . . . . . . . . . . . . . . . 1-161, 4·045, 4-049, 4-193
Smeaton Hanscomb & Co. v. Setty (Sassoon I.) Son & Co. (No. 2) (1953] 1 W.L.R.
1481; 97 S.J. 876; [1953] 3 AIIE.R.1588; [1953] 2 Lloyd's Rep. 580...... 18·178
Smith v. Bush (Eric S.); Harris v. Wyre Forest District Council [1990} l A.C. 831;
[1989] 2 W.L.R. 790; [1989] 2 All E.R. 514; (1989) 133 S.J. 597; (1990) 9
Tr.L.R.1; 87 L.G.R. 685; (1989) 21 H.L.R.424; (1989] 17 E.G. 68 and [1989}
18 E.G. 99; (1989) 139 New L.J. 576; (1989) 153 L.G. Rev. 984, H.L. . . . . 1·178,
1·287 2·203
- v . Chadwick (1884) 9 App. Cas. 187;53 L.J.Ch. 873;50 L.T. 697;48J.P. 644;32 '
W.R.687,H.L. . . . . . . . . . . . . . . . . . . . . . . . . . . , . . . . . . . . . . . 1·146,1·152
- - v. Gordon (1880) 30 U.C.C.P. 552. . . . . . . . . . . . . . . . . . . . . . 6·114, 6·117, 12-035
- v . Hamilton [1951] Ch.174; 66T.L.R. (Pt. 2) 937; 94S.J. 724; [1950] 2 AIIE.R.
928 . . ...... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9·022
--v. Howden Union (1890) 1 Cab. & Ell. 125. . . . . . . 6·097, 6·115, 6·118, 6·120, 6·128,
6·141, 6·146, 12-079, 12·082
-v.Hughes (1871) L.R. 6 Q.B. 597;440 L.J.Q.B. 221; 25 L.T. 329; 19 W.R.1059;
[1861-73] All E.R. Rep. 632. . . . . . . . . . . . . . . . . . . . . . . . . 1·097, 1·101, 1-108
--v.Johnson (1899) 15T.L.R.179 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S.165
--v. Land &House Property Corporation (1884) 29 Ch.D. 7; 51 L.T. 718; 49 J.P.
182, C.A. . . . . . . . . ... ..... ... . .... 1·145
- - v. Littlewoods Organisation Ltd.; Maloco v. Same sub nom. Smith v. Little-
woods Organisation (Chief Constable, Fife Constabulary, third party)
(1987] A.C. 241; (1987] 2 W.L.R. 480; [1987] 1 All E.R. 710; (1987) 131 S.J.
226; (1987) 84 L.S.Gaz. 905; (1987) 137 New L.J. 149, H.L.. . 1·321 1·337
- - v. Martin (1925] 1 K.B. 745. . . . . . . . . . . . . . . . . . . . 18·006, 18·007, 18-044, 1.8-141
- v . Mayberry (1878) 13 Nev. 427; U.S. Dig. (1879) p. 142 . . . . . . . . . . . . . . 14-007
- - v. O_ld W<:rson Development Company 479 S.W. (2d) 795 (1972), Sup. a. of
Missoun . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4-106
--v. Sadler (1880) 6 Viet. L.R 5 ............................... . 6·026
- - v. Salt Lake City 104 Fed. Rep. 457 (1900) . . . . . . . . . . . . . . . . . . . . . . . 7·079
--v. South Wales Switchgear Ltd. [1978] 1 W.L.R.165; (1977) 122S.J. 61;[1978] 1
All E.R. 18; (1977) 8 Build. L.R. 5, H.L.. . . . . . . . . 15·040, 15·041, 15-042, 15,044
- - v. Vange Scaffolding and Engineering Co. [1970] 1 W.L.R. 733; 114 S.J. 118;
[1970] 1 All E.R. 249; 8 K.I.R. 709. . . . . . . . . . . . . . . . . . . . . . . . 15·052, 15·053
Smith (A.) & Son (BognorRegis) v. Walker [1952] 2Q.B. 319; [1952] 1 T.L.R.1089;
96 S.J. 260; [1952] 1 All E.R. 1008, C.A.. . . . . . . . . . . . 4·277, 4-280, 7·123
TABLE OF CASES CV
Smith (Brian) (1928) Ltd. v. WheatsheafMills [1939] 2 K.B. 302 . . . . . . . . . . . . 1-253
Smith, Coney & Barratt v. Becker, Gray & Co. [1916] 2 Ch. 86; 84 L.J.Ch. 865; 112
L.T 914· 31 T.L.R.151 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18·109
Smith & Montiomery v. Johnson Bros. (1954) 1 D.L.R. (2d) 392. . . . . 3·049,
4-157, 4°247, 4·255, 13·102, 13-134
Smyth v. R. (1884) 1 N.Z.L.R. 80, C.A. . . . . . . . . . . . . . . . . . . . . . . . . . . . 7·055, 7·060
Sneezum Re ex parte Davis (1876) 3 Ch.D. 463; 45 L.J.Bk. 137; 35 L.T. 329; 25 W.R.
49'. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ·............ 2-056, 16·028
Societe Commerciale de Reassurance v. Eras International (formerly Eras (U.K.))
(Note); Eras Eil Actions, The [1992] 2 All E.R. 82; [1992] 1 Lloyd's Rep. 570,
C.A. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1·366, 1·369, 1·376
Societe Franco*Tuisienne D'Armement*Tunis v. Government of Ceylon [1959]
W.L.R. 787 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18·074
Solle v. Butcher [1950] 1 K.B. 671; 66 T.L.R. (Pt.1) 448; [1949] 2 All E.R. 1107; 66
T.L.R. (Pt. l) 448 ............... 1·094, 1·096, 1·102, 1·105, 1·145, 1·148, 3·077
Sonat Offshore S.A. v. Amerada Hess Developments and Texaco (Britain) [1987] 2
F.T.L.R. 220; [1988] 1 Lloyd's Rep. 145; (1988) 39 BLR 1 C.A. . . . . . . . . 15·040,
15-041, 15·046
Sorrell v. Smith [1925] A.C. 700; 94 L.J.Ch. 347; 133 L.T. 370; 69 S.J. 641;41 T.L.R.
529 . . . . . . . . . . . . . . . . . . . . . . . . . . . 3·080
South Africa Mullin (Pty.) Ltd. v. Benade Ltd. [1952] 1 S.A.L.R. 211 . . . . . . . . . 1·180
South Australian Railways Commissioner v. Egan (1973) 130 C.L.R. 506 (1973) 47
A.L.J.R. 140. . . . . . . . . . . . . . . . . . . . . . . . . . 6·086, 6-093, 6-095, 18·039, 18·041
South Australian Superannuation Fund Investment Trust v. Leighton Contractors
(1990) 55 S.A.S.R. 327 . . . . . . . . . . . . . . . 8·171, 8·211, 18·159, 18·159A, 18·159C
South Devon Ry. exparte., Re Elliott (1848) 12 Jur.(o.s.) 445. . . . . . 1·255, 6·101, 6·140,
' 18·128
South East Thames Regional Health Authority v. Lovell (Y.J.) London (1985) 32
BLR 127; (1987) 9 Const. L.R 36 . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14-026
South Pacific Manufacturing Ltd. v. N.Z. Security Consultants Ltd. [1992] 2
N.Z.L.R. 282. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1·289, 1·302
South Wale&-Railway v. Wythes (1854) 5 De G.M. & G. 880; 24 L.J.Ch. 87; 3 Eq.
Rep. 153; 24 L.T.(o.s.) 165; 3 W.R. 133; 104 R.R. 327 . . . . . . . . . . . . . . . 4-298
Southern Water Authority v. Carey [1985] 2 A.E.R 1077.... 1·326, 6·003, 13·043, 13·054,
15-014
Southway Group v. Wolff (1991) 57 BLR 33 ...... 14-009, 14·010, 14·011, 14·019, 16-004
Sparham-Souter v. Town and Country Developments (Essex) Ltd. [1976] Q.B. 858;
[1976] 2 W.L.R. 493; [1976] 2 All E.R. 65; 120 S.J. 216; 74 L.G.R. 355, C.A.;
[[1976] L.G.C. 247]; (1976) 241 E.G. 309; (1976) 3 Build. L.R. 70....... 1·277,
1·347, 1·348, 1·361,2·084
Spartan Steel & Alloys Ltd. v. Martin& Co. (Contractors) (1973] Q.B. 27; [1972] 3
W.LR. 502; [19072] 3 All E.R. 557; 116 S.J. 648; 14 K.I.R. 75, C.A. . . . . . . 1·323
Spectra v. P/Dindarz [1976] 2 N.S.W.L.R. 617 . . . . . . . . . . . . . . . , . . . . . . . . . 12·044
Spence v. Crawford [1939] 3 All E.R. 271, H.L............... . . . . . . 1·148
Spencer v. Harding (1870) L.R. 5 C.P. 561; 39 L.J.C.P. 332 19 W.R. 48; 27 L.T.
237 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . , . . . . . . . . . . . . . . . . 1·022, 3·053
Sperry v. Government of Israel 689 F. (2d) 30 (1982) . . . . . . . . . . . . . . . . . . . . 17-069
Stadhard ( or Stannard) v. Lee (1863) 3 B. & S. 364; 1 N.R. 433; 32 LJ.QB. 75; 7 L.T.
850· 9 Jur.(N.s.) 908· 11 W.R. 361; 129 R.R. 357. . .... 6·023, 6.025, 6·027, 12·045,
' ' 12-065
Stag Line Ltd. v. Tyle Shiprepair Group [1984] 2 Lloyd's Rep. 211; (1985) 4 Tr.
L. 33 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1·240, 4· 104
Stale v. Winters (1953) 921 L.T.R. 66 . . . . . . . . . . . . . . . . . . . . 18·133
Star International v. Bergbau-Handel [1966] 2 Lloyd's Rep. 16 . . . 18·061
Startup v. McDonald (1843) 6 M & G 593 . . . . 9·006
Stead Hazel & Co. v. Cooper [1933) 1 K.B. 840. . . . . . . . . . . . . . . . . . . . . . . . 16·012
Steeds v. Steeds (1889) 22 Q.B.D. 537; 58 L.J.Q.B. 302; 60 L.T. 318; 37 W.R. 378;
[1886-90] All E.R.1021 .. , . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1·090
Steel Co. of Canada v. Willand Management [1966) S.C.R. 746...... 4·057, 4·088, 4·090,
4·091, 4-093, 4-111, 4-113
Steel Wing Co., Re [1921] 1 Ch. 349; 124 L.T. 664; 65 S.J. 240; [1920] B. & C.R. 160;
sub nom. Steel Ring Co., re Lords Petition, 90 L.J.Ch. 116 . . . . . . . . . . . 14-017
Steljes v. Ingram (1903) 19 T.L.R. 534. . . . . . . . . . . . . . . . . . . . ....... 1·372, 2·083
Steller v. Parra Council (1986] 1 N.Z.L.R. 84 1·282
Steven v. Pryce-Jones (1913) 25 W.L.R. 172 (Canada) . . . . 8·166
cvi TABLE OF CASES TABLE OF CASES cvii
Stevens v. Anglian Water Authority [1987] 1 W.L.R.1381 1·344 Sutcliffe v. Chippendale Edmondson (A Firm) (1971) 18 Build. L.R. 149 2·095,
- v . Gourley (1859) 7 C.B.(N.s.) 99;29 L.J.C.P.1; 1 LT. 33; 6Jur.147; 8 W.R. 85; 2·190, 2·219, 2·230, 5·020, 5·051
141 E.R. 752. . . . . . 4-279 - v . Thackrah [1974] A.C. 727; [1974] 2 W.L.R. 295; 118SJ.148, [1974] 1 All E.R.
- - v. Mewes & Davis, June 8, C.A. 1901 (Unrep.) . . . . . . . . . . . 7·044 859; [1974] 1 Lloyd's Rep. 318, H.L.; reversing [1973] 1 W.L.R. 888; 117 S.J.
- v . Taylor (1860) 2 F. & F. 419. . . . . . . . . . . . . . . . . . . . . . . . . 4·177, 12-052 509; [1973] 2 All E.R.1047; [1973] 2 Lloyd's Rep. 115, C.A........ 1·130, 1·302,
Stevenson v. Mclean (1880) 5 Q.B.D. 346; 49 L.J.Q.B. 701; 42 L.T. 897; 28 2·190, 2·214, 2·215, 2·219, 2-220, 2·221, 2·232, 6·184,
W.R. 916 . . . . . . . . . . . . . 1·028 6-228, 18·062, 18·063, 18·067, 18·071
- v . Watson (1879) 4 C.P.D. 148; 48L.J.C.P. 318; 40 L.T. 485; 43 J.P. 399; 27 W.R. Sutherland Shire Council v. Heyman (1985) 60 A.LR. 1~ [1985] 59 A.L.J.R. 564;
682. . . . . 2·073, 6·039, 6·110, 6·177, 6-179, 18·127 (1986) 2 Const. L.J. 150; [3 I.C.L.R 157];, High Ct. of Australia; reversing
Stewardson Stubbs & Collett Ltd. Re.. . . . . . . . . . . . . . . 12·033, 12-039, 12·040, 12·041 (1982) 1 Const. L.J. 161, Sup. Ct. of New South Wales, Australia..... 1·296, 1·385
Stewardson Stubbs & Collett Ltd. and Bankstown Municipal Sutro (L.) & Co. v. Heilbut Symons & Co. [1917] 2 K.B. 348; 86 L.J.K.B. 1226; 116
Council Re. (An Arbitration between) (1965] N.S.W.R. 1671 . . . . . . . . . 12·010 L.T. 545; 33 T.L.R. 359; 14 Asp. M.L.C. 34; 23 Com. Cas. 21, C.A.. . . 1·225, 1·227
Stewart v. Brechin [1959] S.C. 306. . . . . . . . . . . . 2·206 Sutton v. Grey[1894] 1 Q.B.285;63LJ.Q.B. 633; 69L.T.673;42 W.R.195; 9R.106;
- v . Reavell's Garage [1952] 2 Q.B. 545; [1952] 1 T.L.R.1266; 96 S.J. 314; [1952] 1 lOT.L.R.96. 17·017
AHE.R.1191............ . .. 4-086,4·120 Swanson Construction v. Govt. of Manitoba (1963) 40 D.L.R. (2d) 162..... 4·147, 4·148,
Stewart (Lorne) v. Sindall (William) and N. W. Thames Regional Health Authority 4·152, 4-158, 4·255, 13·134
(1987) 35 Build. L.R. 109; (1988) 11 Con L.R. 99 . . . . . . . . . . . . . . . . . . 13·048 Swartz & Son (Pty.) Ltd. v. Wolmaransstad Town Council 1960 (2) S.A.L.R
Stewards v. Admiralty (1901) 18 T.L.R. 131, H.L.; reversing 17 T.L.R. 111 . . . . . 3-073 1. . . . . 3·065,
Stickney v. Keeble [1915] A.C. 386; [1914-15] AllE.R. Rep. 73; 84 L.J.Ch. 259; 112 4·210, 17·018
L.T. 644. . . . . . . . . . . . . . . . . 9·002, 9·003, 9·022 Sweet & Maxwell Ltd. v. Universal News Services Ltd. [1964) 2 Q.B. 699; [1964] 3
Stieller v. Porirua City Council [1986] 1 N.Z.L.R. 84; (1987) 3 Const. L.J. 312, W.L.R. 356; 108 S.J. 478; [1964] 3 All E.R. 30. . . . . . . . . 1·048, 3·058, 4·216, 4·217,
N.Z.C.A. . . 1·351 12·078
Stiff v. Eastbourne Local Board (1868) 19 L.T. 408; 20 L.T. 339; 17 W.R. 68, Swiney v. Ballymena Commissioners (1888) 23 L.Rlr. 122, 129 . . . . . . . . . 6-147
428... . . . . . . . . . . . . 17·010, 17-0llE, 17-026 Syarikat Perumahan Sdn. v. Bank Bumiputra [1991] 2 M.LJ. 565. . . . . . . 17·060, 17-063
Stilk v. Myrick (1809) 2 Camp. 317; 6Esp.129; 170 E.R.1168, N.P.... 1·068, 7·011, 7·024 Sykes (F. & G.) (Wessex) Ltd. v. Fine Fare Ltd. [1967] 1 Lloyd's Rep. 53, C.A.;
Stimson v. Gray [1929] 1 Ch. 629; 98 L.J.Ch. 315; 141 L.T. 456 . . . . . . . . . . . . . 4·303 reversing in part [1966] 2 Lloyd's Rep. 205 1·049
Stockloser v. Johnson [1954] 1 Q.B. 476; [1954] 2 W.L.R. 439; 98 S.J.178; [1954] 1 All Syrett (Pamela) v. Carr & Neave (A Firm) (1991) 54 BLR 121; (1990) 48 E.G. 118;
E.R. 630; C.A. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12·021, 12·022 (1990) 6 Const. L.J. 305. . . . . . . . . . . . . . . . . . . . . . . . . . .... 2·209, 2·210
Stoddart v. Union Trust Ltd. [1912] 1 K.B. 181; 81 L.J.K.B. 140; 105 L.T. 806 14-052 Syros Shipping Co. S.A. v. Elaghill Trading Co.; Proodos C, The [1980] 2 Lloyd's
Stovin-Braford v. VolpointProperties [1971] Ch.1007; [1971}3 W.L.R.256; 115 S.J. Rep. 390; [1981] 3 All E.R. 189; [1981] Com. L.R. 80 . . . . . . . . . . . . . . . 1·079
568, [1971] 3 AllE.R. 570, C.A.; affirming(1970) 114S.J. 823; The Times,July Sztejn v. J. Henry Schroder Banking Corporation 31 N.Y.S. (2d) 631 (1941), New
29, 1970 . .... ............................. 2·278 York Court of Appeals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17·069
Strata Construction Corporation v. Winkler (1987) 45 D.L.R (4th) 741 B.C.,
C.A . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8·119, 8·139, 8·141, 8·142
Stratford (Borough of) v. J.H. Ashman [1960] N.Z.L.R. 503 . . . . . . . . 5·045, 6°053, 6-082, Tai Hing Cotton Mill v. Liu Chong Hing Bank [1986] A.C. 80; [1985] 3 W.L.R. 317;
6·083 [1985] 2 All E.R. 947; (1985) 129 S.J. 503; [1986] F.LR. 14; [1985] 2 Lloyd's
Strongman (1945) v. Sincock [1955] 2 Q.B. 525; [1955] 3 W.L.R. 360; 99 S.J. 540; Rep. 313; (1985) 135 New L.J. 680; (1985) 82 L.S. Gaz 2995; [2Prof. Neg.17],
[1955] 3 All E.R. 90. . . . . . . . . . . . . . . . . . . . . . . . . . . 1·205, 1·214, 4·278, 4·280 P.C.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ... 1.280, 1.375, 1.378
Stuart v. Smith (1816) 2 Marsh 435; 7 Taunt. 158; Holt N.P. 321 . . . . . . . . . . . . 4·279 Tailby v. Official Receiver (1888) 13 App. Cas. 523; 58 LJ.Q.B. 75; 60 L.T. 162; 37
Stubbs v. Holywell Ry. (1867) L.R. 2 Ex. 311; 36 L.J.Ex. 166; 16 L.T. 631; 15 W.R. W.R. 513; 4 T.L.R. 726 . . . . . . . . . . 14.041
869. . . . . . . . . . . . . . 2·054, 2·261, 4·006, 4·026, 4·270, 14-071 Tahrland v. Rodier (1866) 16 L.C. Rep. 473 . . . . . . . . . . . . . . . . . . . . . . . . . . 2.234
Sturgeons Ltd. v. Municipality of Metropolitan Toronto (1968) 70 D.L.R. (2d) 20 Tamarac Development v. Delamater Freud & Associates 675 P. (2d) 361 (1984) . 2.092
[1968] 2 O.R. 526 (Canada) 1·057 Tamplin v. James (1880) 15 Ch.D.221; 43 L.T. 520; 29 W.R. 311, C.A. . ,...... . 1.097
Sudbrook Trading Estate Ltd. v. Eggleton [1983] 1 A.C. 444; [1982] 3 W.L.R. 315; Tamplin S.S. v. Anglo-Mexican Petroleum Products Co. [1916] 2 A.C. 397; 85
[1982] 3 AIIE.R. 1; 126 S.J. 512; (1982) 44 P. & C.R.153; (1982) 79 L.S.Gaz. L.J.K.B. 1389; 32 T.L.R. 677; 21 Com. Cas. 299 . . . . . . . . . . . . . . . . . . . 4.234
1175; (1983) 265 E.G. 215, H.L.; reversing [1981] 3 W.L.R. 361; [1981] 3 All Tancred v. Delagoa Bay &East Africa Ry. (1889) 23 Q.B.D. 239; 58 L.J.Q.B.459; 61
E.R. 105; (1981) 125 S.J. 513; (1981) 260 E.G. 1033, C.A. . . . . . . . 1·052 L.T. 229; 38 W.R. 15. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14.013, 14.014
Suisse Atlantique Societe D'Armement Maritime S.A. v. N.V. Rotterdamsche
TancredArrol & Co. v. Steel Company of Scotland (1890) 15 App. Cas. 125; 62L.T.
Kolen Centrale [1967] 1 A.C. 361; [1966] 2 W.L.R. 944; [1966] 2AllE.R. 61;
738. . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.201, 4.202
110 S.J. 367; [1966] 1 Lloyd's Rep. 529; (29 M.L.R. 546), H.L.; affirming
[1965] 1 Lloyd's Rep. 533; [1965] C.L.Y. 3610, C.A.;. affinning [1965] 1 Tannenbaum Meadows v. Wright-Winston (1965) 49 D.L.R. (2d)
Lloyd's Rep. 166........... . . . . . . . . . . 1·231, 1·233 386. . . . . . 4.007, 4.017, 4.019, 4.227, 5.002, 5.006, 12.080
Sumpter v. Hedges [1898] 1 Q.B. 673; 67 LJ.Q.B. 545; 78 L.T. 378; 46 W.R. 454;42 Tapp v. Jones (1875) L.R. 10 Q.B. 591; 44 L.J.Q.B. 127; 33 L.T. 201; 23 W.R.
S.J. 362. . . 4-011, 4·017, 4·018, 4·019, 5·004, 11·007, 11·013 694 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14.064
Sunbird Plaza v. Maloney (1988) 166 C.L.R. 245. 17·011F, 17·021 Tara Civil Engineering Ltd. v. MoorfieldDevelopmentsLtd. (1989) 46 B.L.R. 72; 16
Sunley v. Cunard White Star [1940] 1 K.B. 740; [1940] 2 All E.R. 97; 109; L.J.K.B. Con. L.R. 46; (1989) 5 Const. L.J. 308. . . . . . . . . . . . . . . . . 4.305, 12.001, 12.094
833; 163 L.T. 257; 84 S.J. 392; 45 Com. Cas. 203 . . 8·194 Taunton-Collins v. Cromie [1964] 1 W.L.R. 633; 108 S.J. 277; [1964] 2 All
Sunley Homes Ltd. v. Borq [1970] 1 Q.B. 115; [1969] 3 W.L.R. 496; 113 S.J. 703; E.R. 332. . . . . . . . . . . . . . . . . . . . . . . . 18.015, 18.111, 18.112, 18.113, 18.196
[1969] 3 All E.R. 332, D.C. . . . . 2·148 Taverner & Co. v. Glamorgan County Council (1940) 164 L.T. 357; 39 L.G.R. 102;
Surf Realty Corp. v. Standing 78 S.E. (2d) 901 ...... 2·088 85 S.J. 142; 57 T.L.R 243 . . . . . . . . . . . . . . . . . 7.065
Surrey Heath Borough Council v. Lovell Construction and Haden Young (1988) 42 Taylor v. Brewer (1813) 1 M. & S. 290; 21 R.R. 831; 105 E.R. 108. . . . . . . . . 1.083, 2.248
Build. L.R. 30. .. 1·326 --v. Brown (1839) 2 Beav. 180; 9 L.J.Ch. 14; 50 R.R. 152 . . . . . . . . . . . . . . . 9.022
--v. Lovell Construction and Haden Young 48 BLR 108; 24 Con. L.R.1; (1990) 6 - v . Caldwell (1863) 3 B. & S. 826; 32 L.J.Q.B. 164; 8L.T. 356; 11 W.R. 726; 129
Const. L.J. 179, C.A.; affirming 15 Con. L.R. 68; 42 BLR 25; (1988) 4 Const. R.R. 573 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.096, 4.234, 4.245
L.J. 226. . . . . . . . . . . 5·028, 10-005, 13·043, 15·014 - v . Hall (1870) Ir.R. 4 C.L. 467; Ir. R. 5 C.L. 477 . . . . . . 2.031
cviii TABLE OF CASES
Taylor v. Johnson [1983] 45 A.L.R. 265, High Ct. of Australia. . . . . . . . . . . 1.095, 1.096
- v . Laird (1856) 1 H. & N. 266; 25 L.J.Ex. 329; 108 R.R. 562 .......... 4.006, 4.025
Taylor (C.R.) (Wholesale) Ltd. v. Hepworths Ltd. [1977] 1 W.L.R. 659; (1976) 121
S.J. 15; [1977] 2 All E.R. 784; (1976) 244 E.G. 631 . . . . . . . . . . . . . . . . . 8.141
Taylor (David) & Son v. Barnett Trading Co. [1953] 1 W.L.R. 562; 97 S.J. 226; [1953]
1 All E.R. 843; [1953] l Lloyd's Rep. 181; C.A........... 18.008, 18.010, 18.134
Taylor-Woodrow International v. Minister of Health [1978] 19 S.AS.R. 1. .. 8.055, 8.181
Team Services Limited v. Kier Management and Design Limited (1993) 63 B.L.R.
76, C.A. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ;, . 1·223, 13·119
Tehno-lmpex v. Gebr van Weelde Scheepvaartkantoor B.V. [1981] Q.B. 648;
[1981] 2 W.L.R. 821; (1981) 125 S.J. 304; [1981] 2 All E.R. 669; [1981] 1
Lloyd's Rep. 587; [1981] Com. L.R. 82, C.A.; reversing [1980] 1 Lloyd's Rep.
484. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8.089, 18.010
Telfair Shipping Corp. v. lntersea Carriers S.A.; Carolina P, The (1985} 129 S.J. 283;
[1985) 1 All E.R. 243; [1984] 2 Lloyd's Rep. 467; (1985) 82 L.S. Gaz.
1781. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.251, L254, 4.289, 4.290
Temloc Ltd. v. Errill Properties Ltd. (1988) 39 B.L.R 30; (1988) 4 Const. L.J. 63
C.A.. · · · · · · . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10.023, 10.079
Tennent v. Glasgow (Earl) (1864) 2 Macph. (H.L.) 22; 36 Sc. Jur. 400 . . . . . . . . 4.265
Tergeste, The [1903} P. 26; 72 L.J.P. 18; 87 L.T. 567; 9 Asp. M.C. 356....... 4.032, 4.033
Tersons v. Stevenage Development Corporation [1965] 1 Q.B. 37; [1964} 2 W.L.R.
225; 107 S.J. 852; [1963] 3 AllE.R. 863; [1963] 2 Lloyd's Rep. 333; [1963] R.A.
393. . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.009, 4.132,4.134, 7.053, 8.064, 18.176
Tew v. Newbold-on-Avon United District School Board (1884) 1 C. & E.
260 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10.032, 10.041
Tharsis Sulphur and Copper Co. v. McE!roy (1878) 3 App. Cas. 1040; 5.R. (Ct. of
Sess. Cas.) 161. . . . . . . . . . . . . . . . . 1.295, 3.052, 4.039, 4.041, 4.046, 4.047, 4.051,
4.053, 4.054, 4.057, 4.060, 4.061, 4.095, 6.187, 7.028, 7.044, 7.055,
7.059, 7.060, 7.074, 7.123
Thomas v. Hammersmith Borough Council 82 S.J. 583; [1938] 2 All E.R. 203 2.049,
2.261, 2.262
- - v. Thomas (1842) 2 Q.B. 8511842 F. & K. 621 . . . . . . . . . . . . . . . . . . . . . 1.070
Thomas & Co. v. Portsea S.S. Co. [1912] A.C. 1. ........ 13.106, 18.027, 18.032, 18.033
Thompson v. Alexander & Partners (1992) 59 Build. L.R. 81 . . . . . . . . . . . . . . 1.362
- v . Lohan (T.) (Plant Hire) andHurdiss (J.W.) Ltd. [1987] 1 W.L.R. 649; [1987]
2 All E.R. 631; (1987) 131 SJ. 358; [1988] T.L.R. 65; [1987] J.R.L.R. 148;
(1987) 84 L.S. Gaz. 979, C.A . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.241, 1.242
Thomson v. Cremin (1941) [1956] 1 W.L.R. 103n; {1953] 2 All E.R. 1185; 100 S.J.
73, sub nom. Cremin v. Thomson (1941) 71 Ll.L. Rep. 1; 1956 S.L.T. 357,
H.L. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.333
Thorman (Patricia) v. New Hampshire Insurance Co. [1988] 1 F.T.L.R. 30; [1988] 1
Lloyd's Rep. 7; (1988) 39 BLR 41, C.A. . . . . . . . . . . . . . . . . . . . . . . . . 15·037
Thorn v. London Corporation (1876) 1 App. Cas. 120; L.R. 9 Ex. 163; L.R 10 Ex.
112; 10 Ex. 44; 43 L.J.Ex.115; 44 L.J.Ex. 62; 45 LJ.Q.B. 487; 34 L.T. 545; 24
W.R. 932; 40 J.P. 468 ........ 1·295, 4·020, 4·039, 4·041, 4·045, 4-046, 4·047, 4·049,
4·050, 4·051, 4·052, 4·053, 4·057, 4·060, 4·061, 4·095, 4· 101, 4· 113, 4.Z33,
7·025 7·084
Thornhill v. Neats (1860) 8 C.B(N.s.) 831; 2 L.T. 539; 125 R.R. 902 ........ 9·008,'9·010,
10·028, 10·040
Thornton v. Place (1832) 1 M. & R. 218; 42 R.R. 781. . . . . . . . . . . . . 4-015, 4·022, 8· 158
Thornton Hall v. Wembley Electrical Appliances [1947] 2 All E.R. 630..... 2·235, 6·099,
6·140
Thoroughgood's Case, Thoroughgood v. Cole (1584) 2 Co. Rep. 9a; 1 And.129; 76
E.R. 408; sub nom. Throwgood v. Turner, Moore K.B. 148 . . . . . . . . . . . 1·100
Thyssen (Great Britain) v. Afan Borough Council (1978) 15 Build. L.R. 98, C.A. 18·179
Tidy v. Mollett (1864) 16 C.B.(N.s.) 298; 10 Jur.(N.s.) 800; 33 L.J.C.P. 235; 10 L.T.
380; 12 W.R. 802; 139 R.R. 497 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9,020
Timber Shipping Co. S.A. v. London and Overseas Freighters [1972] A.C.1; [1971]
2 W.L.R. 1360; [1971] 2 All E.R. 599; sub nom. London & Overseas Freight-
ers v. Timber Shipping Co., 115 S.J. 404; [1971] 1 Lloyd's Rep. 523, H.L. . . 8·090
Tingay v. Harris [1967] 2 Q.B. 327; [1967] 2 W.L.R. 577; 110 S.J. 926; [1967] 1 All
E.R. 385; [1966] C.L.Y. 2053 C.A. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18·185
Tins Industrial Co. Ltd. v. Kono Insurance Ltd. (1988) 4Const. L.J. Hong Kong Qi,
of Appeal. . . . . . . . . . . . . . . . . . . . . . . . . . . . 17-009, 17·010, 17·011C, 17·011E
TABLE OF CASES cix
Tito v. Waddell (No.2). Titov. Att.-Gen. {1977] Ch.106; [1977]2 W.L.R.496;{1977]
3 All E ..R. 129; Judgment on Damages [1977] 3 W.L.R. 972(N). . . . . . . . . 8·139,
8·140, 8·142
Titterton v. Cooper (1882) 9 Q.B.D. 473; 51 L.J.Q.B. 472; 46 L.T. 870; 30 W.R.
866 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16·011
Toepferv.Continental Grain Co. (1973) 117 S.J. 649; [1974] 1 Lloyd'sRep.11 C.A.;
a/finning [1973] 1 Lloyd's Rep. 289 . . . . . . . . . . . . . . . . . . . . . 6·031
--v. WarincoA.G. {1978] 2 Lloyd's Rep. 569 . . . . . . . . . . . . . . . . . . . 1·256
Token Construction Co. v. Charlton Estates (1973) 1 Build. L.R. 48, C.A. 6·088,
6·153, 6·158, 6·159, 10·075, 10,076
Tokyo Marine & Fire Insurance v. Costain (Australia) 1988 5 Aust. & N.Z.
Insurance Cases 75680 N.S.W. C.A. . . . . . . . . . 15·030
Tolhurst v. Associated Portland Cement Manufacturers [1903] A.C. 414; 72
L.J.K.B. 834; 89 L.T. 196; 52 W.R.143; 19 T.L.R. 677. . . . . . . . . . . 14·002, 14-020
Tooth v. Hallett (1869) 4 Ch. App. 242; 38 L.J.Ch. 396; 20 L.T. 155; 19 L.T. 309; 17
W.R. 423.. 12·031, 14·043, 14-050, 16·062, 16·063
Tool Metal Manufacturing Co. Ltd. v. Tungsten Electric Co. Ltd. [1955] 1 W.L.R.
761; [1955] 2 All E.R. 657; 99 S.J. 470; 72 R.P .C. 209; [18 M.L.R. 609; 105 L.J.
20; 220 L.T. 144], H.L. reversing [1954] 1 W.L.R. 862; [1954} 2 All E.R. 28; 98
S.J. 389; 71 R.P.C. 201; [1 Business L.R. 97], C.A.; [1954] C.L.Y. 618; restor-
ing (1953) 71 R.P.C.1 . . 1·256
Tombergee Construction v. U.S. 420 F. 2nd 1027, 1046 (1970) . . . 8·199
TorridgeDistrict Council v. Turner (Michael) 90L.G.R.173; (1992) 156J.P.N. 636;
(1991) 59 BLR 31, Q.B., D.C.; The Times, November 27, 1991, D.C. . . . . 2·149
Tout & Finch, Re. [1954] 1 W.L.R. 178; 98 S.J. 62; {1954] 1 All E.R. 127; 52 L.G.R.
70. . . . . . . . . . . . . 8·079, 8·080, 8·081, 8·084, 13·124, 13·126, 13·130, 14-044, 16·054
Toward, Re, ex parte Moss (1884) 14 Q.B.D. 310; 54 L.J.Q.B.126; 52 L.T. 188. ... 14·044,
16·062, 16.063
Town & City Properties (Development) v. Wiltshire Southern and Gilbert Powell
(1988) 44 BLR 109. . . 18·132, 18·143, 18·148, 18.149, 18·151, 18·159, 18·161, 18·162
Town ofMulgrave v. Simcoe & Erie General Insurance Co. (1977) 73 D.L.R. (3d)
272. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17·043, 17·044
Town of Truro v. Toronto General Insurance {1974] S.C.R. 1129. . . . . . 17·023
Townsend v. Stone Toms and Partners (1984) 128 S.J. 659; (1985) 27 Build. L.R. 26;
(1984) 81 L.S. Gaz. 2293, C.A................ 2·095, 2·096, 2·155, 2·215, 2·220
Townsend (Builders) Ltd. v. Cinema News Property Management [1959] 1 W.L.R.
119; 1231.P.115; 103 S.J. 74;57L.G.R l74;subnom. Towsends (Builders) v.
Cinema News and Property Management (David A. Wilkie & Partners,
Third Party) [1959] 1 All E.R. 7. 1·206, 1·283, 2·147, 2·151, 2·198, 4·115,
4·274, 4-281
Townsville Hospital Board, Ex parte Jennings Industries Re {1981J 2 Q.R.
592. . . . . . . . . . . . . . . . . . . . . . .. . . . . . . 13·076, 13·081, 13· 82, 13·083, 13·088
TradaxExport S.A. v. Cerrahogullari T.A.S. [1981] 3 AllE.R. 344; [1981] Com. L.R.
144; [1981] 2 Lloyd's Rep. 169 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18·090
Trade Indemnity Australia Ltd. v. Parkinson Air Conditioning (1994) 13 A.C.L.R.
19, Qd. C.A . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13·110, 13·114
Trade Indemnity Co. v. Workington Harbour & Dock Board rI937j A.C. 1; 105
L.J.K.B.183; 41 Com. Cas.186; 154 L.T. 507;54 Ll.L.R.10~; f19 6] 1 AllE.R.
454. . . . . . . . . . . . . . . . . . 4·045, 6·016, 17·001, 17·008, 1"7·010, 17·011A, 17·0110,
17·011E, 17·025, 17·026, 17·027
Trafalgar-House Construction (Regions) v. General Surety & Guarantee (1994) 66
BLR42, C.A ..... 17·011A, 17·0118, 17·011C, 17·011E, 17·011F, 17·012, 17·012A,
17·013, 17·015, 17·016, 17·029, 17·063
Tramountana Armadora S.A. v. Atlantic Shipping.Co. S.A. [1978] 2 All E.R. 870; 1
Lloyd's Rep. 391. . . . 18{MJ5, 18·180, 18· 184, 18· 186, 18· 187, 18· 188, 18· 189,
18·194
Trans Trust S.P.R.L. v. Danubian Trading Co. [1952] 2 Q.B. 297; [1952] 1 T.L.R
1066; 96 S.J. 312; [1952] 1 All E.R. 970; [1952] 1 Lloyd's Rep. 348; C.A.;
reversing in part [1952] 1 K.B. 285; [1952] 1 T.L.R 13; [1952] 1 All E.R. 89;
[1951) 2 Lloyd's Rep. 644, 1 C.L.C. 9206. . . . . . . . . 8·093
Transatlantic Financing Corporation v. U.S. 363 F. (2d) 316 (1966) . . . . 4·237
Traynor v. Panan Contractors Ltd. (1988) 7 A.C.L.R. 47......... 6·164, 18·144, 18·165
Travers v. Cooper (1915) 1 K.B. 73. . . . . . . . . . . . . . . . . . . . . . . 15·015, 15·041, 15·042
Tredegar v. Harwood [1929) A.C. 72; 97 L.J.Ch. 392; 139 L.T. 642; 44 T.L.R.
790. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5·019, 6'025
Trendberth (John) v. National Westminster Bank (1979) 39 P. & C.R. 104; (1979)
123 SJ. 388; (1979) 253 E.G.151. . . . . . . . . . . . . . . . . . . . . . . . . . . 1·341, 1·342
 T
ex TABLE OF CASES
Trendtex Trading Corp. v. Credit Suisse [1982] A.C. 679; [1981J 3 W.L.R. 766;
(1981) 125 S.J. 761; [1981] 3 All E.R. 520; (1981] Com. L.R. 262, H.L.; affirm-
mg [1980] Q.B. 629; [1980] 3 W.L.R. 367; (1980) 124 S.J. 396; [1980] 3 All
E.R. 721, C.A. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14·025
Trentham G. Percy Ltd. v. Archital Luxfer Ltd. and others (1992) 63 BLR 44,
C.A.. · · - .......................................... 1·041 1·043
Triangle Ltd. v. John Burrows Ltd. [1958] (3) S.A. 811. ......... 11-017, 11·030, lJ.103
Triden Contractors Ltd. v. Beluista Ltd. (1987) 3 B.C.L. 203. . . . . . . . . . . . 6· 197 6-203
Tr~dent Construction v. Wardrop [1979] 6 W.W.R. 481. ........... 1·298, 2·192'. 4·056
Tndent General Insurance Co. v. McNiece Brothers (1988) 80 A.L.J.R. 574 . . . . 15.009
T~~ Joint.District School Board of Management v. Kelly [1914] A.C. 667 . . . . . 15·010
T~nlty Umversal Insurance Co. v. Gould 258 F. 2nd 883 (1958) . . . . . . . . . . . . 17·039
Tnple A Investments v. Adams Bros. (1985) 23 D.L.R. (4th) 587 . . . . . . . . . . . 4-103
Tripp v. Armitage (1839) 4 M. & W. 687; 1 H. & H. 442; 3 Jur.(o.s.) 249; 8 L.J.Ex.
107; 51 R.R. 762... 11·007, 11·011, 11·019, 11·026, 11·030,
11·059, 12·063, 12·066, 16·039
Trollope and Coils v. North West Metropolitan Regional Hospital Board [1973] 1
W.L.R. 601; 117 S.J. 355; [1973] 2 All E.R. 260, H.L.. . . . . . . . 1·042, 1·180, 1·195,
. 1 ·220, 4·156, 4·190, 10·062, 10·091A
- - v. Srnger (1913), Hudson, Building Contracts (4th ed.), Vol. l, p. 849 ....... 1·045,
1·059, 4·181, 10·091
Trollope & Colls Ltd. v. Atomic Power Constructions Ltd. [1963] 1 W.L.R. 333; 107
S.J. 254; [1962] 3 All E.R. 1035...... 1·032, 1·041, 1·208, 3·058, 3·059, 3·067, 3·068
Troncello v. U.S. 681 F. 2nd 756. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12·014, 12·015
Trov.:sdale v. Jopp (1865) 2 M. (Ct. of Sess. Cas.) 1334; 4 ibid. 31 . . . . . . . . . . . . 6,099
Tsakrroglou & Co. v. Noblee Thor! G.m.b.H. [1962] A.C. 93; [1961] 2 W.L.R. 633;
105 S.J. 346; [1961] 2 All E.R. 179; [1961] 1 Lloyd's Rep. 329, H.L.; affirming
[1960] 2 Q.B. 348; [1960] 2 W.L.R. 869; 104 S.J. 426; [1960] 2 All E.R. 160;
[1960] 1 Lloyd's Rep. 349; [1960] C.L.Y. 535, C.A.; affirming [1960] 2 Q.B.
318; [1959] 2 W.L.R. 179; 103 S.J. 112; [1959] 1 All E.R. 45; [1958] 2 Lloyd's
Rep. 515; [1959] C.L.Y. 539 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18·175
Tubeworkers Ltd. v. Tilbury Construction (1985) 30 BLR 67; [1985} C.I.L.L. 187;
(1985) 1 Const. L.J. 385 C.A. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6·006, 6·199
Tucker v. Linger (1883) 8 App. Cas. 508; 49 L.T. 373; 52 L.J.Ch. 941; 48 J.P. 4; 32
W.R.40,H.L.......................................... 1·201
Tullis v. Jacson [1892] 3 Ch. 441; 61 L.J.Ch. 655; 67 L.T. 340; 41 W.R. 11; 8 T.L.R:
691;36S.J.646. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1·165,6·106
Turcan, Re (1888) 40 Ch.D. 5; 58 L.J.Ch. 101; 59 L.T. 712; 37 W.R. 70 14·058
Turner v. Diaper (1841) 2 M. & G. 241; 2 Scott N.R. 447 . . . . . . . . . . . 8·087
--v. Garland (1853) (4th ed.) Vol. 2, p. 1. . . . . . . . . . . . . . ..... 2·091, 2-099
Turner Corporation v. Austoted Ltd. (1992) 11 A.C.L.R. 156 . . . . . . . . . . . . . . 18·093
Turner (East Asia) v. Builders Federal (Hong Kong) and Josef Gartner (1988) 42
BLR 122, High Ct. Singapore...... 18·141, 18·146, 18·147, 18·149, 18·151, 18·160
Turner and Goudy v. McConnell [1985] 1 W.L.R. 898; (1985) 129 S.J. 467; [19851
2 All E.R. 34; (1985) 30 Build. L.R. 108; (1985) 1 Const. L.J. 392,
C.A. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18·122, 18·196
Turner and Sons Ltd. v. Mathind Ltd. (1986) 5 Const. L.J. 273. . . . 10.005, 10·061, 10·062
Tu~ock v. Sarto~is (1889) 43 Ch.D. 150; 62 L.T. 209; 38 W.R. 340....... 18·096, 18·108
Turnff Constructmn Ltd. v. Regalia Knitting Mills Ltd. (1971) 222 E.G. 169...... 3·071,
3·059
Tuta Products v. Hutcherson Bros. (1972) 46 A.L.J.R. 119......... 1·203, 3·020, 13·093
Twickenham Garden Developments v. Hounslow L.B.C. (19711 Ch. 233 . . . . . . 6·123
Twins Transport Ltd. v. Patrick and Brocklehurst (trading as H.V. & C. Patrick
Estates Developers) (1984) 25 Build. L.R. 65 . . . . . . . . . . . . . . . . . . . . 13·045
Tyers v. Rosedale and Ferryhill Iran Co. (1875) L.R. 10 Ex. 195; 44 L.J.Ex.130; 33
L.T. 56; 23 W.R. 871. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9·009, 9·020
U.B.A.F. Ltd. v. European American Banking Corporatioil' Pacific Colocotronis
Th, [1984] Q.B. 713; [1984] 2 W.L.R. 508; [1984] 2 All E.R. 226; (1984) 128
S.J. 243; [1984] 1 Lloyd's Rep. 258; (1984) 81 L.S. Gaz. 429; [1984] BCLC 112,
C.A. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1·307
U.S v Algenon Blair 329 F Supp 1360 (1970) . . . 17·020
- - v Atlantic Dredgmg 253 U.S. 1 (1928) . . . . ... ~ -~ 4·061
--v. Blair 321 U.S. 730 (1944) . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4·156
- - v. Corliss Steam Engineering Corporation 91 U.S. 321 (1876) ... . 12·014
TABLE OF CASES cxi
U.S. v. Foley 329 U.S. 64 (1945). . 1·189, 4·156
- v . Rice 317 U.S. 61 (1942). . . 1·189, 4·156
- - v. Rogers & Rogers (1958) 393 S.E. (2d) 830, California . . . . . . 1·305
- - v. Spearin 248 U.S. 132 (1918). . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4·047, 4·061
- v . Walsh (1902) 115 Fed. Rep. 697 . . . . . . . . . . . . . . . . . . . . . . . . . 17·049
U.S. Leslie Salt Co. v. St. Paul Mercury Insurance 637 F. (2d) 657 (1981) U.S. Ct. of
Appeal . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8·149
Ultramares v. Touche (1922) 253 N.Y. 170 . . . . 1·281
Ulysses Cia Naviera S.A. v. Huntingdon Petroleum Services, Ermoupolis, The,
[1990] 1 Lloyd's Rep. 160 . . . . . . . . . . . . . . . . . . . . . . . 18·096
Union Construction Ltd. and Nova Scotia Power Corporation (1980) 111 D.L.R.
(3d) 728 . . . . . . 8·080
United City Merchants (Investments) and Glass Fibres and Equipments v. Royal
Bank of Canada, Vitrorefuertos S.A. and Banco Continental S.A.;
American Accord, The, [1983] A.C.168; [1982] 2 W.L.R. 1039; [1982} 2 All
E.R. 720; [1982] Lloyd's Rep. 1; [1982] Com. L.R. 142, H.L.; reversing [1981]
3 W.L.R. 242; (1981) 125 S.J. 413; [1981] 3 All E.R.142; [1981] 1 Lloyd's Rep.
604; (1981] Com. L.R. 98, C.A.; affirming [1979] 1 Lloyd's Rep. 267 ...... 17·056,
17·067, 17·068
University of Glasgow v. Whitfield & Laing Construction (1988) 42 BLR 66 ...... 2·108,
2·109, 2·222, 4·103
University of Regina v. Pettick (1991) 79 D.L.R. 3d 615. . . . . . . . . . . . . 1·359, 2·120
University of Warwick v. Sir Robert MacAlpine (1988) 42 BLR 1. ............ 4-098,
4·108, 13·029, 13·063
Update Constn1ction Ltd. v. Rozelle Child Care Centre (1990) 9 A.C.L.R.
66. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1·248, 1·269
Upsdell v. Stewart (1794) Peake N.P. 255; 3 R.R. 685. . . . . . . . . . . . . . . . . 2·257, 2·268
Utica City National Bank v. Gunn (1918) 118 N.E. 607. . . . . . . . . . . . . . . . 1·184, 1·216
Uxbridge Permanent.Benefit. Building Society v. Pickard [1939] 2 K.B. 248; 108
L.J.K.B. 757; 160 L.T. 407; 83 S.J. 297; 55 T.L.R. 579; [1939] 2 All E.R.
344 . . . . . . 2·232
Van der Zijden Wildhandel (P.J.) N.V. v. Tucker & Cross [1976] 1 Lloyd's Rep. 341;
for previous proceedings see [1975] 2 Lloyd's Rep. 240.......... 18·012, 18·134
Vawdrey v. Simpson [1896} 1 Ch.166 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18·104
Vermont Construction Ltd. v. Beatson (1976) 57 D.L.R. (3d) 95 ... 1 ·296, 1·296A, 1·306A
Verona Construction v. Frank Ross Construction [1961] S.C.R.195, Canada . . . 4·210
Vogan v. Barry (1908) 7 W.L.R. 811 (Canada) . . . . . . . . . . . . . . . . . . . . . . . . 8°166
Voli v. Inglewood Shire Council (1963) 56 Q.L.R. 256; [1963] A.L.R. 657; [27
M.L.R. 216]. . . . . . . . ... . ... 1·311, 1·314, 1·317, 2·124
Von Hatzfeldt-Wildenberg v. Alexander [1912] 1 Ch. 284; {1911-13] AIIE.R. Rep.
148; 81 LJ.Ch. 184; sub nom. Hatzfeldt v. Alexander 105 L.T. 434 . . . . . . 1·057
Victoria, and Kong Wah Housing Development S.D.B. v. Desplan Construction
Trading [1991) 2 L.J. 117 Malaysia. . . . . . . . . . . . . . . . . . . . . . . . . . . . 4·305
Victoria Laundry (Windsor) v. Newman Industries [1949] 2 K.B. 528; 65 T .L.R. 274;
93 SJ. 371; [1949] 1 All E.R. 997. . . . . . . . . . . . . . . . . . 8·109, 8·117, 8°167, 8·179
Victoria University of Manchester v. Hugh Wilson and Lewis Womersley (a firm)
(1984) 1 Const. LJ. 162; 2 Const. L.R. 43 . . . . . . . . . . . . . 4·103
Vigers, Sons & Co. Ltd.-v. Swindell [1939] 3 All E.R. 590......... 2>061, 13·038, 13·039
Viking Grain Storage v. White (T.H.) Installations (1985) 33 Build. L.R. 103; [1985]
C.I.L.L. 206; (1985) 3 Con. L.R. 52. . . . . . . . . 3·026, 3·027, 3·028, 4·073, 4-096
Viney v. Bignold (1888) 20 Q.B.D. 172 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18·036
Vitex Manufacturing Corporation v. Caribtex Corporation 377 F. (2nd) 795 (1967)
U.S. Ct. of App. 3rd Circuit. . . . . . . . . . . . . . . . . . . . . . . . . . 3·047, 8·178, 8·179
W.R.B. Corporation v. U.S. 183 C. & Cl. 409 (1968) ........ . 8·203
W.T. Malouf Pty. Ltd. v. Brinds Ltd. (1981) 52 F.L.R. 442 ..... . 10·018
Waddle v. Wallsend [195212 Lloyd's Rep.105 . . . . . . . . . . . . . . . . . . . . 1·333
Wade v. Simeon (1846) 2 C.B. 548; 3 Dow. & L. 587; 15 L.J.C.P. 114; 6 L T.O.S. 346;
10 Jur. 412; 135 E.R. 1061 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1·079
Wade-Gery v. Morrison (1877) 37 L.T. 270 . . . . . . . . . . . . . . . . . . . . . . . . . . 18°026
Wadey v. Mort's Dock and Engineering Co. [1902] 2 N.S.W.S.R. 391, (1905) 22
T.L.R.61 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . · · · · · · · · · · 6'013
 cxii TABLE OF CASES TABLE OF CASES cxiii
Wadsworth v.Lydall (1981] 1 W.L.R. 598; (1981) 125 S.J.309; [1981] 2All E.R.401, Watts v. Morrow {1991] 1 W.L.R.1421; [1991] 4AIIE.R. 937; (1991) 23H.L.R. 608;
C.A. 8·093 54BLR86; [1991]2E.G.L.R.152; [1991]43E.G.121;26Con. L.R. 98; [1991]
Waghorn v. Wimbledon Local Board (1877), (4th ed.), Vol. 2, p. 52 . . 2·069 E.G.C.S. 88; (1991) 141 New L.J. 1331; [1991] N.P.C. 98; [1992] Gazette,
Wakefield, etc. v. Namanton Local Board (1881) 44 L.T. 697....... 6-109, 6·139, 14-053 January 8, 33; The Independent, August 20, 1991; The Guardian, September
Waldon v. Maryland Casualty Co. 116 S.C. 828 (1923) 17·033 4, 1991, C.A.; reversing [1991] 14E.G. lll; [1991] 15 E.G. 113;24 Con. L.R.
Walker, Re, ex parte. Barter. See Barter, ex parte 125................ 2·210, 2·211, 2·212, 2·213, 8·143, 8·150, 8·159, 8·160, 8-161
--v. Black (1879) 5 Viet. L.R. (Law) 77 . . . . . . . 6-155 - - v. Shuttleworth {1861) 7 H. & N. 353; 7 Jur.{N.s.) 945; 5 L.T. 58; 10 W.R. 132;
--v. London and North WesternRly. Co. (1876) 1 C.P.D. 518;45LJ.C.P. 787; 36 126 R.R. 471 ........................ ·. . . . . . . . . . . . . . . . . . 17-028
L.T. 53; 25 W.R. 10. . . . . . 12·011, 12·012, 12.047, 12·048, 12·049, Waugh, Re exparte Dickin (1876) 4 Ch.D. 524; 46 L.J. Bk. 26;35 L.T. 769; 25 W.R.
12-051, 12-064, 12·065, 12-066 258 .............. 11·022, 11·037, 11·041, 11-049, 11·060, 16·037, 16-041, 16·042
WalJace v. Brandon and Byshottles Urban District Council (1903), (4th ed.), Vol. 2, Weatherstone v. Robertson (1852) 1 Stuart M. & P. (Sc.) 333 . . . . . . . . . . . . . . 4-040
p. 362 . . . . . . . . . . . . . . . . . . . . . . . . 6·040 Websterv. Bosanquet [1912] A.C. 394;81 LJ.P.C. 205; 106 L.T. 357;28 T.L.R. 271 10·006
Wallace (James) v. William Cable Ltd. [1980] 2 N.Z.L.R. 187............ 1·076, 1·078 --v. Cecil (1861) 30 Beav. 62; 132 R.R. 185; 54 E.R. 812 . 1·097
Wallbridge v.Moore(W.H.) & Co. Ltd., W.H.Moore&Co.Ltd. v.Baldry(1964)48 Weeks v. Rector of Trinity Church (1900) 67 N.Y.S. 670, New York. 4-166, 4·168
W.W.R. 321, Canada... 1·146 Wegematic v. U.S. 360 F. (2d) 674 (1964) . . . . . . . . . . . . . 4·237
Wallis v. Robinson (1862) 3 F. & F. 307; 130 R.R. 841. ............... 7·072.13-031 Weibking,Re, exparte Ward. [1902] 1 K.B. 713; 71 L.J.K.B.389; 86 L.T. 455;50 W.R.
Walnut Creek Aggregate v. Testing Engineers (1967) 248 Cal. App. (2d) 690, 460; 9 Mans.131. ......................... 11-027, 11·035, 11·036, 11·050
California . . . 1-305 Welsh Health Technical Services Organisation v. Haden Young (I.D.C., third
Walsh Canadian Corporation v. Churchill Falls Corporation (1979) 25 N.Fld. & party) (1987) 37 Build.L.R. 130 D.C.................. 13·020, 13·043, 13°054
P.E.I.R. 361............. . ..... 8·198, 8·201, 8·206 Wells v. Army andNavyCo-OperativeSociety(l902) 86L.T. 764; (4th ed.), Vol. 2,
Walter Cabott Construction v. The Queen (1974) 44 D.L.R. 3d 82, 90...... 4·133, 7·014 p. 346........... 2·133, 4·146, 4-147, 7·050, 9-038, 10-029, 10·034, 10·036, 10-040
Walter & Sullivan v. Murphy (J.) & Sons {1955] 2Q.B. 584; [1955] 2 W.L.R. 919; 99 Wells {Merstham) v. Buckland Sand and Silica Co. [1965] 2 Q.B. 170; [1964] 2
S.J. 290; [1955] 1 All E.R. 843, C.A. . . . . . . . . . . . . . . . . . . . . . . . 14.019 W.L.R. 453; 108 S.J. 177; [1964] 1 All E.R. 41 .. 13-020
Walters v. Whessoe and Shell (1960) 6 Build. L.R. 23, C.A.. 1·235, 15·048, 15-049, Wertheim v. Chicoutimi Pulp Co. [1911] A.C. 301 8·226
15·051, 15·053, 15·057, 15·059 West Coast Transmission v. Ipoco (1985) (Unrep.) ... 1·378
Walton-on-the-Naze Urban District Council & Moran, Re (1905) (4th ed.), Vol. 2, Westcott v. J.H. Jenner (Plasterers) Ltd. {1962) 106 S.J. 281 ............. . 15-042
p. 376. . .. 4-041, 7·021, 7·022 Westerhold v. Carroll (1967) 419 S.W. (2d) 73, Missouri ................. . 1·305
Waltons Stores (Interstate) Ltd. v. Maher (1988) 164 C.L.R. 387 76 A.L.R. Western Waggon and Property Co. v. West [1892] 1 Ch. 271; 61 L.J.Ch.244; 66 L.T.
513........ . .. 1·246, 1-255 402; 40 W.R. 182; 8 T.L.R. 112 . . . . . . . . . . . . 14·042
Wangler v. Swift (1882) 90 N.Y. 38 . . . . 6·179
Westerton, Re, Public Trustee v. Gray [1919) 2 Ch. 104; 88 L.J.Ch. 392; 122 L.T. 264;
Wansbeck Railway v. Trowsdale (1866) L.R. 1 C.P. 269; 12 Jur.(N.s.) 740 . . . 6·178
63 S.J,., 410 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14·016
War Service Houses (Director of) v. Harris (1968) Qd. R. 275 8·127 Westlake v. Bracknell District Council (1987) 19 Housing L.R. 375; {1987) 282 E.G.
Ward v. Calvert {1837) 7 A. & D.143 . . . . . . . . . . 17·043
868; [1987]! E.G.L.R. 161. .... 2-109, 2·222
--v. Cannock Chase District Council [1986] Ch.546; [1986] 2 W.L.R. 660; (1986) Westminster Chemicals &Produce Ltd. v. Eichholz&Loeser [1954] 1 Lloyd's Rep.
130 SJ. 316; [1985] 3 All E.R. 537; (1986) 84L.G.R. 898; (1986) 83 L.S. Ga,. 99......................... . ....... 18·006, 18-117, 18-155
1553. . . . . . .... 8·108, 8-134, 8·136, 8·140, 8-141, 8·143, 8·160
Westminster Corporation v.Jarvis (J.) & Sons [1970] 1 W.L.R. 637; 68 L.G.R.470;
--v. Duncombe {1893] A.C.369;62L.J.Ch. 881; 1 R. 224;69L.T.121;42W.R.59 14-046
sub nom. Westminster City Council v. Jarvis (J.) & Sons [1970] 1 All E.R.
Ward v. National Bank of New Zealand (1883) 8 App. Cas. 755; 52 L.J.P.C. 65; 49
943,H.L.; reversingsubnom. Jarvis (J.) &Sons v. Westminster City Council
L.T. 315. 17·079
[1969] 1 W.L.R. 1448; 113 S.J. 755; [1969] 3 All E.R. 1025, C.A.; reversing
Wardens and Commonalty of the Mystery of Mercers of the City of London v. New {1968) 118 New L.J. 590; The Times, June 18, 1968.............. 1·009, 2·168,
Hampshire Insurance Co., [1992] 1 W .L.R. 792; [1992] 3 All E.R. 57; {1992] 2 4·005, 4·012, 4·020, 4-029, 4-269, 5·037, 5-048, 5-053, 9·007, 10-059,
Lloyd's Rep. 365; Financial Times, June 4, 1992, C.A.; reversing [1991] 1 10·091A, 10·098, l0.099, 13·008, 13·010, 13·026, 13·057, 13·059, 13·061
W.L.R. 1173; {1991] 4 AllE.R. 542; (1991)135 S.J. 541; {1992] 1 Lloyd's Rep. Westwood v. Secretary of State for India (1863) 7L.T. 736; 11 W.R.261; 1 N.R.262;
431; (1991) 7 Const. L.J. 130; The Times, March 22, 1991. ........ 3·071, 17·005, 132 R.R. 810. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6°038, 10·029, 10-032
17-009, 17·010, 17·011E, 17·013, 17·019, 17·052 Wethered v. French (1967) 203 E.G. 431 2·152
Ware v. Lyttelton Harbour Board (1882) 1 N.Z.L.R.S.C. 191 . . . . . . . . . . . . . . 8·074 Whaley v. Milton 241 S.W. (2d) 23 (1951) 4-106
Waring v. Manchester Railway (1949) 7 Hare482; 18 L.J.Ch. 450; 14Jur.(o.s.) 613;2 Wharf Properties v. Eric Cumine Associates (No. 2) (1991) 52 BLR 1; P.C.. . . . . . 8·171,
Hall&Tw.239;82R.R.196 ..... . 6·107 8·200, 8·204, 8-207, 8-208, 8·211, 18-145,
Waring & Gillow Ltd. v. Thompson (1912) 29 T.L.R. 154 ..... . 4·303 18-146, 18-159, 18·159A, 18·159C, 18·160
Warley Ltd. v. Adco Constructions Ltd. (1988) 8 A.C.L.R. 73 .. . . ....... 18·022, Wharf Properties Ltd. v. Eric Cumine Associates (1984) 29 Build.L.R. 106 High Ct.
18·024, 18-176, 18-199 of Hong Kong. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5-028, 7·118
Warner v. Basildon Development Corporation (1991) 7 Const. L.J. 146, Wheat v. Lacon (E.) & Co. [1966] A.C. 552; [1966] 2 W.L.R. 581; [1966] 1 All E.R.
C.A...... . .............. 1·361, 1·363 582; 110 S.J. 149; [1966] R.V.R. 223; [1966] R.A. 193; [82 L.Q.R. 465], H.L.;
Wates Construction {London) Ltd. v. Frantham Property Ltd. (1991) 53 BLR 23; affi,ming [1966] 1 Q.B. 335; [1965] 3 W.L.R. 142; [1965] 2 All E.R. 700; 109
(1991) 7 Const. L.J. 243, C.A.. . . . . . . . . . . . . . . 1·223, 8·084, 16·058 S.J. 334; [1965] C.L.Y. 2663; [28 M.L.R. 721; 236 L.T. 452], C.A...... 1·329, 1·335
Watson v. Canada Permanent Trust Co. (1972) 27 D.L.R. (3d) 735, British Colum- Wheeler v. Copas [1981] 3 All E.R. 405. . . . . . . . . .... 1·320, 1·336
bia Supreme Ct. . ..... 1-256 Wherry v. Hutcherson Ltd. (1987) Aust. Tort Rep. 80-107 N.S.W. . . . . . . . . . . 1·339
- - v. O'Beirne (1850) 7 U.C.Q.B. 345 ..... 7·082 Whitaker v. Dunn (1887) 3 T.L.R. 602. . . . . 4-011, 4-019, 4·020, 4-232, 5·003, 5·004, 5·011
Watson Lumber Co. v. Guenniwig226 N.E. 2nd 270. 278 (1967); Citing 13 Am.Jur. White v. Tarmac Civil Engineering {1967] 1 W.L.R.1508; 111 S.J. 831; [1967] 3 All
2nd.... . . . . 5·001, 7·006, 7·007, 7·093 E.R. 586, H.L.; reversing [1966] 1 W.L.R. 156; 109 S.J. 995; [1966] 1 AllE.R.
Watts v. McLeay (1911) 19 W.L.R. 916, (Canada) ............... 4-016, 61096, 6·113, 209; 64 L.G.R. 111, C.A.. . . 15·041, 15·043, 15·049
6°120, 6·129, 6·147, 8·118, 10·058, 10·079 - - v. Taupo Totara [1960] N.Z.L.R. 547 2·083
cxiv TABLE OF CASES
White and Arthur Re (1901) 84 L.T. 464; 17 T.L.R. 461 . . . . . . . . 10·011
Whitehousev.Jordan [1981] 1 W.L.R.246; (1980) 1258.1.167; [1981] 1 AllE.R.267;
H.L. affirming [1980] 1 All E.R. 650 C.A ...................... 2·087, 2·098
Whitlock v. Brew [1968] C.L.R. 445 . . . . . . . . . . . . 1·052
Whitmore v. Mason (1861) 2 J. & H. 204; 8 Jur.(N.s.) 278; 31 L.J.Ch. 433; 10 W.R.
168; 5 L.T. 631; 134 R.R. 190 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16-038
Whittal Builders Co. Ltd. v. Chester-Le-Street District Council 40 BLR 82; 11 Con.
L.R.40,D.C. 8·189
Whittington v. Seale-Hayne (1900) 82 L.T. 49; 16 T.L.R. 181; 44 S.J. 229. . . . 1·150, 1·152
Whitworth Street Estates (Manchester) v. Miller (James) & Partners . . . . . . . . 18·084
Wickman Machine Sales Tool v. Schuler (L.) A.G. See Schuler (L.) A.G. v. Wick-
man Machine Tool Sales
Widnes Foundry (1929) Ltd. v. Cellulose Acetate Silk Co. [1931] 2 K.B. 393; 100
L.J.K.B. 746; 145 L.T. 507; 47 T.L.R. 481; affirmed in H.L. [1933] A.C. 20; 48
T.L.R. 595 10·002
Wigan Metropolitan Borough Council v. Sharkey Brothers (1988) 4 Const. L.J. 162 18·055
Wilbeam v. Ashton (1807) 1 Camp. 78; 170 E.R. 883 ..... 10·016
Wilkie v. Hamilton Lodging House Company (1902) 4 F. (Ct. of Sess.) (5th
ser.). . ...... 8.021, 8·049
- - v. Scottish Aviation Ltd., 1956 S.C. 198............... 2·245, 2·257, 2·259, 2·266
Wilkes v. Thingoe Rural District Council (1954), (Unrep.).............. 2·160, 2·202
Wilkins & Davies v. Geraldine Borough (1958) {1958] N.Z.L.R. 985 ........... 4-051,
4·055, 4·233, 4·254, 7·025
Wilkinson, Re, exparte. Fowler (1905] 2 K.B. 713; 74 L.J.K.B. 969; 54 W.R. 157; 12
Mans. 377.......................... 8·079, 13·123, 13·126, 16·041, 16·055
Wilkinson v. Clements (1872) L.R. 8 Ch. 96;42 L.J.Ch. 38; 27 L.T. 834; 21 W.R. 90 4·297
William Brothers v. Agius Ltd. [1914] A.C. 510. . . . . . . . . . . . . . . . . 8·226
William Lacey (Hounslow) v. Davis. See Lacey (William) (Hounslow) v.
Davis. . . . 3·076, 8· 104
William Tomkinson v. The Parochial Council of St. Michael (1990) 6 Const. L.J.
319. . . . . . . . . . . . . . . . . . . . . ......................... 4·293, 5.049
Williams v. Atlantic Assurance Co. Ltd. [1933] 1 K.B. 81; 102L.J.K.B. 241; 37 Com.
Cas. 304; 148 L.T. 313; 48 Ll. L. Rep. 177. . . . . . . . . . . . . . . . . . . 14·015, 14·044
--v. Fitzmaurice (1858) 3 H. & N. 844; 32 L.T.(o.s.) 149; 117 R.R. 1004....... 4-040,
7·010, 7·013, 11·007, 11·013
- - v. Roffey & Nicholls (Contractors) [1991] 1 Q.B. 1; [1990] 2 W.L.R. 1153;
[1990] 1 AllE.R. 512; 48BLR69; (1991) lOTr. L.R. 12; (1989) 139New L.J.
1712; [1990] L.S. Gaz. March 28, 36, C.A............. 1·069, 7·011, 7·024, 7·025
Williams and Williams v. Coatsworth (1955) 105 L.J.124....... . 2·064, 7·072
Willment Brothers Limited v. North West Thames Regional Health Authority
(1984) 26 Build. L.R. 51, C.A .. 16-016
Wilson v. United Counties Bank [1920] A.C. 102 ........ .
8·115
- - v. Wallace (1859) 21 Ct. of Sess. Cas. (2nd ser.) D. 507 .......... .
4·112
- v. Wilson (1854) 5 H.L.C. 40; 23 L.J.Ch. 697 ......... .
1·126
Wilson (Paul) & Co. AIS v. Partereederi Hannah Blumenthal, Hannah Blumenthal,
The, [1983] A.C. 854 .... 18·007
Wimpey Construction U.K. v. Poole (1984) 128 S.J. 969; [1984] 2 Lloyd's Rep. 499;
(1985) 27 Build. L.R. 58................................ 2·090, 15·032
Wimpey (George) & Co. Ltd. v. British Overseas Airways Corporation [1955] A.C.
169; [1954] 3 W.L.R. 932; [1954] 3 All E.R. 661; 98 S.J. 868; [71 L.Q.R. 163; 21
Sol. 123; [1954] C.L.J. 50; [1956] C.L.J. 15J; H.L.; affirming sub nom. Little-
wood v. Wimpey (George) & Co. and British Overseas Airways Corpor-
ation [1953] 2 Q.B. 501; [1953] 3 W.L.R. 553; 117 J.P. 484; 97 S.J. 587; [1953] 2
AllE.R. 915;51 L.G.R.557; {117 J.P.J. 753; 103L.J.267], [1953] C.L.Y. 2070,
C.A.; affirming [1953] 1 W.L.R. 426; 97 S.J. 152; [1953J 1 All E.R. 583 1·381
--v. Territory Enterprises (1971) 45 A.L.J.R. 38. . . . . . . . . . . .... 1·141, 1·168
Wimshurst v. Deeley (1845) 2 C.B. 253 . . . . . 3·048
Winconsin Red Pressed Brick v. Hood 69 N.W. 1091 (1897) . . . . . 4·106
Windsor Rural District Council v. Otterway&Try [1954] l W.L.R.1494;988.J.871;
[1954] 3 All E.R. 721; 53 L.G.R. 96. . . . 6·074, 6·081, 6·082, 6·084, 6·090, 6·091,
6-183
Winston Corporation v. Continental Casualty Co. (1975) 508 F. 2nd 1299 ... 17·033
Winter, Re. See Bolland, ex parte
TABLE OF CASES cxv
Winter Garden Theatre (London) v. Millennium Productions [1948] A.C. 173;
[1947] L.J.R.1422; 177L.T. 349; 63 T.L.R. 529; 91 S.J. 504; [1947} 2 All E.R.
331; H.L.; reversing (1946) 115 L.J.Ch. 297; restoring (1946) 115 L.J.Ch.
185 .................................. . 12·091
Winterbottom v. Wright (1842) 10 M. & W. 109; 11 LJ.Ex. 415; 62 R.R. 534; 152
E.R.402 ................................... . 1·314
Wisbech Rural District Council v. Ward [1927] 2 K.B. 55~; [1928] 2 K.B. 1; 97
L.J.K.B. 56; 138 L.T. 308; 91 J.P. 200; 26 L.G.R. 10; 44 T.L.R. 62 6·188
With v. O'Flanagan [1936] Ch. 575; [1936] l All E.R. 727; 105 L.J.Ch. 247; 154 L.T.
634; 80 S.J. 285, C.A.....
Wolf v. Collis Removal Service [1948] 1 K.B. 11 .................. .
Wolverhampton Corporation v. Emmons [1901] 1 K.B. 515; 17 T.L.R. 234; 70
L.J.K.B. 429; 84 L.T. 407; 49 W.R. 553; 45 S.J. 256. . . . . . . . . 4·300, 4·302, 4·303
Wong Lai Ying v. Chinachem Investments Co. (1979) 13 Build.L.R. 81 P.C.. . . . . 4·233,
4·234, 4·236, 4·248, 4-258, 4·262, 4·263
Wood v. Bell (1856) 6 E. & B.355; 25 L.J.Q.B. 321; 2Jur.(N.S.) 664;4 W.R.553; 103
R.R. 749 .... 11·012
- v . Grand Valley Railway (1916) 51 S.C.R. 283 . . . . . . . . . . . . . . . . . . 8·197
- v. Hewitt (1846) 8 Q.B. 913; 15 L.J.Q.B. 247; 70 R.R. 689 11·016
- v . Silcock (1884) 50 L.T. 251; 32 W.R. 845 . . . . . . . . . . . . 4-299
- - v. Stringer (1890) 20 Ont. Rep. 148. . . . . . . . . . . . . . . . 5·004, 8·124
- - v. Tendring Rural Sanitary Authority (1886) 3 T.L.R. 272 . . . . . . . . . . . . . 12·047
Wood Hall Ltd. v. Pipeline Authority (1979) 141 C.L.R. 443; (1979) 53 A.L.J.R.
487................................... 17·005, 17·055, 17·072, 17·073
Wood-Hopkins v. Masonry Contractors 235 So. (2d) 548 (1970) . . . 4·106
Woodar Investment Development v. Wimpey Construction U.K. [1980] 1 W.L.R.
277; (1980) 124 SJ. 184; [1980] 1 All E.R. 571 H.L. . .............. . 4·217
Woods v. Russell (1822) 5 B. & Aid. 942; 1 D. & R. 58; 24 R.R. 621 ....... . 12·082
Woodward v. Gyles (1690) 2 Vernon 119 .. 10·001
Woolfe v. Wexler [1951] 2 K.B. 154; [1951] 1 T.L.R. 794; 115 J.P. 202; 95 S.J.171;
[1951] 1 All E.R. 635; 49 L.G.R. 307 ........................ . 4·277
Woollatt Fuel & Lumber (London) v. Matthews Group (1978) 83 D.L.R. (3d) 137
Ontario H.C.J................................... 4·227, 8·222, 12·017
Woollertonand Wilson Ltd. v. Costain (Richard) Ltd. [1970] 1 W.L.R. 411; 1148.J.
170; [34 Conv.130;33 M.L.R. 552] ......................... 1·341, 1·342
Woollongong City Council v. Fregnan (1982) 1 N.S.W.L.R. 244 8·135
Worbuoys v. Acme Investments (1969) 210 E.G. 335 . . . . . . . 2·100
Workington Harbour & Dock Board v. Towerfi.eld (Owners) [1951] A.C. 112;
[1950) 2 AIIE.R. 414; 66 T.L.R. (Pt. 2) 387;sub nom, The Towerfield, 94 S.J.
517; sub nom. Towerfield (Owners) v. Workington Harbour and Dock
Board, 84 LI. L. Rep. 233, H.L.; reversing sub nom. Towerfield (Owners) v.
Workington Harbour and Dock Board (1949] P. 10; [1948] L.J.R. 1645; 92
S.J. 555; [1948] 2All E.R. 736; 81 LL L. Rep. 419, C.A.; reversing (1947) 80 LI.
L. Rep. 488 ........ . 1·329
- - v. Trade Indemnity (No. 2) [1937] 3 All E.R. 39 ............... .
17·009
Workman, Clark & Co. v. Lloyd Brazileno [1908] 1 K.B. 968; 77 L.J.K.B. 953; 99
L.T. 477; 11 Asp. M.C.126;24 T.L.R. 458....................... 8·105
Wormald Engineering Ltd. v. Resources Conservation International (1988) 8
B.C.L. 158. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4· 132, 7·054
Warlock v. SAWS (a firm) (1983) 265 E.G. 774; (1983) 22 Build. L.R. 66 C.A.;
(1981) 260 E.G. 920; (1982) 20 Build. L.R. 94. . . . . . . . . .... 1·351, 1·384, 4-103
Worsley v. Wood (1796) 6 T.R. 710; 2 H. BL 574; 3 R.R. 323 . . . . . . . . . . . . . . . 6·146
Wraight v. P.H.T. Holdings (1968) 13 Build. L.R. 26. . ........... 8·096, 8·216
Wren v. Emmelts Contractors Pty. (1969) 43 A.L.J.R. 213..... . . . 17·042, 17·049
Wunderlich v. U.S. (1965) 351 F. (2d) 956......................... 7,088, 7·089
Wyett v. Smith (1908) 28 N.Z.L.R. 79. . ... 4-016, 4·018, 4·035
Yates v. Law (1866) 25 U.C.Q.B. 562 4-152
Yates Building Co. v. Pulleyn (R.J.) & Sons (York) (1975) 119 S.J. 370; (1975) 237
E.G. 183, C.A.; reversing (1973) 228 E.G. 1597 . . . . . 12·043
Yeadon Waterworks and Wright, Re_(1895) 72 L.T. 538; affirmed by C.A.; 72 L.T.
832. . 10·048, 10·049, 10·050, 10·052, 14·023
Yemen Salt Mining Corporation v. Rhodes Vaughan (1977) 10 A.R. 501 1·378
Yeoman Credit v. Apps. [1962) 2 Q.B. 508; (1961] 3 W.L.R. 94; 105 S.J. 567; [1961] 2
All E.R. 281; C.A. 5·020
cxvi TABLE OF CASES

Yeung Kai Yung v. Hong Kong and Shanghai Banking Corp. [1981) A.C. 787,P.C.;
[1980] 3 W.L.R. 950; (1980) 124 S.J. 591; [1980] 2 All E.R. 599, D.C.. 4·171,
15-039
Yianni v. Evans (Edwin) & Sons [1982) Q.B. 438; [1981] 3 W.L.R. 843; (1981) 259
E.G. 969; (1981) 125 S.J. 694...
Yonge v. Toynbee [1910] 1 K.B. 215; 79 L.J.K.B. 208; 102 L.T. 57; 26 T.L.R. 211 . 2·080
. .. 1·178, 1·287 TABLE OF STATUTES
York Condominium Corporation v. Rose Park Wellesley Investments (1985) 0.R.
(2d) 455 . .. .. .. . 1-237
Yorkshire Joinery Co., Re (in Liquidation) (1967) 111 S.J. 701; 117 New L.J. 652. 11·004
(References are to Paragraph numbers)
Yorkshire Water Authority v. (Sir Alfred) McAlpine Ltd. (1985) 32 Build.LR.
114. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7-008, 7·032, 7·043, 8·068
Young v. Ballarat Water Commissioners (1878) 4 Viet. L.R. 306, 502; ibid. 1677 Statute of Frauds (29 Car.. 2 1893 Sale of Goods Act (56 & 57
503. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2-215, 6·108, 6-147 c.3)- Vict.c. 71) ..... 1·183,4·119
- v. Blake (1887) (4th ed.), Vol.2, p. 110 8-019 s.4............ 1·270, 4·282 s.14. . . . . . . 4·066, 4·067, 4·084
- v. Buckett (1882) 51 L.J.Ch. 504; 46 L.T. 266; 30 W.R. 511. . . . . . . . . . . . . 18-107 Fires Prevention (Metrop· (2). .. ........ 4·124
- v . Buckles [1952] 1 K.B.220; [1952] 1 T.L.R. 271; 116J.P. 96;96 S.J.120; [1952) olis) Act (14 Geo. 3, s.18... . . ......... 11·009
1 All E.R. 354 . . . . . . . . . . . . . . 4-277 c. 78) . . . . 4·279 s.25 ....... , , ....... 16·050
- - v. Kitchin (1878) 3 Ex.D. 127; 47 L.J.Ex. 579; 26 W.R. 493 .......... 8·118, 8°165, 1697 Arbitration Act (9 Will. 3 (1) .............. 11-057
9·006, 14·002, 14-022, 14·049, 14·050 c. 15). . . . . . . 18·013, 18·015 (2).... 11·030, 11·054
- v . Smith (1880) (4th ed.), Vol. 2, pp. 70, 75. . . 2·069, 2·287, 6·110 1833 Civil Procedure Act (3 & 4 s.31(2). . . . . . . . . . . . . . 9·003
- v. White (1911) 76 J.P. 14; 28 T.L.R. 87. 13·035, 13-036, 13·039, 13·072, 13·089 Will. 4 c. 42) ........ 18·013 1894 London Building Act (57 &
Young & Fehlhaber Pile Co. Inc. v. State of New York 177 Misc. 204 (1941) . . . . 4·061 s.25. . . . ......... 18·015 58 Viet. c. 72). . . 2·063, 8-165,
Young & Marten v. MacManus Childs [1969) 1 A.C. 454; [1968} 3 W.L.R. 630; 112 1835 Highway Act (5 & 6 Will. 4, 15·023
S.J. 744; [1968] 2 All E.R. 1169, H.L.. . . . . . . . . . 1·183, 4·066, 4·067, 4·071, 4·072, c. 50)- 1906 Merchant Shipping Act (6
4·075, 4-086, 4·092, 4·094, 4·097, 4·098, 4·107, 4·108, 4·109, 4·118, 4·119, s.46. . . . . . . . . . . 4·279 Edw. 7. c. 48)-
4-Ul, 4·123, 4·125, 4·191, 9·026, 13·002, 13·008, 13·029, 13-063 1838 Judgment Act (1 & 2 Viet. s.10. . . . . . . . . . . . ... 10-003
Yuen Kun Yeu v. A.-G. ofHongKong [1988] A.C.175; [1987] 3 W.L.R. 776; [1987] 2 c. 110) . . . . . 8·090 1911 Copyright Act (1 & 2 Geo. 5,
All E.R. 705; (1987) 131 S.J. 1185; (1987) 84 L.S. Gaz. 2049; (1987] F.L.R. 1854 Bills of Sale Act. . . ... 11·046 c. 46). . . . 2·273, 2-274, 2·275
291; (1987) 137 New L.J. 566; [(1988) 4 P.N. 65], P.C.. . . . . . . . 1-282, 1·288, 1·292 Common Law Procedure s.35(1). . . . 2·274
Yuill v. Yuill [1945] P.15.................... 18·165 Act (17 & 18 Viet. 1914 Bankruptcy Act (4 & 5 Geo.
c.125). . . . . . 14·064, 18-013, 5, c. 59). . . . . . 16·001, 16-005
18·026, 18·027 s.30 . . 16-016
Zalinoff v. Hammond [1898] 2 Ch. 92 18·122 s.5 . 18·013, 18·021
Zamperoni Decorators v. Lo Presti [1983] V.R. 338. s.31 , . 16-008, 16·014, 16·016
4·017 s.11 . . . . . . . . . . 18·015, 18-065 s.38 . . . . . . . . . 16·052
s.13 ................ 18·065 s.45 . . . . 16·005, 16·041, 16·044
s.17. . ............ 18·066 s.51 ................ 16-060
1855 Metropolitan Building Act s.54(4) .............. 14·006
(18 & 19 Viet. c. 122) . 4·279
(5). . . . . .. . 16·007
1856 Mercantile Law Amendment
s.105 ............... 16·009
Act (19 & 20 Viet.
(1) . . . . 16.010
c.97)-
s.323(5) ............. 14·006
s.3 . . . ........ 17·018
1920 Indemnity Act (10 & 11 Geo.
1863 Supreme Court of Judicature
Act (36 & 37 Viet. 5,c.48)-
c. 66)- s.2 8·216
s.23(6) .............. 14-016 1925 Law of Property Act (15 & 16
1873 Supreme Court of Judicature Geo. 5, c. 20). . . . . . . 16·002,
Act- 16-020, 18-025
s.25(6). . 14-012, 14·014, 14·044 s.53(l)(c)... . . . 14·012, 14·044
1875 Public Health Act (38 & 39 s.136. . . . . . . . 14·012, 14-016,
Viet. c. 55)- 14·039, 14·041, 14·044
s.174 . . . . . . . . . . . . . . . 3·066 s.137(3) . . . . . . 14·021
1878 Bills of Sale Act (41 & 42 s.146 . . . . ..... 14·048
Vict.c.31) ... 11·026,11-046 Supreme Court of Judicature
s.4 . . . . . . . . . . . . . 11·047 (Consolidation) Act (15
1883 Bankruptcy Act (46 & 47 & 16 Geo. 5, c. 49)-
Viet. c. 52)- s.44. . . . . . . . . . . . . . . 1·090
s.102(1) ............. 16·010 1926 South African Co's Act-
1889 Arbitration Act (52 & 53 ss.181, 182 ........... 16·054
Viet. c. 49). . . 11-046, 18·013 1927 Auctions (Bidding Agree-
s.l . . . . . . ... 18·015 ments) Act (17 & 18
s.4 . . . . . . . . · .. 18-068 Geo. 5, c. 12)-
s.19 . . ............ 18·021 s.1 . . . . . . . 3·081

cxvii
 cxviii TABLE OF STA TUTES TABLE OF STATU'IES cxix
1930 Arbitration (Foreign 1948 Companies Act (11 & 12 1950 Arbitration Act-cont. 1967 Misrepresentation Act-
Awards) Act ........ 18·013 Geo. 6, c. 38) ........ 16·001 (2) . . 18{!01, 18·003, 18·102 cont.
1931 Architects Registration Act s.32.... 2·043 (3). . 18·102 s.3 .. 1·133, 1·139, 1·171, 1·172,
(22 & 23 Geo. 5, c. 33)- s.95.... 11·047, 11·053, 11·055, s.25 ................ 18·070 1·176, 1·177, 1·178, 1·239,
s.5(2) . . . . . . . . . . . . . . 2·015 11·056, 11·058, 16-050 (2)(a) ............ 18·126 1·242,4·143
s.9 . . . . . . . . . . . . 2·013 s.302 . . . . 8·083 (b).. 18·002, 18·003, 1968 Trades Description Act (c.
s.17....... 2·011, 2·013, 2·015 s.317........ 16·014, 16·016 18·041, 18·126 29). . . . . . . . . . 2·012, 2·019
1933 Local Government Act (23 & s.323(4)............ 16·012 (4). . ... 18·102 s.19(1)(a). . . . . . . . . . . . 2·013
24 Geo. 5, c. 51)- 1950 Arbitration Act (14 Geo. 6, s.27. 6-046, 6·185, 18·048, 1969 Architects Registration
s.266 . . . . . . . . . . . . . . . 2·065 c. 27). . 6·066, 18·013, 18·016, 18·055, 18·056, 18·057 (Amendment) Act (c.
1934 Arbitration Act (24 & 25 s.32. . . 18·001, 18·025, 42). . . . . . . . . . 2·011, 2·015
18·017, 18·062, 18·075
Geo.5,c.14).. 6·066,6·175, 18·028, 18·033 Auctions (Bidding Agree-
18·013, 18·016, 18·073 18·084, 18.085, 18·162
Pt. I ............... 18·013 1956 Restrictive Trade Practises ments) Act (c. 56)-
s.5 . . . . . 6·073 Act (4 & 5 Eliz. 2, c. ss.1 & 2 . . . . . . . . . . . . . 3·081
s.9 ...... 18·021 Pt. II . . . 18·003, 18·013
s.1. . . . . 18·002, 18·003, 18·014, 68) ...... 1·203,2·071,3·081 1970 Administration of Justice
s.14. 6·022, 18·070, 18·127 Copyright Act (c. 74). . . . . 2·273, Act (c. 31) ......... 18·013
Law Reform (Miscellaneous 18·015, 18·019, 18·025,
18·088, 18·113, 18·114, 2·274 s.44(1). . . . . . . . . . . . . . 8·090
Provisions) Act (24 & 25 s. 3(1). . . . . . . . . . 2·274, 2·275 1971 New South Wales Licensing
Geo. 5, c. 41). . . 8·089, 8·091, 18·115, 18·196
s.2(1) .............. 18·124 s.17.. 2·275 Act-
8·092 s. 19. . . . . . . . . . . . . . . 2·281 s.45........... 1·268, 4·282
s.1(1) 4·270 (2) . . . . 18·124
s.3 . . . . . .. 18·124 s.48(1). . . . . . . . . . . . . . 2·275 1972 Defective Premises Act (c.
1935 Law Reform (Married 35)..... 1·277, 1·279, 1·314,
Women & Tortfeasors) (2) 18·124 1957 Occupier's Liability Act (5 &
6Eliz.2,c.31).... 1·239, 1·325, 1·358, 1·360, 1·361,
Act (25 & 26 Geo. 5, s.4. . . . . 18·014, 18·019, 18·025, 1·362, 1·363, 1·368, 1·369,
18·088, 18·089, 18·090, 18.091, 1·275, 1·310, l ·320, 1·325,
c.30) ........ 1·372,1·380, 2·083, 2· 152, 4·286, 6· 184,
18·113, 18·114, 18·123, 18·165 1·327, 1·328, 1·330, 1·331,
1·381, 1·382 1·332, 1·333, 1·334, 1·335, 14·002A
1936 Public Health Act (26 Geo. 5 (1). . . 18·015, 18·094, 18·110, s.1.... 1·321, 1·361, 1·366
& 1 Edw. 8, c. 49)- 1·336, 1·366,4·142, 15·052
18·120 (1). 1·361, 1·363
Pt. II. 2·148 (2) .............. 18·003 s.1(1) 1·329
(2) 1·329 (2) 1·363
s.61A .............. 2·148 s.6 ................ 18·072 (3) 1·363
s.64. 2·148 s.7. 18·065, 18·072 (3)(a) . . . . . . . . . 1-366
(b) . . . . 1·329 (4).. 1·361, 1·362
s.65. . . . . . . . . . . 2.148, 2.150 s.8(1) .............. 18·072 (5) . . . . . . 1·361, 1·363
1938 Architects Registration Act s.2(1) 1·329
(2) ..... 18·073 (2)..... 1·328, 1·329, 1·330 s.2.... 1·361, 1·363
(1 & 2 Geo. 6, c. 54)- (3) ... 18·072 (3)(6) . . . . . . . . . 1-330 s.3.. 1·361, 1·363
s.1 2·011 s.9(1). . . . 18·073, 18·074 (1) . . . . 1·362
(3) . . . . . . . . . . . . . . 2·011 (4)(b) ........ 1-335,2·022
s.10 ................ 18·075 s.3(1) 1·330 s.4........ 1·328, 1·363, 1·366
1939 Limitation Act (2 & 3 Geo. 6, (l)(a) ............ 18·076
c. 21) . . . 4·284 s.4 1·363 (1) 1·321
(2) . . . . . . . . 18·075, 18·076 (b) 1·333 1973 Supply of Goods (Implied
s.2 . . . . . . . . . . . . . . . . 1·307 (3). . 18·075
s.26. . . . . . . . . . . . . . 8·128 s.5(1) 1·329 Terms) Act (c. 13). . . . 1·183,
s.12.. 18·016, 18·017, 18·136 1960 Corporate Bodies' Contracts 4·067
(b)......... 4·294 (1) ........ 18·158, 18·162
s.27(3) .............. 18·059 Act (8 & 9 Eliz. 2, c. 1975 Arbitration Act (c. 3). . . . 14·038,
London Government Act (2 (2) .............. 18·158 46. 1·088, 2·043 18·123, 18·196
& 3 Geo. 6, c. 40)-
(3) .............. 18·158 1961 Public Health Act (9 & 10 s.1 . . . . . 18·003, 18·080, 18·091
s.160(2) . . . . . . . . . . . . . 2·065 (4). . . ... 18·158 Eliz.2,c.64) .... 2.148,2·151 (1) . . . 18·003, 18·082, 18·120
1943 Law Reform (Frustrated (5) .............. 18·158 1963 Companies Act- (4). . 18·003, 18·080
Contracts) Act (6 & 7 (6)(a) . . . . . . . . . . . 18·082A s.275 . . . . . ....... 13·125 s.3(2) . . . . .. 18·171
Geo.6,c.40) ... 1·264,1·265, (h) ........... 18·082 Limitation Act (c. 47). . . . . l ·347, s.4 ...... 18·003
1·271, 2·055, 4·239, 4·240, s.13(3)...... 18·126, 18·135 4·285 s.5 . . . . . . . . . . . . . . . 18·120
4·241, 4·243, 4·249, 4·251, s.14.... 18·016, 18·017, 18·167 1967 Misrepresentation Act (c. s.7(1)... 18·001, 18·013, 18·171
4·255, 4·258, 4·264, 4·270, s.18 ................ 18·178 7)... 1·127, 1·129, 1·133, Limitation Act (c. 54).. 1·347
8·104 (1) .............. 18·178 1·136, 1·137, 1·139, 1·142, 1977 Unfair Contract Terms Act
s.l. . . . . . . . . . . . 4·244, 4·272 (4) .............. 18·191 1·149, 1·150, 1·154, 1·157, (c.50) ... 1·176,1·178,1·233,
s.1(2) . . . . . . . . . . . . 4-241 s.19(A) ............. 18·012 1·165, 1·174, 1·212, 1·275, 1·237, 1·238, 1·240, 1·242,
s.1(2). 4·242, 4·243, 4·258, 4·263 s.20 . 8·090, 8·092 l ·280, 3·077, 4·045, 4· 143, 1·243, 1·244, 1·245,2·170,
s.1(3). . 4·241, 4-242, 4·243, s.21 . . . . . . . . . . 18·004, 18·011 18·007 5·058, 6·003, 6·006, 6·090,
4·244, 4·263 s.22. . 18·138, 18·178, 18·191 s.l(a). . . . . 1·132, 1·144 6·106, 6-184, 8·222, 9·021,
s.1(5) . . . . . . . . . 4·244 s.23. . 18·002, 18·011 (b). 1·132, 1·138, 1·149 13·113, 18·194
s.2(3). . . . . . . . . . 4.244, 4·263 (1). 18·126, 18·135, s.2 4·278 s.1(3) 1·239
1945 Law Reform (Contributory 18·138, 18·147 (1). 1·132, 1·136, 1·140, s.2 ........ 1·178, 1·239, 1·241
Negligence) Act (8 & 9 (2)....... 18·126, 18·134 1·141, 1·143, 1·149, (2) . . 1·241
Geo.6,c.28) ... 1·372,1·377, s.24. . . 6·022, 6·099; 6·105, 1·150, 1·151, 1·164, s.3. 1·241,1·242
1·378, 8·224, 15·054 6-175, 6·226, 18.002~·1s.010 (2). 1·133, 1·139, 1·149, (1)..... . . . . . 1·239, 1·243
s.4 . . . . . . . . . . . . . . 1·377 (1). . ...... 18·127 1·150, 1·151 (2)(a) . . . . . . . . . 1·239
cxx TABLE OF STATUTES TABLE OF STATUTES cxxi
1977 Unfair Contract Terms 1979 Arbitration Act-cont. 1985 Companies Act (c. 6). . . . 16-001, 1986 Insolvency Act-cont.
Act-cont. (1) ...... 18·158 16·024 s.278 ............... 16·004
(b) 1·239 (2) . . . . 18· 158, 18·166 s.36. . . . . . . . . . . . . . . . 1·088 s.284 . . . . .... 16·005
s.4 1·240 s.6 ... 18·013 s.395... 11·005, 11·053, 16·050, (1) . . . . . . 16·005
,.6(3) J.239 s.22 . . . . . ..... 18· 163 16·051 (4). 16·005, 16·044
s.7 1·241 s.23. . ..... 18·163 (2) . . ..... 11·053 s.285(5) . . .. 16-005
(3) 1·239 SaleofGoodsAct(c.54) ... 1·183 s.396 ............... 16·051 s.310 . . . . . . . .. 16·060
s.8. . 1·133, 1·172, 1·239, 4·143 s.2(i). . . . . 4·067, 8·223, 8·226, (l)(b)... . . 16·051 (2) ............. 16·059
s.11...... 1·243 11·058 Administration of Justice (7) . . . . . . 16·060
(1).. 1·133, 1·139, 1·172, s.25.... 11·005, 11·010, 11·027, Act (c. 61) ......... 18·013 s.316 . . . . . . . . . . . . .. 16·011
1-174 11·054, 11 ·058, 16·050 1986 Latent Damage Act (c. (1). . . . . . . 16-011, 16·021
(4) 1·240 1980 Limitation Act (c. 58). . 1·347, 37). . 1·016, 1·279, 1·307, (2) ............. 16·011
s.12. 1·241 1·365, 1·366, 1·371, 4·285, 1·347, 1·349, 1·363, 1·366, s.322(3) ............. 16·017
(l)(a). 1·243 4·295 1·367, 1·369, 1·376, 2·084, s.323. 16·008, 16-014
(,). 1·241 s.2....... 1·307, 1·367,4·284 2·110, 2·222, 4·286, 4·287 (3) ............. 16·014
s.13(1)..... 1·240, 1·241, 1·242 s.S . . . . . . 4·284 s.1. . . . 1·365, 4·285, 4·287 s.328 . . . . . . . . . . . . . . . 8·083
1978 CivilLiability(Contribution) s.8. . . . . . . 4·284, 4·288 s.2 . . . . . . . . . . . . . . 1·365 (2) ............. 16·044
Act(c.47) ..... 1·372,1·381, s.10. . . . . 1·382 s.3....... 1·365,1·367,4·287 (3) ............. 16-044
1·382, 8·224 ss.11-13. . . 1·366, 4·285 (l)(b) 1-367 s.339 ............... 16-005
s.1(3) . . . . . 1·381 ss.11-14. . . . . . 4·286 (6) . . . . . . . . . . . . 1·368 s.340 ............... 16·005
(4) 1·381 s.llA. . . . . . 1·371, 4·286 s.4(1)(a) 1-349 (3)(b) ........... 16·005
s.2(2). 1·383, 1·386 s.14.. . ..... 1·366 s.14A . . . 1·366 s.341 . . . . . . . . . . . . . . . 16·005
,.6(1) 1·381 s.14A... 1·307, 1·365, 1·369, s.14B . . . . 1·366 s.354(2). . . . . . . 16·007, 16·030
,.7(3) 1·386 4·286 (1) . . . . . . . . . 1-368 s.363 ............... 16·009
1979 British Columbia Laws (6) . . . . . . . . . . . . 1·368 Insolvency Act (c. 45). 11·050, s.365(5) . . ... 16·011
Equity Act- (7) . . . 1·368 14·006, 16·001, 16·002, s.382 ............... 16·014
s.58. 1·271 (8) . . . . . . . . . . . . 1·368 16·010, 16·012, 16·014, Scbed. 1 ............ 16·020
Law and Equity Act- s.14B ...... 1·307, 1·365,4·286 16·017, 16·020, 16·023, Sched. 2 ............ 16·020
s. 58 . . . . . . . . . 7·070 s.28A . . . . . . . . . . . . . . 1·365 16·041 Sched. 4. . . . . . . 16·005, 16-006
Arbitration Act (c. 42). . . 18·003, s.30(3)(a) ............ 18·028 Pt. JII . . . . ..... 16·020 Sched. 5 ............ 16·006
18·011, 18·013, 18-022, s.32. . . . . . . 1·369, 4·284, 4·296 Pt. IV .............. 16·002 para. 1 . . . . . . . . . . . . 16·032
18·044, 18·074, 18-075, (1). . 4·295 Pt. VIII . . ........ 16·002 1987 Consumer Protection Act (c.
18-076, 18·119, 18·120, (b) 4·296 ,.8(3) .............. 16·024 43)..... 1·369, 1·370, 1·371,
18· 170, 18·172 s.32(2). . . . . . . . . . . . . . 4·296 ,.9(3) ...... 16·023 4.286
s.1. . . . . 18·004, 18·005, 18·010 s.33. . . . . . 1·366, 4·286 s.11(3) .............. 16026 s.1(2) 1·371
(1)-(4) ............ 18·173 s.34(2). . 18·003, 18·041 (c) . . . . . . . . . . . . 16·026 s.2(2) 1·370
(1) .............. 18·174 (3) .............. 18·043 s.15 . . ... 16·048 s.3 1·370
(2) . . 18·173, 18-175 (a) ............ 18·059 (2)(b) . . . . . ... 16·025 ,.4(2) 1·371
(3). 18·171, 18·172, 18·181, 1981 Supreme Court Act (9). . . . . .... 16·025 s.5(1) 1·370
18-198 (c. 54) ...... 18·013 s.29(2) .............. 16·020 (3) 1·371
(a) . . . . . . . . . . . . 18·005 s.35A . . . . . . . . . . . . . . 8·091 s.44(1)(a) ............ 16·021 s.45(1).. . . . . 1·371
(b) ............ 18·177 s.37(1). . ..... 18·082 (b) ........... 16·021 1988 Local Government Act (c.
(d) ............ 18·004 s.43A . . . . . . . . . . . . . . 6-064 s.87(1) .............. 16·032 9) . . . . . . . . . 3·082
(4)..... 18·174.18·177 s.148 . . 18·004 s.107. . . . . . 8·083, 16·044 s.17(4).. . . . 3·082
(5) .............. 18·170 1982 Supply of Goods and Ser- s.123 . . . . . . . . . . . 16·003 (5). . . . . . . 3·082
(6) .............. 18·170 vices Act (c. 29).. 1·183, (l)(e) ........... 16·003 (a). 3·082
(6A) ............. 18·004 4·067, 4·076 s.127 . . . . . . 16·006, 16·044 s.18. . . . . 3·082
(7) .............. 18·004 ,.4(6) . . . . . . . . . . 4·067 s.129(1) . . ....... 16·006 ,.19(7)(b) 3·082
s.2 . . . . . 18·004, 18.005, 18·010, (9). . . . . . . 4·067, 4-127 (2). . . . 16-006, 16·044 ,.20(2)(b)(i). 3·082
18·119, 18·159, 18·163, Administration of Justice s.130 . . . . ...... 16·005 Consumer Arbitration
18·168, 18·177 Act (c. 53) . . . . . . . . . 8·091 s.145 . . . ....... 16-005 Agreements Act (c.
(1) .... 18·172 s.19A 8·092 s.178 . . . . .... 16·012 21) .............. 18·195
(a) .......... 18·168 1984 Occupier's Liability Act (c. (5). 16·011, 16·012, 16·021 Copyright, Design and Pat-
(2) .............. 18·177 3)...... 1·275, 1·279, 1·325, (6) . . ....... 16·011 ent Act (c. 48). . . . . . 2·273,
(2A) ............. 18·004 1·327, 1·328,4·142 s.186. . . 14·011, 16·007, 2·274, 2·275, 2·282
(3) . . . . ....... 18-004 s.1(3)(a) . . . . . . . . . 1·328 16·022, 16-030 s.4(1)(a) . . . . . . . . . . . . 2·275
s.3. . . . 18·005, 18·011, 18·022, (4) 1·328 ,.234(3), (4). . 16·024, 16·048 (2). . . . . . . . . . 2·274, 2·275
18·058, 18·060, 18·080, County Courts Act (c. 28)- s.238 . . ...... 16·006 s.9(1) 2·274
18·081, 18·104, 18·167 s.69. 8·091 s.239 . . . . . . . . .. 16·006 s.77(4) .............. 2·282
(3) 18·104 Building Act (c. 55)- s.240 . . . . . . . . . . . . . . . 16·006 (5). 2·282
(6) ....... 18·195 s.16.... , 2·148 s.245 . . .... 16-023 s.78. 2·282
s.5..... 18·016, 18·017, 18·136, s. 35 . . . . . . 2·148 s.267 . . . . . . 16·003 (2)(b) 2·282
18·197 s.38. . . . . 2·152 s.268 . . ..... 16-003 (4)(b) 2·282
cxxii TABLE OF STATUTES

1988 Copyright, Design and Pat- 1986 South Australian Commer-

ent Act-cont. cial Arbitration Act-
s.80. 2·276, 2·282 s.4 . 18·159A
s.12(i). 18·159B
(4)(,). . .
s.96(2). . . . . . . .
2·282
2·275 s.14 .............. 18·159A TABLE OF STATUTORY INSTRUMENTS
s.101 2·281 s.22...... 18·159A
1989 Companies Act (c. 40)- s.43.... 18·159A
s.47. 18·159A, 18·159D (References are to Paragraph numbers)
s.93. . . 11·053, 16'051
1990 Australian Commercial
s.95 ................ 11·057 Arbitration (Amend-
1990 Contracts (Applicable Law) 1986 Insolvency Rules (S.I. 1986 1986 Insolvency Rules-cont.
ment) Act.... 18·022, 18.174 r. 4.90(3) . . . . . .. 16·014
Act (c. 36) ......... 18·087 No. 1925) (Liquid-
r. 13·12 ............. 16·014
Courts and Legal Services CANADA ation)- (3) .......... 16017
Act (c. 41)- Pt. III . . . . . . . . . . . . . . l 6·020
Ontario Factory Act. . . . . . 4·168 (4) . . . . . . . . . . . 16·017
s.100 .......... 6'064, 18·198 L 4.86(1) ...... 16-017
1987 Province's Law and Equity
Act (British Colum- r. 4·90. . 16·008, 16·014
bia)-
AUSTRALIA s.58. 4·220

1899 Australian Bills of Sale SINGAPORE

Act- 1985 Singapore Companies
s.5.... 11·029, 11·046, 11·047 Act. . . . . . . . 13·126, 16·054
1984 Australian Commercial s.280(1).... . ...... 13·126
Arbitration Act ...... 18·056 s.327(2) . . .. 13·126
s.18(3) .............. 18·166
s.20. . . ... 18·144 INDIA
ss.31, 32 . . . . . . . . . 8·097 1872 Indian Contracts Act .. 4·240,
s.38.. . . 18·173 4·243
(5) . . . . . . . . . . . . . . 18·174 s.56 .... . 4.239
s.47. . . . . . . . . . . . . . . . 8'211 s.64 .... . 1·265
s.48(1). . . . . . . . 18·056 s.65. 1·265, 4·239

cxxiii
 RULESOFTHESUPREMECOURT
(References are to Paragraph numbers)

Ord.14 . . . . . . . . . . . . . . 18·121, 18·122 Ord.58-

Ord. 29. . . . . 18·092, 18·167 r. 5. . . . . . . . . . . . . . 2·096
Ord. 50--- Ord. 73-
r. 8.... . .............. 2·270 r. 7. . . . . . . . . . . . . . . . 18·079
Ord. XI . . . . . . . . . . . . . . . . . . . 18·079

cxxv
 TABLE OF REFERENCES TO RIBA
CONTRACT FORM CONDITIONS
(References are to Paragraph numbers)

cl. 1...... 7·037, 7·113 cl. ll(d) .......... 16-018

(1). 1·219,1·230,2·170,4-126, (1). 7·057, 7·062, 7·087
5·058, 6-003, 6· 184 (2). 4·036, 7·043
1.3. . 1·230 (3). 4·179, 13·065
1.4. 2·242 (4) ...... 7·062
1.7. 2·042 (b). 7·105, 7·111, 8·038, 8·044
1.12. 2·123 (6) ... 1·258, 7·049, 7·052, 7·113,
1.13. 2·123 8·038, 8·044, 8·069, 8·070,
1.18 . 2·024 8·095, 8·206, 8·213, 8·215,
1.21.. 2·184,2·244 8·229, 13·068, 13·071
1.22.. 2-184,2·244 cl. 12........ 1·117, 1·227, 1·228, 2·032,
1.23 . . . . . . 2·184 3·051, 7·061
1.24 . . . . . . . . 2·123 (1) .. 1·226, 2·161, 4·036, 7·019,
1.60 . . . . . . . . . . . . . . . . . . . . 2·194 8·037, 8·038
cl.2 ......... 2·130,3-051, 7·071,8·031 (2) .. 2·161, 7·012, 7·015,8·027,8·047
(,) . . . . . . . . . . . . . . . . . . . . 2·255 cl. 13. . . . . . . 1·117, 2·229, 7·007, 8·049
(1)....... 4·144 13.1 . . . . . . . . . . . . . . . . . . 7·043
2.1. . . 1·219, 2·170, 4·039, 5·058, 6·184 13.1.1 . . . . . . . . . . . . . . . . . . . 4·036
2.2 . . . . . . . . . . . . . . . . . 2·161,4-039 13.1.2.1 .................. 10·066
2.2.1. . . . . . . . . . . . 1·226, 3·051 13.2 . . . . . . 7·062
2.2.2.1 . . . . . . . . . . . . . . . . . . 8·031 13.4.1 . . . . . . . . . . . . . . . . . . 7·062
2.2.2.2. . . 7-015, 8·038, 8·047 13.5.1.1...... 7·113
(3) .................... 7·061 13.5.1.2 .................. 8·038
2.5.1. . . . . . . . . . . . . . . . . . . . 3·032 13.5.1.3............. 7·105, 7·111
2.13.5.3.1 . . 8·031 13.5.2. . . . . 8·038
cl.3.. . ... 2·147,4·281 13.5.3.3..... 7·106, 7·113,8·038
3.2.1. . . . . . . . . . . . . . . . . . . . 3·035 13.5.5. . . . 7·113, 8·038
(3). . 2·200, 2·201, 4-036, 4·179, 5·038 13.5.6......... 7·113,8·038,8·044
(4) ....... 2·130,4·095,4·177,4-179 cl.14 . . . . .. 11·045
3.6. . ........ 2-242 (b).. 15·018, 15·024, 15·051, 15·059
3.8.............. 2·243, 2·244 (1) .......... 4·036, 7·019, 11·057
3.9.................. 2·244 14.2 . 8·049
cl.4 ............. 2·130,4·115,4·275 14.4.1 . 8·051
4.2 ..................... 7·061 14.5 . . . . . . . . . . . . 8·051
4.23A. . . . . . . . . . . 2·240 14.5.1.2. . . . . . . . . . . . . . . . . . 8·051
cl.5..... . .. 2·169,5·034 14.5.1.3. . . . . . . . . . . 8·051
5.3.2. . . . 4·036 cl. 15. . . . . . . . . . . . 4·029, 5·034, 5·039,
5.4.......... 4·177 8· 158, 15·018
cl. 6(3) .. .. .. .. .. .. .. .. 5·034 (2) . . . . . . . . . . . . . . . . . . . 2·169
(4)... 4·095,5·033 (3) ................... 2·169
cl. 7 . . . 4·149 cl.16. 4·149, 10·060
cl. 8.3 . . . . . . . . . . . . . . . . . . . . . 5·034 cl. 17. . . . . 1·219, 5·039, 14·006
(4) . . . . . . . . . . . 7·007 (1). . . . . . . . . . . . . 14·055, 14·057
8.4. . . . . . . . 5·033 (2) ................... 14·055
cl. 9... 6·215, 7·062 17.2 ................... .
(iii). . . . . . . . . . . 5·016 cl. 18. 10·060, 15·019, 15·026
cl. 10. . . . 1·117, 2·024, 2·027, 3·051, 7·061 cl. 19. 1·219, 14·068, 15·027
(ii) 6·077 (2)(a). 2-173, 15·025
(iii)................... 5·016 cl. 20. . 7·031, 13·054, 15·026
cl. 11. . . . . . 2·214, 7·007, 8·027, 8·028 (c). . . . . . . . 15·014, 15·019, 15·022

cxxvii
 cxxviii RIBA CONTRACT FORM CONDITIONS
RIBA CONTRACT FORM CONDITIONS cxxix
cl. 20A ............... 4·059, 15·014 cl. 26.2.7. . . . . . 5·035, 7·049, 7·113, 8·038
20C............... . . . . . 1·326 cl. 36 ...... .. ....... 4·195 cl. 40 . . . . . . . . . . . . . . . . . . . . . 8·057
26.6 ................ 8·069, 8·070 cl. 38 ... .
20.2..... . ...... 2·173 cl. 27. . . . . 8·052 Art. 3. 6·173, 6·174
. . . 4· 179, 13·065, 13·072, (5) . .............. 13·028
cl. 21. . . . . . . . . . . . . . . . 4·079, 15·027 5.2....... 6·209, 18·043
16·018, 18·057 cl. 39.3 .. . . . . . . . . . 8·055, 8·056 5.3. . . . . . . . . . . . . . 18·005, 18·057
(,) . . . . . . . 13-124 (a) .. ;:.·.·.. 4·185,4·190,4·194,
(1) ................... 4·128 13·012, 13·072
(2). . . 7·049, 13·077, 13·080, 15·025 (a)(i)-(ix) .......... 13·046
(3)(a) ................. 13-102 (a)(i) ......... 4·190
cl. 22. . . . . . . . . . . . 2·214, 4·079, 6·075, cl. 27(a)(ii). . . . . . . . . . . 13·075, 13·082
6·170, 10·048, 10·067, (vi)........... 10·098, 13·026
10.071, 18·092 (b) ................... 10·098
22A . . . . . . . . . . . . . . . . . . . . 15·014 (,) ................... 13·128
cl. 23. . . . . . . . 1·335, 2·214, 4·195, 6·088, (d) . . . . . . . . . ... 13·096
7·033, 13·071, 13·074, 13·077 (ii) . . . 13·079
(f). . . . . . . . 10·025, 13-071, 13-074 27.2. . . . . . . . . 12·032, 16·022, 16·047
(g). . . . . . . 2·171, 4·269, 10·098, 27.4.1 . . . . . . . . . . . . . . . . . . . 12·061
10·099, 10·100, 13·026,
cl. 28.. 4·119, 13·033, 13·124
13·071, 13·074 (b) . . . . . . . . 4·185
(h) ... 10·025 28.1.1 . . . . . . .. 12·055
(j) .. . . . . . 2·027, 10·100 28.1.3.... 1·242
23.2. . . . . . . 5·036, 7·033, 7·049
23.4 ... . 28.1.3.1. . . . . . . . . . 4·264
6·198
cl. 24 ..... . 28.1.3.4. . . . . . . . . . 5·036
1·258, 2·214, 4·095, 4·195,
28.3.1 . . . . . . . . . . . . . 4·269
7·049, 7·052, 7·114, 8·069,
cl. 29. . . . . . . 4·144, 7·046, 13·023
8·070, 8·096, 8·213, 8·215,
cl. 30(1). . . . . 6·042, 6-192
10·071, 13·068, 13·071,
30.1.1.1. . . . . . . . . . . . . 2·170, 6-184
13·077, 14·066
(f). . . 6·003, 6·074, 6·084, 6·085 (2). . . . . 4·023, 5·026, 11-030
(1) ...... 1·258,2·229,8·095,8·206 (a) ................. 11·014
(a)....... 4·177,5·035, 7·114 30.2.1 . . . . . . . . . . . 5·026
(b) . . . . . . . . . 5·035 30.3 . . . . . . 6·206
(,) 7·012 (4). . . . 8·081,8·084, 14·045, 16·031
(,) . . . . . . . 5·035 (a) ......... 16·018
24.1 . . . . ............ 10·023 (,) . . . . . . 4·030
(2). . . . 4·177, 8·069, 8·070, 8·111 (5)(6)................. 6215
24.2 . . . . . .............. 10·023 (c). . . . . . 10·098, 13·026, 13·072
24.2.1. 10·023, 10·071, 10·095 30.5 .. 16·031
cl. 25 .......... 4·305, 10·046A, 12·090 30.5.1 . . . . . ... 14·045
25A. . . . . . . . . . 3·048, 3·049, 3·052 30.5.3. 8·084, 8·085, 8·086
(1). . . . . . . 6·123, 12·036 (6) . . . . . . . . . . . . . . . 6·215
(2). 12·032, 16·016, 16·022, 16-047 30.6.1.1. . . . . . . . . . . 6·215
(3)(6) . . . 13·129 (7). 6·003, 6·017, 6·046, 6·076,
(d). 4·028, 10·047, 12·075, 6·084, 6·085, 6-092, 7·052,
17·012A 8·112, 10·059, 10·071, 18·002
25.3. . . 10·046, 10·093, 17·012A (a)... 2·170,6·003,6·184
25.3.1. . . . . . 10·046A, 10·090 (i). . . . . . . . . 1·219, 5·058
25.3.1.2. . . . . . . . . . . . . . . . 10·046A (b) . . 2·191
25.3.3 . . . 10·046A 30.7.. . ........... 4·135
25.3.3.1. . . . . . ..... 10·046A (8).............. 6·189,6215
25.4 . . . . . . . ......... 10·065 30.9 . . . 18·057
25.4.7. . . . . . . . . . . . . 10·098, 13·057 30.9.1. . . 6·003, 18·057
25.4.10. . ....... 10·100 30.9.1.1. . . 1·219, 5·058
25.4.12. 1·219,2·172,10·065 30.9.1.2. . . 4· 135, 7·052
cl. 26. 4·264, 7·052, 8·069, 8·070, 30.9.3. 18·057, 18·059
8·096, 8·213, 8·215, 12·040 30.11 . . . . . . 6·189
(l)(a)..... 12-055, 12·058 cl. 31A . . . . . . . . . . 8·053
(,) . . . . . . . . . . . . . . . . . 1·242 (c). . . . . 8·055, 8·056
(i) 4·269 310.(3) 2·062
(d) ................. 16·029 (2) .... 13-028
(2)(b)(vi) 8·216 (3) .... 13·028
26.2.1 .......... 4·177,5·035, 7·114 cl. 34 . . 2·214
26.2.2 . . . . . . . . . . 5·035 cl. 35 . . . . . . . . 4·195
26.2.5 . . . . . . . . . . . . . . 5·035 (2) 6·209
TABLEOFREFERENCESTOICECONTRACT
FORM CONDITIONS
(References are to Paragraph numbers)

cl. l . . . . . . . . . . . . . . . . . 8·191 cl. 44(4). . 10·071, 10·093

cl. 2. . . . . . . . . 2·022, 2·023, 8-055, 8-056 cl. 46 . 7·050
(3), proviso(b)............ 7·062 cl. 47 .................... 10·091A
cl. 3............ 1·219, 14·006, 14·055 (4) . . . . . . . . . . . . . . 10·071
cl. 4 . . . . . .. 14·055 cl. 48 . . . . 4·029
(4). .. .. . 7·052, 7·053 (1). . . . . . . 5·030, 5·048
cl.5.......... 1·228,1·230,8-191 cl. 49(2). . 5·039, 5·041, 5·049
cl. 6 . . . . . . . . . ..... 7·012 (3) . . . . . . . . . . . . . . . . . . . 7·054
cl. 7(1) . . . 2·130 (4) . . . . . . . . . . . . . . . . . . . 7-054
cl. 8. . . . . . 2·130, 4·177, 8·067 (5) . . . . . . 7·054
(2) . . . 4-104 · cl. 50 . . 7·054
cl. 9. . 1·058, 1·209, 7-006 cl. 51 . . . . . . 4·173
cl. 10 ...... ·. . . . 3-065 (1). . 7-007, 7·008, 7·043, 7·087
d.1!(4)(d) ................. 7·113 (2). 7·055, 7·057, 7·062
cl. 12. . . . . . . . 1·160, 2·128, 4·043, 4·050, cl. 52. . . . . . . 4·134, 7·022, 8·003, 8·031
4· 134, 8·062, 8·065, 8·066, 8·067 (1). 7·105, 7·111, 7·113
(1). . . . . . . . . . . . . . . 8·029, 8·067 (2). 4·134, 7·049, 7·052, 7·053,
(2). . . . . . . . . . . . . . . 8·064, 8·065 7·054, 7·105, 7·113, 7·116
(3). . . . . 8·064, 8·065, 8·067 (4). . . . . . 4·134, 7·052, 7·053, 8·064,
cl. 13. . . . 4·043, 4·126, 4·264, 7·030, 8·068 8·085
(1). 7·008, 7·039, 7·057, 7·113, (e). . . . . . . . . . . . . 4·134, 8·085
8·068 (6) . . . . . . . . . . . . . . 4·134
(3). 1·219, 1·230,2·177, 7·008, cl. 54 .......... ·........... 11·014
7·113, 7·116, 8-068 cl. 55. . . . . . . 2·032, 4·039, 7·022, 8·003,
cl. 14 ............. 2·017, 7·032, 7-037 8·039, 8·040
(2) .. .. .. ........ 9·042 (1) . . . . . . . . . . . . . . . . . . . 7·049
(3)-(6). . . . 2-177, 9·042 (2). 1·219, 2·161, 2·177, 7·012,
(7) . . 9·042 7·019, 7·034, 8·047, 8·068
cl. 20 . . . . . . . . . .. . . . . . . . . 4·050 cl. 56. 2·032, 4·039, 8·027, 8·039,
(1) . . . . . . . 4·059 8·040, 8·045, 8·049
(2) .. .. .. . 4·043 (2). 1·219, 2·161, 2·177, 7·015,
cl. 22 ..................... 15·026 7·019, 8·007, 8·011, 8·014,
(l)(a) ................. 15·026 8·031, 8·042, 8·045, 8·068
cl. 23 ..................... 15·014 cl. 57. . . . . . . . . . . . . 8·027, 8·029, 8·031
(1) . . . . . . . . . . . . 15·027 cl. 58. . . . . . . . . . . . . . . . 4· 195, 13·091
cl. 24 .... 15·026 (1) . . . . 13-092
cl. 26. . 4·115, 4·275 cl.59.... 4·060,4·119,4·195
cl. 31. . 4·144, 13·024 cl.59A................. 2·177
cl. 33 . . .......... 11·020 (6) . . ........ 13-028
cl. 36 . . 4· 126 cl. 59B. . . . . . 2·177, 13·028
cl. 37 . . 4·149 cl. 59(c) . . . . ..... 13·128
cl. 38(2) . . . . . . . . . . . . . . . . . . 5·034 (1) ... 13-012
cl. 39(1) . . . . . . . . . . . . . . . . . . . 5·033 (a) . . . . . . . . . . . . . . . . . 4·185
(2) . . . . . . 4-144 (2) . . . . . . . ..... 13-128
cl.40 ................. 4·264, 7·049 cl. 60(2) . . . . . . . . . . . . . . . . . . . 4·030
(1) . . . . . . . . . . . . . . . . . . . 4·134 (4) . . . . . . . . . . • . . . . . . . . 6·171
cl. 41 . . . . . . . . . . . . . . . . . . . . . 4·128 (5)(c) . . .. . .. . . . . . . . . . . 4·030
cl. 42(1) ................... 10·065 (6).......... 1-219, 8·098, 8·099
cl. 44. . . . . 10·024, 10·025, 10·036, 10·040 (7).. .. . .. .. 5·026, 13-028
(3) . .. . . . . . . . . . . 10·071 cl. 61. . . . . . . . . . . . . 6-003, 6-054, 6· 183

cxxxi
 l..

cxxxii IcE CONTRAcr FORM· CONDITIONS

d. 61(2). 2·078, 5·058, 6·003, 6· 184 cl. 65(2) . . . . . . . . . . . . . . . . . . . 8·049
cl. 62 ... 6-054, 6· 183 cl. 66. 1·231, 2-217, 2·220, 4·134,
cl. 63. 1·220, 6·054, 12·008, 12-061 6-009, 6·181, 6·209, 18·045,
(1) 16·047 18-047, 18·053, 18-055, 18-063
(c) 12·094 (1) ..... 18-053 CHAPTER 1
(4) .... 4·028 cl. 67. 1·231, 6·009
cl. 64 2·264 Bond ... 3·065, 17-010
cl. 65 2·264 Tender. 3·053
GENERAL PRINCIPLES OF LAW

PARA.
Definitions and Background 1·001
Section 1. Classification of Contracts...... . 1·014
Section 2. Formation of a Simple Contract
(1) Elements of a Simple Contract.. .. . 1·017
(2) Offer................................................ . 1·018
(3) Withdrawal of an Offer and Counter-offer.......................... . 1-023
(4) Death of Offeror or Offeree 1·030
(5) Acceptance ............................... . 1-032
(6) Agreements to Agree and Vagueness........................... . 1·042
,. (7) Agreements "Subject to Contract" ................................ .
(8) Consideration
1·057

(a) Generally................................. .. 1-061

(b) Accord and satisfaction .............. . 1-071
(c) Forbearance to sue ...................... . 1-079
(d) Collateral agreements with third parties.......... . 1·080
(9) Intention to Create Legal Relations................. . 1·081
Section 3. Contracts Under Seal
{l) Generally............................ . 1·085
(2) Contracts with Local Authorities ............. . 1-088
Section 4. Variation of Contracts......................... . 1·089
Section 5. Void and Voidable Contracts
(1) Generally ..... 1·092
(2) Mistake
(a) Offact.. ................... . 1·094
(b) Common mistake .... . 1·096
(c) Unilateral mistake........................... 1·097
(d) Parties mistaking each other. .... . 1·099
(e) Non est factum ......................................................... . 1·100
(3) Rectification.............................. .. 1·109
(4) Misrepresentation
(a) Generally ....................... . 1·127
(b) Misrepresentation defined ......................... . 1·128
(c) Summaryofpre-1967law....................... . 1·131
(d) Summary of the Misrepresentation Act 1967 .......... . 1·132
(e) The Hedley Byrne liability....... .. 1·134
(f) The law as modified by the Act of 1967............... . 1·140
(g) Fraudulent misrepresentation..................... . 1·162
(h) Exclusion of liability for misrepresentation.................. . 1-165
(i) Exclusions and effect of the Misrepresentation
Act1967,s.3 ..................... . 1·172
Section 6. Implied Terms
(1) General Principles..........._.................................................. 1· 179
(2) Application to Building and Engineering Contracts.. 1·186
(3) Implied Covenant for Good Faith and Fair Dealing 1·197
Section 7. Custom and Trade Usage
(1) Generally................................. 1·200
(2) Incorporation of Usage 1·202
(3) Admissibility of Evidence of Trade Usage..... 1·204
Section 8. Collateral Agreements. l ·208

1
2 GENERAL PRINCIPLES OF LAW [CHAP. I DEFINITIONS AND BACKGROUND 3
Section 9. Interpretation
(iv) Effect of Murphy v. BrentwOod District Council.. 1·357
(1) General Rules........ . 1·215 (7) Defective Premises Act 1972............................. 1·361
(2) More Specific Rules
(8) Latent Damage Act 1986 1·364
(a) Subsequent conduct 1·222 (9) Consumer Protection Act 1987 1·370
(b) Deletions. 1·223 (10) Concurrent Liability in Contract and Tort
(c) Contra preferentem rule .. 1·224 (a) Generally........................................... 1·372
( d) Priority of documents
(b) Contributory negligence.................... 1·377
(i) General rule .................................. . 1·225
(ii) Express provisions for priority......... . (c) Contribution between defendants 1.379
1·226 (i) A/E's supervision l ·383
(3) Discrepancy and Divergence Provisions 1·229
(4) Exemption Clauses (ii) The "contract setting" or "contract structure"...... ·1·386
1·231
(5) Indemnity Clauses...... (11) Vicarious Liability and Independent Contractors... 1·387
1·234
(6) Other Clauses .................... . Section 13. Economic Duress 1·390
1·236
(7) The Unfair Contract Terms Act 1977 ..... . 1·238
Section 10. Estoppel and Waiver
(I) Estoppel.. ........... . 1·246 DEFINITIONS AND BACKGROUND
(2) Estoppel Per Rem Judicatam ... 1·250
(3) Waiver and Equitable Estoppel... 1·255
Section 11. Quasi-contractual Liability
(1) Quasi-contract Generally............... . A building or engineering contract may be defined, for the purposes of this 1·001
1.260
(2) Money Had and Received........... . 1·261 book, as an agreement under which a person, in this book called variously
(3) Quantum Meruit.......... . 1·263 the builder or contractor, undertakes for reward to carry out for another
Section 12. Liability in Tort
(1) Generally ........................................ .. 1·273
person, variously referred to as the building owner or employer, works of
(2) The Principle in Hedley Byrne v. Heller a building or civil engineering character. In the typical case, the work will
(a) Generally..... 1·280
(b) Application in construction projects...... .
be carried out upon the land of the employer or building owner, though in
1·290
(c) Owner/sub-contractor situations............. . 1·291 some special cases obligations to build may arise by contract where this is
(d) Contractor/A/E situations......................... . 1·293 not so, for example, under building leases, and contracts for the sale of
(i) Design............. .. ................................. . 1·295
Q!) Sup~rvisi?n and temporary works.......... . 1·297
land with a house in the course of erection upon it. 1
(111) Certification .............................................................. . 1·302 However, despite its title, this book is not concerned merely with build-
(iv) Liability of A/Es to contractors in United States ing and civil engineering projects and their associated sub-contracts and
law............. .................... . 1·305
(v) Liability of A/Es to contractors in Canada ..... . 1·306A
industries. It also deals with other projects or industries where an on-site
( e) Limitation ..................... . 1·307 construction element is involved, such as industrial plant contracts in the
(3) Liability Under the Principle of Donoghue v. Stevenson
(a) Generally ........ .
mechanical engineering industry, where on-site construction or erection is
1.308
(b) Application to construction contracts ........... . 1·310 usually involved, though it may be relatively small in value, but where in
(c) Proximity and economic loss limits ...................... . 1·322 general the same principles will apply. The fundamental characteristic
(d) Disclai~e~ and "c<;intract structure" or "contract
setting exemptions .......................... . 1·325
which governs these principles and which distinguishes construction con-
(4) The Occupiers' Liability Acts·1957 and 1984 tracts from the other major commercial contracts, such as contracts of sale
(a) Generally 1·328 or for services, is that as the work proceeds and becomes fixed or attached
(b) Application to Construction Contracts
(i) As between owner and contractor. .............. . 1·330
to the land of the owner it progressively and irretrievably becomes the
(ii) As between the main contractor and sub-con- property of the owner, whatever the financial rights or obligations of the
tractor.... ............................ . l ·331 parties may be at the time. Even here there may be some exceptions where
(iii) As between non-contracting parties..... . 1·332
(5) Strict Liability...................... . 1·337 contracts in the form of traditional construction contracts are used with-
(a) Rylands v. Fletcher........... . 1·338 out this factor being present, such as, for example, contracts for the con-
(b) Nuisance 1·339
(c) Trespass ..... 1·340
struction and load-out of off-shore oil installations, which share some of
( d) Withdrawal of support. 1·343 the characteristics of ship-building contracts and some of construction
(6) Liability Under the Anns Principle contracts.
(a) Generally ............... . 1·345
(b) The limitation problem.............. . 1·347
So far as the contract parties themselves are concerned, the traditional 1-002
(c) Application of the Anns principle nomenclature can also be confusing. Persons commissioning construction
(i) To whom duty owed 1·350
(ii) Applications of principle
work can be and are variously described in the contracts as owners, clients,
1·351
(iii) Principle not applicable.. .. ............... . 1·352 employers (particularly in civil engineering contracts but also in the
(d) The Heyman and D. & F. Estates and Murphy cases United Kingdom building standard forms) or purchasers (in industrial
(i) Heyman'scase .............. . ,1·.353
(ii) The D. & F. Estates case ....... . T·354
(iii) Combined effect of the two cases 1·356 I See post, Chap. 4, paras. 4·105 et seq.
 4 GENERAL PRINCIPLES OF LAW (CHAP. 1
plant or off-shore contracts, for example). On the other hand, contractors
are usually so described in most construction contracts (with the adjectival
"main" (United Kingdom) or "prime" (United States) in Sub-contract
contexts), though occasionally they may be described as vendors or sellers
in some plant erection contracts. In certain contexts, such as with sub-
contracts or their own labour, they are strictly employers, of course. To
reduce confusion the present edition will use the simple word "owner"
rather than the sometimes confusing "employer", and the words "con-
tractor" and "sub-contractor" in most general contexts, unless there is
specific reason to refer to the terms actually used in a particular contract.
1·003 So far as professional advisers are concerned, while the architect and
(unique to the United Kingdom) the "quantity surveyor" ("QS") present
little difficulty, the expressions "engineer", "consulting engineer" or
"consultant" can be indifferently used in the civil engineering field. In this
edition, the individual in administrative and technical charge on behalf of
the owner of a civil engineering project using traditional contracting
arrangements will be described as the "engineer", and of a building pro-
ject as the "architect" (regardless of their precise professional qualifi-
cations). In general discussion where identical principles apply to both
industries (as they almost invariably will) the descriptions "A/E" ( or "cer-
tifier" in some contexts) will be used for this individual for the sake of
brevity. "Consultant" will be reserved as a generic term for other pro-
fessionals in both industries who may be engaged to advise the owner or
his A/E, although of course more precise descriptions may where necess-
ary be used, such as "structural engineer", "soils engineer", or "heating
consultant".
1·004 At the present time, the majority of the more substantial building and
civil engineering projects in the United Kingdom are designed by a pro-
fessional adviser of the employer, and are usually supervised and adminis-
tered on the employer's behalf by this adviser {the "A/E") during the
currency of the work. This relatively sophisticated arrangement has
important legal consequences, since in general the owner places far less
reliance under such a contract upon the skill or judgment of the contractor
in relation to the design of the work or choice of materials or their suit-
ability for their purpose, and this will have an important effect on the
terms to be implied in the contract in regard to the quality or suitability of
the work and on the interpretation of its express terms. 2 The standard
forms of contract recommended by the various bodies in the industry in
the United Kingdom have, until very "recently, only contemplated this
type of arrangement, and make express provision for the A/E to carry out
important administrative and other functions under the terms of the con-
tract. (These are described in this book as "traditional contracts".) As a
result much, though not all, of the more modern law on building and
engineering contracts has grown up around this now traditional arrange-
ment, and it is perhaps advisable to point out that modern attempts to
l See particularly post, Chap 4, paras. 4·063 et seq.
DEFINITIONS AND BACKGROUND 5
return to the historically older and more primitive arrangement, whereby
the contractor not only carries out but also designs the work (recently
known as "package deal", but more lately as "design and build" in the
United Kingdom, and internationally as "turnkey") mean that drafting
requirements applicable to the traditional contract will need radical alter-
ation at almost all points.
No text book on construction contracts can avoid reference to standard 1·005
forms of contract, and in particular no text book emanating from the
United Kingdom can avoid referring frequently to the United Kingdom
standard forms of contract, and in particular to "the farrago of obscurities
which go to make up the RIBA contract". 3 These standard forms have for
nearly a century exercised great influence on the form and content of the
contracts in use not only in Commonwealth countries, such as Canada,
Australia and New Zealand, but even more directly at the present day in
the new Commonwealth countries such as Malaysia, Hong Kong and Sin-
gapore, as well as in the principal international form of contract
("FIDIC") used frequently in developing countries. Indeed, prior to the
Second World War it is clear from the law reports of the United States that
very similar forms were up to that time in use there as well.
It is of fundamental importance to appreciate the extremely limited 1·006
value of the actual contents of any standard form of contract, and in par-
ticular the modern United Kingdom forms, from the point of view of a
student of the general law of construction contracts or as an indication of
what is reasonable, or what the Jaw would otherwise seek to imply, as
between owner and contractor. In addition to the almost universal obscu-
rity and disorganised draftsmanship of the forms, "they are apt to be
somewhat like Topsy, and they just grow without thinking very much what
is happening during the course of growth", 4 and their substantive policies
have in almost all developed countries become so producer-orientated
that they bear virtually no relation to the fundamental principles which, in
the absence of express terms, would govern the terms to be implied by law
into an informally concluded construction contract in order to give it
reasonable business effect. 5
The most commonly used standard forms in the building industry in the 1·007
United Kingdom at the present day are the group of main contracts pub-
lished by the RIBA under a self-chosen "Joint Contracts Tribunal" or
"JCT" title. Designed for use with them, but by a differently constituted
> Per Edmund Davies L.J. in English Industrial Estates Corp. v. George Wimpey & Co. Ltd.
(1973] 1 Lloyd's Rep.118, at p. 126. .
"Per Parker L.J. in Mander Raikes & Marshall (a firm) v. Severn Trent Water Authority
(1980) 16 BLR 34, at p. 43.
., for the history of the emergence of the standard forms in common law countries in the last
century, see the author's Construction Contracls: Principles and Policies in Tori and Con·
tract (1986) ("C.C.P.P. "), paras. 27-09 to 27-14 and 29-03 to 29-05. For a wider review of
other countries. see op. cit. at paras. 23-17 to 23-18. For a detailed critique of the RIBAJ
JCT forms of contract. see op. cit. at Chaps. 29 and 30, and see post, Chap. 2,
paras. 2·167-2·182.
 6 GENERAL PRINCIPLES OF LAW [CHAP.]
body, are a group of sub-contracts (known colloquially as the "FASS" or
"Green" and "Blue" forms respectively). These groups of contracts were
very frequently amended since their present form emerged in 1963, and
they continue to dominate current lititgation in the United Kingdom at
the time of writing, notwithstanding the emergence of an entirely new
RIBA/JCT set of forms in 1980, the chief characteristic of which is an
extraordinarily difficult if not obscurantist style of draftsmanship with an
exceptional degree of (usually unexplained) cross-referencing. This 1980
RIBA/JCT group contains its own sub-contracts. Although its policies
continue closely the producer-orientated trend of the preceding forms,
and indeed take them still further, its introduction into practical use has
been slow due largely, it may be surmised, to the complication and diffi-
culty of comprehension of its draftsmanship. There are a number of other
contracts available either directly or closely assotjated with the RIBA/
JCT group, such as a minor works form, a cost and fixed fee contract, and a
design-and-build contract for turnkey projects which has relatively
recently emerged.
1,008 In the civil engineering industry the Institution of Civil Engineers pub-
lishes the ICE conditions, on which, at least in the past, the international
FIDIC contract has been closely modelled. There is also a standard form
of sub-contract for use with these conditions. A very different fifth edition
of these conditions appeared in 1973, and, unlike the 1955 fourth edition,
which was used .as-a basis for civil engineering contracts in many parts of
the new and old Commonwealth, the fifth edition (which at certain vital
points connected with price and claims adopted RIBA/JCT wording) has
found little acceptance overseas in view of the large number of explicit
new claims of uncertain extent which they permit and which, it may be
guessed, renders them unattractive to overseas public entities, who are, of
course, likely to be the great majority of employers in the civil engineering
industry whether in developed or developing countries. The latest
(fourth) edition of FIDIC in 1987 has, however, resisted this trend in the
domestic forms.
There is considerable misunderstanding of the provenance of the
United Kingdom standard forms, which it should be appreciated are nego-
tiated on equal terms between the professional bodies of the architects or
consulting engineers on the one hand and of the contractors' representa-
tives on the other. In both industries the principle has been adopted, some
may take the view unwisely, that unanimity is required as a condition of
the drafting of new forms or amendment of existing forms. Except for
local authority representation in the RIBNJCT forms only (which until
very recently appears to have had little or no practical influence on their
content from the owner's point of view) there is no direct representation
of public or private owners or of the central government or of consumerist
or regulatory bodies. This is extremely surprising since, despite the
existence of a central government contract ("GC/Wks/1 ") containing in
many instances diametrically opposed (and fully justified) policies, the
RIBA/JCT and ICE forms have through sustained industry Piessures
become used for nearly all public as well as private construction
DEFINITIONS AND BACKGROUND 7
in the United Kingdom, and GC/Wks/1 has fallen into relative disuse
except by a very few central government departments. 6
Notwithstanding that the policy and wording of the forms have come 1·009
under increasing (and deserved) judicial criticism,7 there is still a tendency
to treat the forms. as emanating from the owner or his representatives
(particularly since the method of placing contracts by tender naturally
requires an initial stipulation of the contractual provisions by the owner)
and to apply the contra preferentem rule of construction against the owner
when seeking to resolve the many ambiguities and discrepancies of the
printed standard forms incorporated into the contract.Hin fact very con-
siderable direct and indirect pressure has been brought to bear on both
public and private owners to use those forms by the contracting sides of
the industries.~ It is submitted that it is both unrealistic and wrong to apply
any such rule to the interpretation of the forms, and that Lord Pearson's
contrary view is the correct one. 10
In regard to turnkey or design-and-build contracts, attempts to use 1·010
modified traditional standard forms in such situations are likely to create
serious anomalies or even to be self-defeating. 11 A discussion of the
respects in which the provisions of these contracts need to differ from the
traditional arrangement is given in Chapter 3. 12 While it is true that the use
of turnkey contracts may be inevitable in projects where adequate design
expertise is simply not available to owners in the market, as in the case of
many industrial plant and mechanical engineering contracts, the advo-
cates of these new arrangements appear largely to ignore the fundamental
conflict of interest between owner and contractor in regard to design
which is inherent in such contracts, and so the need, in order to combat it,
of stricter contractual protection for the owner in that regard equivalent
to that afforded by the law of sale of goods to buyers who rely on their
sellers. Furthermore, such contracts, by reason of the virtual impossibility
of devising methods for genuinely comparing tenders where competing
designs are present, present problems of cost evaluation which are almost
~ See the index entry "Government. standard forms. lack of interest in provisions of", and
the many entries thereunder in C.C.P.P.
1
See, e.g. by Sachs. Danckwerts and Edmund Davies L.JJ. in Bickerron Ltd. v. N. W. Metro-
politan Hospital Board (1969] 1 All E.R. 977. at pp. 979. 991 and 996; by Salmon and
Edmund Davies L.JJ. in Jarvis v. Westminster Corporation [1969] 1 W.L.R. 1448, at
p. 1458; by Viscount Dilhorne in East Ham B.C. v. Bernard Sunley [1966] A.C. 406. at
p. 423: and by Mocatta J. inA.M.F. Internationalv. Magnet Bowling [1968] 1 W.L.R. 1028.
at p. 1054. See also C.C.P.P., para. 21--07 (p. 332) and para. 23-18 (p. 375).
~ See. e.g. per Edmund Davies L.J. in Jarvis & Sons Ltd. v. Westminster Corporation [1969]
1 W.L.R. 1448, at p. 1456 and per Harman L.J. in Monmouthshire County Council v.
Costelloe and Kemple Ltd. (1965) 63 L.G.R. 429. at p. 434.
• See, e.g. the almost complete disuse of GCfWks/1 already referred to.
w See Tersons Ltd. v. Stevenage Development Corporation [1963] 2 Lloyd's Rep. 333, at
p. 368.
11
See. e.g. the case of Cable (1956) Ltd. v. H1ucherson (1969) 43 A.L.J.R. 321, H. Ct..
Australia. and see post. Chap. 3, paras. 3·032 and 3·049-3·050.
1
~ The subject of turnkey contracts in general. and of their advantages and disadvantages and
drafting. is dealt with in some detail in C.C.P.P.. paras. 23-05 to 23-11, 24--04 to 24-14, and
24-18. See also post. paras. 3·026 et seq.
 8 GENERAL PRINCIPLES OF LA w
beyond resolution, in spite of efforts by interested parties to assert the
contrary. In general, the experience obtained with this type of arrange-
ment in building or civil engineering projects in the United Kingdom has
to date been an unhappy one, and has been exacerbated by the absence of
any satisfactory form of contract, and by the refusal of the contracting side
of the industries to depart substantially from the traditional forms of con-
tract in design-and-build situations, or to give the necessary long-term
warranties, adequately bonded and above all independent of fault, for the
suitability of the completed work for its required purpose. (This latter is
the term which, in the absence of express provision, the courts would
imp~y in such a case.) The refusal of this fundamental undertaking has
earned through to the contents of the first recently available design-and-
build standard forms in the United Kingdom, where a "professional negli-
gence" type of duty is offered in its place. 13
1·011 The contracts of employment of the architects, engineers, or quantity
surveyors who, under the traditional arrangements, generally advise the
employer in the preparation and supervision of construction contracts,
are dealt with in Chapter 2. These contracts are much more rarely con-
tained in formal written documents than the building contracts them-
selves, although RIBA Conditions of Engagement (and other comparable
documents in the case of the other professions) are frequently incorpor-
ated by reference in the letters of appointment or correspondence leading
up to the engagement of the professional concerned. As stated, this book
is also necessarily concerned with the numerous sub-contracts, whether
for supply of materials only or for the carrying out of work, which every
construction contractor is in practice likely to have to make across a sub-
stantial spectrum of his work. Special problems peculiar to these are dealt
with specifically in Chapter 13.
1-0U Fo_r ~he benefit ~f those readers of this book who are not legally quali-
fi_ed, It IS proposed_1n the present chapter to state some of the general prin-
ciple~ of law relating to the formation of contractual obligations, and to
provide some examples of their application, which may be useful in con-
sideri~g those disputes likely to occur in practice between parties to a con-
struction contract. Substantial new sections on tortious and
e~-c~ntractual liability are also included. Given the limitations of space
w1thin one chapter, the treatment of these subjects should not be regarded
as comprehensive and reference should be made to the standard text
books on contract and tort for a fuller understanding.
1·013
More detailed treatment of many of the matters discussed in this chap-
ter and their particular application to construction contracts will be found
in later chapters, particularly Chapter 3, "Tenders and Estimates"; Chap-
ter 4, "Performance"; Chapter 7, "Variations"; Chapter 8, "Price and
Damages"; Chapter 9, "Time for Performance". The discharge of con-
tracts by frustration, breach, or illegality is only incidentally noticed in this
chapter, and is dealt with more fully in Chapter 4. Chapter4 is, indeed, the
'·' Of al( pr_ovisions in a design-and-build contract this is probably the one of ;~;atest com-
mercial importance to owners. See, e.g. C.C.P.P., paras. 23---08(f) and 24---07(viii).
[CHAP.)
SECT. 1] CLASSIFICATION OF CONTRACTS 9
main residual chapter of the book in which the basic obligations of both
parties during the performance of a construction contract, including the
completion obligations of the contractor, and the associated owner's obli-
gations, and certain associated but more narrow subjects, such as limi-
tation of actions, are discussed. Insurance and indemnities, discussed in
Chapter 4 in previous editions, are now considered in a new separate
chapter, see post, Chapter 15.
SECTION 1. CLASSIFICATION OF CONTRACTS
A traditional classification of contracts divides them into two types, con- 1·014
tracts made by deed, known as contracts under seal, and simple contracts.
Undertakings contained in contracts or documents under seal depend
for their validity solely upon the form of the document and not upon the
existence of any agreement between the parties or upon the presence of
consideration. Damages for breach of an undertaking given by one party
(the covenanter) to another (the covenantee) and embodied in a deed
may be recovered by the covenantee against the covenantor, notwith-
standing that the covenantee gives no undertaking in return (or that the
undertaking which he gives is void).
A simple contract does not, in general, require to be in any particular
form. It may be oral, or in writing, or partly oral and partly in writing. It
may also be inferred from conduct-but it may be necessary to distinguish
between conduct creating the contract and subsequent conduct which will
be rejected as evidence of the terms of the contract. 14 The undertaking or
promise forming part of a simple contract is enforceable because it forms
part of an agreement between the parties and is supported by consider-
ation; that is to say, it is given in return for some promise or conduct by the
other party to the contract, which is either a detriment to that party or is a
benefit to the party giving the promise to be enforced. Consideration may
be regarded as a test evolved in common law countries to ascertain
whether informally concluded agreements should be enforceable,
whereas by using his seal a party indicates that intention expressly.
An important sub-division of simple contracts differentiates between 1·015
"executed" and "executory" (or "unilateral" and "multilateral" con-
tracts). In the case of unilateral or executed contracts, the offer or contract
is conditional in character and only becomes binding upon performance
or part-performance by the other party. The classical example is an offer
to pay if the other party will perform some service-a feature, as it hap-
pens, of the "letters of intent" which are often exchanged between the
parties during the pre-contract stage of a project. 15 Here the performance
itself constitutes acceptance of the offer. This class of executed or unilat-
eral contract has recently been described as an "if" contract. 16 Executory
,-1 Wickman Machine Tool Sales Ltd. v. L. Schuler A.G. [1974] A.C. 235; following Whitworth
Street Estates (Manchester) Ltd. v. Miller & Partners Ltd. [1970] A.C. 583.
'·' For these, see infra, paras. 1·263-1·275 and post, Chap. 3. para. 3·071.
1~ Per Robert Goff J. in British Steel Corp. v. Cleveland Bridge and Engineering Co. Ltd.
[1984] 1 All E.R. 504. See also Monk Construction Ltd. v, Norwich Union (1992) 62 BLR
92,C.A.
 10 GENERAL PRINCIPLES OF LAW [CHAP.!
or multilateral contracts, on the other hand, come into force before any
performance by either side upon mutual exchanges of promises supported
by consideration. The classical example in the construction field is the tra-
ditional construction contract itself (where, if work has started before final
agreement, other considerations may govern the rights of the parties in
the event that no binding contract is subsequently concluded). 17
1·016 If the formalities necessary for the proper execution of a deed are not
observed, a contract under seal is not enforceable as such. If it is a building
contract, however, it will almost invariably be enforceable as a simple con-
tract, since all the necessary elements of a simple contract will be present.
Although, historically, legal obligation arising by covenant under seal is
older than obligation arising under simple contract, the latter now forms
the basis of the law of contract and is therefore more conveniently con-
sidered first.
In the owner's interest, construction contracts, notwithstanding that
consideration will invariably be present, should always be under seal,
since by virtue of the English Limitation Acts this automatically extends
the period of limitation in contract from six to 12 years from the date of a
breach of contract, and since defective work by a builder is frequently not
discovered on completion, or indeed within the six-year period. (In tort,
liability in England for concealed defects in buildings is now based on a
three-year period following first "discoverability", subject to a 15-year
"long stop": see the Latent Damage Act 1986.)
SECTION 2. FORMATION OF A SIMPLE CONTRACT
(1) Elements of a Simple Contract
1·017 A simple contract is constituted by an offer made by one party and
accepted by the other. The resulting agreement is, however, only enforce-
able as a contract if the promises it comprises are supported by consider-
ation. If a builder were to offer to build a house without payment, even
though the offer were expressly accepted, no enforceable contract would
result, since there would be no consideration, or quid pro quo, for the
promise to build the house~otherwise if the promise were contained in a
deed. An accepted offer to do building work may, of course, make no
mention of price, as for instance in small informally concluded jobbing
contracts or repair works, but this does not mean that consideration is not
present since wherever an offer is made and accepted in circumstances in
which an intention to pay and be paid can be inferred, the law implies a
promise to pay a reasonable price for the work ( and indeed will imply
many other terms, for example as to the quality of the work or for due
expedition). Circumstances can arise in practice, however, where it may
1 1
' See infra, Section 11, "Quasi-contract".
SECT. 2] FORMATION OF A SIMPLE CONTRACT 11
be difficult to decide whether a promise to pay will be implied, even
though work may have been carried out or services performed, and some
examples of these are given in Subsection (8) "Consideration". 1H
(2) Offer
An offer must be something which invites, and is intended by the offerer 1·018
to invite, acceptance, and must be sufficiently definite to be capable of
resulting in a contract if accepted. There is, however, no requirement that
the word "offer" must be used, and an offer is no less an offer because
some other word such as "estimate" or "quotation" or even "order" or
"acceptance" is used. 19 Thus a main contractor will frequently place his
"order" "accepting" the quotation which a nominated sub-contractor has
previously supplied in reply to an invitation from the architect, but gener-
ally, since the original quotation was not given to him, the "order" will
only rank as an offer by the main contractor, until accepted by
acknowledgment or by conduct, for instance by the sub-contractor start-
ing work. 20 Again, an acceptance may add an additional term, in which
case it will rank as a counter-offer, and no contract will come into being
until there is a later unqualified acceptance of the counter-offer, whether
expressly or by conduct! 21 The parties are then said to be "ad idem",
perhaps after many exchanges of offer and counter-offer have taken
place. An offer is to be distinguished from a mere invitation to tender.
"In cases in which you offer to negotiate, or you issue advertisements that 1·019
you have got a stock of books to sell.or houses to let ... there is no offer to be
bound by any contract. Such advertisements are offers to negotiate-offers
to receive offers-offers to chaffer, as I think some learned judge in one of
the cases has said. " 22
An invitation to tender given by a prospective employer to building
contractors is a mere invitation to negotiate with the persons who reply,
and not an offer to make a contract with the contractor whose tender is the
lowest, or with any contractor at all. It is usual for such an invitation to
state that the employer does not bind himself to accept the lowest or any
tender, though such a reservation is an excess of caution, for advertising
for or inviting tenders is a mere attempt to ascertain whether an offer can
be obtained within such a margin as the employer is willing to accept.
However, an invitation to contractors to tender in competition, even if so
worded, may oblige the inviting owner at least to consider a conforming
bid, and it may be a breach of contract not to do so, although it may be
difficult to prove damage in such a case, particularly if the bid is not the
'" See infra, paras. 2·249-2·251. See also post, Chap. 2, paras. 1·061 et seq.
1
~ Crowshaw v. Pritchard (1899) 16 T.L.R. 45.
"' See Davies & Co. Shopfitters v. William Old (1969) 67 L.G.R. 395, infra, para. 1·035.
' See infra, Subsection (5).
22
Carlill v. Carbolic Smoke Ball Co. [1893) 1 Q.B. 256, at p. 268,per Bowen L.J.
 12 GENERAL PRINCIPLES OF LAW [CHAP. I
lowest.23 On the other hand, for obvious commercial reasons invitations to
competitive tenders in construction contracts are invariably expressly
drafted so as to obtain firm offers capable of immediate binding accept-
ance, if the employer is so minded. 24
1·020 A simple advertisement, announcing that it is intended to hold an auc-
tion sale, constitutes no contract between the advertiser and the highest
bidder that the goods will be sold to him, nor between the advertiser and
any intending purchaser that the goods will be put up for sale at all. 25 To
advertise, however, that goods will be sold "without reserve" or to the
highest bidder does constitute a binding obligation upon the advertiser to
sell, and to sell to the highest bidder.26 "A vendor who offers property for
sale by auction on the terms of printed conditions can be made liable to a
member o~ the public who accepts the offer if those conditions are
violated. " 27
Furthermore, if a sale of property by auction is advertised by a person
who has no intention of selling, an action will lie against him in tort for
deceit by a person who, in reliance upon the truth of the advertisement,
incurs expense in inspecting and valuing the property.28 There is no reason
to doubt that a person who issues fraudulent invitations to tender would
be similarly liable to a contractor who incurred expense in submitting a
tender. 29 The contractor's remedy would not, however, be founded upon
any contract, but would arise in tort from the fraudulent representation.
1·021 On the other hand, when an employer invites an architect to prepare
plans for the erection of a building, and the architect does so without more
being said, there will usually be a binding contract and the employer will
usually.have to pay a reasonable sum for the architect's services even if he
does not use the plans. Further, in certain circumstances this can be so
even if the architect knows that he is in competition with other architects
and that only one of their plans will be used. 30 But in all such cases where
the parties have not made their intentions clear the "matrix" of the sur-
rounding circumstances will need to be examined to determine what is
their presumed intention. 31
If, however, a request for tenders expressly states that the lowest tender
will be accepted, it will, if sufficiently definite in other respects, constitute
a true offer, so as to produce a concluded contract between the employer
and the lowest tenderer, for breach of which damages will be recoverable.
23
See Blackpool and Fylde Aero Club v. Blackpool B.C. [1990] 1 W.L.R. 1195; Fairclough
Building Ltd. v. Port Talbot (1992) 62 BLR 82.
24
See for an example of sophisticated modern draftsmanship the Canadian Supreme Court
case of Queen in the Right ofOntario v. Ron Engineering [1981] 1 S.C.R. 111, infra, Subsec-
tion 3, para. 1·025.
25 Harris v. Nickerson (1873) L.R. 8 Q.B. 286.
2li Warlow v. Harrison (1859) 1 E. & E. 309;Johnston v. Boyes [1899] 2 Ch. 73.
21
Ibid. at p. 77,per Cozens-Hardy J.
""Richardson v. Silvester (1873) L.R. 9 Q.B. 34.
29
See post, Chap. 3, para. 3·075.
Jo Landless v. Wi~on (1880) 8 R. (Ct. of Sess.) 289 and see post, Chap. 2, paras. 2·251-2-254.
Ji See particularly the cases infra, Chap. 2, Section 9(1) (c) and (d), paras. 2·249-2:°2:Sl and for
contractors performing such services Chapter 3, Section 4, paras. 3·075-3-076.
SECT. 2] FORMATION OF A SIMPLE CONTRACT 13
But more usually, it is the tender submitted in response to an invitation to
submit tenders which is the offer and which, if accepted by the employer,
will result in a binding contract. In every case the exact circumstances and
language used must be carefully examined.
ILLUSTRATIONS
(1) The defendants issu~d a circular stating that they were instructed to 1·022
offer certain goods for sale by tender. The plaintiff sent in a tender which was
the highest, but the defendant refused to sell his goods to him. Held, that the
circular was a mere proclamation that the defendants were ready to negotiate
for the sale of the goods: Spencer v. Harding (1870). 32
(2) H. telegraphed to F.: "Will you sell us Bumper Hall Pen? Telegraph
lowest cash price." F. telegraphed in reply: "Lowest price for Bumper Hall
Pen £900." H. telegraphed: "We agree to buy Bumper Hall Pen for the sum of
£900 asked by you." Held, that F.'s telegram was a mere statement of the
lowest price and not an offer to sell capable of being accepted by H. so as to
constitute a contract: Harvey v. Facey (1893).:u
(3) B. advertised a public-house for sale under conditions providing that
the highest bidder should be the purchaser and should pay an immediate
deposit of 10 per cent. J. made the highest bid, but could not pay the deposit in
cash, but only by cheque, and B. refused to sell to J. Held, that had J. been able
to pay the deposit in cash, B. would have been bound to sell the property to
him: Johnston v. Boyes (1899). 34
(4) P. wrote to C.: "Estimate-Our estimate to carry out the ... alterations
to the above premises according to the drawings and specifications amounts
to £1,230." C. replied accepting the estimate. Held, that the estimate was an
offer accepted by C. 's letter; that there was no custom that a letter in the form
of an estimate was not to be treated as an offer and that such a custom would
be contrary to law: Crawshaw v. Pritchard (1899). 30
(5) A city treasurer wrote to the plaintiff that the council" ... may be pre-
pared to sell the house to you at the purchase price of £2180" and invited him
to make a formal application, which normally would have led to exchange of
contracts. The council then changed its policy and refused to sell. Held, by the
House of Lords, that the letter was at most an invitation to treat and the plain-
tiffs application an offer only: Gibson v. Manchester City Council (1979). 36
However, in certain circumstances, an inviter of tenders may be con-
tractually liable at least to consider a conforming tender, and in principle
liable in damages for failure to do so.3M
.l.lL.R. 5 C.P. 561.
" [1893] A.C. 552.
·" [1899] 2 Ch. 73.
_,s Hudson's on Building Contracts. (4th ed.), Vol. 2. p. 274.
"[1979] 1 W.L.R. 294.
·"'" See the Blackpool and Fylde Aero Club and Fairclough Building cases illustrated post,
Chap. 3, para. 3·053A.
 14 GENERAL PRINCIPLES OF LAW
[CHAP. I
(3) Withdrawal of an Offer and Counter-offer
1·023 An offer may be accepted at any time after it has been made, unless before
it is accepted:
(a) it is expressly withdrawn; or
(b) it is rejected; or
(c) it is revoked by a counter-offer; or
(d) it lapses by effluxion of time.
The withdrawal of an offer takes effect from the time when it comes to
the notice of the offeree; a mere uncommunicated change of mind by the
offeror has no effect. If a withdrawal is posted, it takes effect, not from the
time of posting, as does an acceptance, if this method of acceptance is
contemplated, 37 but from the time of its receipt by the offeree38;
"Both legal principle and practical convenience require that a person who
has accepted an offer not known to him to have been revoked, shall be in a
position safely to act upon the footing that the offer and acceptance constitu-
te a contract binding on both parties. "l9
1·024 It does not appear to be necessary that the offeror should himself com-
municate his withdrawal to the offeree; it is enough if the offeree in fact
learns of the withdrawal from some other reliable source.40
An offeror may undertake to keep his offer open for a certain period.
Upon the expiry of this period the offer lapses and can no longer be
accepted. The offer can, however, be withdrawn at any time, notwith-
standing that the period has not expired, unless the undertaking to keep
the offer open was given for valuable consideration, so that there exists a
separate contract in the nature of an option.41
In the great majority of construction contract cases where a tender is to
be left open for a period, express or implied consideration will be present,
it is submitted, particularly, for example, if it is a condition of being per-
mitted to take part in a tendering competition for a project. In such cases
the tender is to that extent an acceptance of the owner's offer contained in
his request or invitation to tender, and an agreement to abide by the con-
ditions in that invitation.
ILLUSTRATION
1.025 Tendering contractors were required to furnish a deposit of $150,000. The
documents provided that tenders might be withdrawn without penalty at any
1
' See infra. paras. 1·032-1 ·033.
-'" Byrne v. Van Tienhoven (1880) 5 C.P.D. 344.
'''Ibid.at p. 348.per Lindley J. ,·
"' Dickinson v. Dodds (1876) 2 Ch.D. 463: Canwright v. Hoogstoel (1911) 105 LT. 618.
11
Dickinson v. Dodds, supra.
SECT. 2]
FORMATION OF A SIMPLE CONTRACT 15
time before the date for opening tenders, but thereafter, if the tender was
withdrawn before the owners had considered the tenders, or before or after
notification of acceptance of the tender, or if the tenderer did not when
requested to do so duly execute a formal agreement and supply performance
bonds within seven days, the owner was to be free to accept any other tender
and retain the deposit. An hour after tenders were opened the contractor,
who had been informed by his representative who was present that his tender
was the lowest, telexed the owner requesting permission to withdraw his ten-
der on the ground that there had been a pricing error, which he explained,
whereby his tender was $750,000 too low. The owner responded by sending
the formal contracts for signature, which the contractor refused. The owner
then accepted a much higher bid (but in fact only sought to retain the deposit,
which was smaller than the difference between the two bids). Held, by the
Ontario Court of Appeal, that the owner could not accept an offer after he
had been informed as to the mistake in pricing the contract, and must return
the deposit, but held, by the Supreme Court of Canada, on the tendered docu-
mentation there was an earlier tender contract separate from the later con-
struction contract. The tender contract came into being immediately upon the
opening of tenders, and entitled the owner to retain the deposit in the events
which had happened, and the rights of the parties under that contract had
crystallised at that time. The previous mistake had not been communicated to
the owner at that time, nor was there any other indication of a pricing error
which could invalidate that contract, whatever the position might have been
on the later contract: Queen in the Right of Ontario v. Ron Engineering. 42
[Note: This case did not need to decide whether the later construction con-
tract was in fact avoided by the contractor's pricing mistake. That contention
was later rejected on almost identical facts by the Alberta Court of Appeal in
1986 in City of Calgary v. Northern Construction, 43 illustrated under the law of
mistake in Section 5, infra, where the owner chose to recover damages rather
than to retain the deposit. The Ron Engineering case appears to have caused
some controversy or concern in construction circles in Canada, but with
respect the Supreme Court's decision was manifestly right, and indeed any
other decision would have enabled contractors to drive a coach and horses
through normal competitive tendering procedures.]
Thus it has been held in Canada that a sub-contractor could not, in the 1·026
light of practice in the industry, withdraw a tender on the faith of which the
main contractor had, to the sub-contractor's knowledge, tendered to an
owner, and in a similar case, that on its facts there would be an obligation
on the main contractor to employ the sub-contractor if he succeeded in
obtaining the main contract. 44
However, in California in 1958, in a Supreme Court case which has exer-
cised great influence in the construction industry in the United States,
Traynor J., held to the contrary on the latter point, on the basis of a doc-
trine of promissory estoppel.
'" (1981) 119 D.L.R. (3d) 267 (overruling Belle River Community Arena v. Kaufmann (1978)
87 D.L.R. (3d) 761).
-1., [1986] 2 W.W.R. 426.
.., See Northern Construction v. Gloge Heating and Plumbing (1986) 27 D.L.R. (4th) 265,
C.A., Alberta: M.J. Peddlesden Ltd. v. Liddell Construction (1981) 128 D.L.R. (3d) 360.
Supreme Court. B.C.
 16 GENERAL PRINCIPLES OF LAW [CHAP.!
ILLUSTRATION
1·027 In accordance with local practice, a sub-contractor was telephoned with a
request for his tender by a main contractor on the morning of the day when
the main contract tenders were due to be submitted to the owner in the even-
ing. The main contractor secured the contract, and on the following day called
in on the sub-contractor, who informed him that there had been a mistake in
pricing his sub-tender. The main contractor was forced to employ another
sub-contractor at a higher price. Held, by the Supreme Court of California,
that the sub-contractor's tender, albeit accompanied by no promise to keep it
open and by no express or implied obligation of the main contractor to
employ the sub-contractor should the main contract be awarded to him, was
an enforceable promise, if used by the main contractor to his deteriment,
despite the absence of consideration. Under section 90 of the Restatement of
Contracts, which applied in California, a promise which the promisor should
reasonably expect to induce action or forbearance of a definite and substan-
tial character on the part of the promisee, and which does induce such action
or forbearance, is binding if injustice can be avoided only by enforcement of
the promise. Drennan v. Star Paving. 4"
[Note: English law may not at present allow damages to be recovered on
the promissory estoppel basis underlying section 90 of the Restatement of
Contracts, though no doubt a duty of care will be owed in tort under the
Hedley Byrne principle.46 There was clearly no consideration moving from the
main contractor on the above facts, as recognised by Traynor J ., since the
sub-contractor would know that other sub-contractors might quote a lower
price to the same main contractor tenderer on the day in question.]
1·028 However, an offer expressed to remain open for a certain period, if
made under seal, is irrevocable, since no consideration is necessary to sup-
port it.
If the offeree does not accept the offer as it stands, but either rejects it or
purports to accept it with the addition or subtraction of some term, the
original offer lapses and is not thereafter capable of acceptance, unless
renewed by the offeror, 47 although any counter-offer involved will itself be
capable of acceptance by the original offeror. An important and some-
times difficult distinction must, however, be made between a counter-
offer and a mere request for information, which does not amount to a
rejection of the original offer. 4s
An offer lapses after a reasonable time and cannot thereafter be
accepted. What is a reasonable time is to be determined in the light of all
the circumstances. 49
1
• 333 P. (2d) 757 (1958). followed in the U.S. Restatement (Second) of Contracts (1981)
paras. 89(2) and in subsequent cases: see Sweet, Legal Aspects of Construction Contracts
(3rd ed.), pp. 727-729.
-1• See Hedley Byrne & Co. Ltd. v. Heller & Partners Ltd. [1964] A.C. 465, see infra, paras.
1·280etseq.
-1, Hyde v. Wrench (1840) 3 Beav. 334.
'" See e.g. Stevenson v. McLean (1880) 5 Q.B.D. 346, and Gibson v. Manchester County
Council [1979] 1 W.L.R. 294. See also the dissentingjudgment ofMcGillivray J.A. in Pigott
Structures Ltd. v. Keillor Constniction Co. (1965) 50 D.L.R. (2d) 97. Canada.
"'' Metropolitan Asylums Board (Managers) v. Kingham and Sons (1890) 6 T.L.R. 2l'7; Rams-
gate Hotel Co. v. Montefiore (1866) L.R.1 Ex.109. See also post, Chap.3, para.3·d68. where
the matter is further discussed.
SECT. 2] FORMATION OF A SIMPLE CONTRACT 17
ILLUSTRATIONS
(1) The defendant offered to buy a house from the plaintiff and to give the 1·029
plaintiff six weeks for a definite answer. Held, that the defendant might
retract the offer at any time before acceptance, although the six weeks had not
expired: Routledge v. Grant (1828)/'1
(2) The defendant offered to sell his farm to the plaintiff for £1,000: the
plaintiff in reply offered to pay £950, which the defendant refused. The plain-
tiff then wrote to the defendant agreeing to pay £1,000, to which the defend-
ant made no reply. Held, the plaintiff by making an offer of £950 had rejected
the defendant's offer of £1,000 and could not thereafter revive and accept it:
Hyde v. Wrench (1840). 51
(3) By letter dated October 1, the defendants wrote from Cardiff to the
plaintiffs in New York offering to sell certain goods. The plaintiffs received
the letter on October 11 and accepted the offer by telegram on the same day.
On October 8 the defendants posted a letter to the plaintiffs, which reached
them on October 20, withdrawing their offer. Held, that the withdrawal of the
offer by the letter of October 8 was ineffective, a binding contract having been
concluded on October 11 by the sending of the telegram when the plaintiffs
had no reason to think that the offer of October 1 had been withdrawn: Byrne
v. Van Tienhoven (1880).52
(4) After discussions, an excavation sub-contractor asked the main con-
tractor to confirm an agreed special definition of rock in writing, and at the
same time submitted his own prices in writing. It was known to both parties
that the employer had previously made difficulties about the definition. The
main contractor did not confirm the definition in writing, but purported to
accept the quotation, sending a standard form of sub-contract for the pur-
pose. The sub-contractor withdrew and refused to proceed since he no longer
wanted the contract. The main contractor argued that there was a concluded
contract, including the agreed definition of rock. Held, by the Ontario Court
of Appeal (McGillivray J.A. dissenting), that the confirmation in writing was
a condition and not a mere incident of the agreement, and till it was given
there was no agreement and the sub-contractor could withdraw: Pigott Struc-
tures Ltd. v. Keillor Construction Co. (1965). 53
(4) Death of Offeror or Offeree
There is some doubt whether an offer can be accepted after the death of 1·030
the offeror, but it is clear that an offeree cannot accept after he has know-
ledge of the offeror's death. 54 If, however, he has no such knowledge at the
time of accepting, then it would appear that a distinction is made between
those contracts where the acceptance of the offer and the offeree's per-
formance are one and the same act (commonly called "unilateral" or
"executed" contracts and of which the Ron Engineering case, supra, is an
5
" 4 Bing. 656.
'
1
3 Beav. 334.
.<.15 C.P.D. 344.
~, (1965) 50 D.L.R. (2d) 97, Canada.
"'Coulthart v. C{ementson (1879) 5 Q.B.D. 42.
 18 GENERAL PRINCIPLES OF LAW [CHAP. I
excellent example) and those contracts (known as "multilateral'' or
"executory" contracts) which are formed by the exchange of mutual
promises to be performed by both parties in the future. In the case of uni-
lateral contracts an offeree who without knowing of the offeror's death
does the act requested of him by the offer-for example, advances money
to a person in reliance upon a surety's standing offer to guarantee its
repayment-makes a valid acceptance and can bring an action upon the
contract against the offerer's personal representatives. 55 Multilateral con-
tracts cannot, it seems, be formed after the death of the offerer, whether or
not the offeree knows of the death. Certainly this must be the case if the
personality of the offerer is an important element in the contract, for ex-
ample where the contract is with an architect for the preparation of plans.
1-031 The effect of the death of the offeree was considered in a dictum by
Warrington L.J. in Reynolds v. Atherton56;
" ... the offer having been made to a living person who ceases to be a living
person before the offer is accepted, there is no longer an offer at all. The offer
is not intended to be made to a dead person or his executors, and the offer
ceases to be an offer capable of acceptance.""'
ILLUSTRATION
J.L. agreed to guarantee "the regular payment of the remaining balance" of
H.L.'s account with B. B. continued to give credit to H.L. after the death of
J.L. and without notice of this fact. Held, that B. could enforce the guarantee
against J. L. 's executors in respect of credit given to H. L. after J. L. 's death:
Bradbury v. Morgan (1862). 511
(5) Acceptance
1·032 The acceptance of an offer must be unequivocal and must be communi-
cated to the offerer if it is to result in a concluded contract. 59 An accept-
ance may, however, be made either expressly by words or writing, or
impliedly by conduct, always provided that the acceptance corresponds to
the mode of acceptance contemplated by the offer. Thus if a householder
asks a builder to call and do certain repairs and the builder does so, there is
a good contract, the builder having accepted the householder's offer by
doing the repairs as asked. Conduct will also, it is submitted, amount to
acceptance if no other reasonable inference can be drawn from the con-
"Bradbury v. Morgan (1862) 31 L.1.Ex. 462. For the effect of death on contracts of guaran-
tee, see Chitty on Contracts (25th ed.), para. 102.
-"' 125 L.T. 690, at p. 695.
57
See also Kennedy v. Thomassen [1929J 1 Ch. 426. See also Re Irvine (1928) 3 D.L.R. 268.
·'"31 L.J.Ex.462.
'~ For incomplete agreement where the parties are not ad idem, see post. Chap. 3.,.·paras.
3·066-3-067. ,,
SECT.2] FORMATION OF A SIMPLE CONTRACT 19
duct in question. This is most important in the field of buildi~g contracts,
because even in major projects it is not uncommon for a budder or sub-
contractor to commence work when all terms have been negotiated and
agreed but no formal acceptance has been recorded. In such a case ?oth
the employer (by standing by and giving up posse~sion)_ and t~e builder
(by doing work) will usually, it is submitted, be ev1denc1ng their a~cept-
ance of the contract terms, or, in a case of offer and counter-offer, of the
611
latest state of the contract terms contained in the last counter-offer.
Thus an offeree giving a conditional acceptance,in the sense that it fails 1·033
to comply with a_ll the requirements of a previous offer orintr?duces a ~e:V
or altered term, has not validly accepted, and is simply making yi,hat 1s tn
law a new offer (or more properly counter-offer) itself capable of accept-
ance by the original offerer, and technically revokin? ~ny previous offers
or acceptances of individual terms made_ by the ong1nal offeree. These
steps of offer and counter-offer, however they may be_ d:scribed the ?Y
parties themselves, are a very frequent aspect of ~egotia.ttons leading ~p
to a binding commercial contract, and the analysis required to ascertain
the moment when agreement has been reached afld the parties are ad
idem is not always easy, and one where the Courts can easily differ on
particular facts.61 Should a party seek to introduce a new term_ after th_e
critical point has been reached it will, of course, be too late since he 1s
already bound (unless the other party chooses to re-open the n_egotiations
with some further counter-offer which has the effect of revoking the pre-
viously reached agreement).
An offerer cannot, however, impose a contract upon the offeree by a
02
provision that the offeree's silence shall be taken as an acceptance.
ILLUSTRATIONS
(1) After some negotiat!ons for the sa~e of_a horse, A. w~.ote to B. "If I hear 1·034
no more about him, I consider the horse 1s mine at£3015s. B. made no reply.
but when selling his farm instructed the auctioneer to reserv~ the h~rse. The
auctioneer by mistake sold the horse. Held, that A. had n~ nght to impose a
contract upon B. by providing that B. 's silence should be his acceptance; that
although B. in his own mind intended to accept A.'s offer, he_ha~ done noth-
ing to communicate this intention to A. and t~ere was no b1nd1ng contract:
Felthouse v. Bindley (1862)."~
(2) M. Co. sent a draft agreement for the sale of coals to !3-,
who made
certain minor alterations, inserted the name of the arbitrator, wrote
"approved," and signed the agreement. B. retu:ned the agreement to the M.
Co. 's agent who put it away without further action. M. Co. then ordered and
In addition to the cases illustrated infra, see also Trollope & Coils Ltd. v. Atomic Power
f!I>
Constructions [1963J 1 W.L.R. 333,post, Chap. 3, paras. 3·057-3·059. . . .
61 See for an example Evans Deakins Industries Ltd. v. Queensland Electnc1ty Generating
Board (1985) 4 B.C.L.R. 334.
02 Felthouse v. Bindley (1862) 11 C.B.(N.S.) 869.
63 11 C.B.(N.S.] 869.
 20 GENERAL PRINCIPLES OF LAW [CHAP. I
B. supplied coal in accordance with the terms of the agreement. Held, that the
parties had by their conduct in the ordering and supplying of coal concluded a
valid contract in the terms of the draft agreement as altered by B.: Brogden v.
Metropolitan Ry. (1877).M
1·035 (3) An architect invited and accepted the tender of a nominated sub-
contractor. The main contractor placed an order with a term on the back (for
no payment of the sub-contractor until the main contractor was himself paid)
which conflicted with the earlier documentation. The nominated sub-
contractor started work. Held, by Blain J., that the architect was not the agent
of the main contractor, so that the order of the main contractor constituted a
counter-offer which had been accepted by the sub-contractor's starting work:
Davies & Co. Shopfitters Ltd. v. William Old (1969).65
(4) A supplier of materials quoted to a main contractor on conditions of
sale which retained title in the goods until payment in full, with any money
received by the main contractor from the owner for the goods held in trust for
the supplier. The main contractor then placed an order which slightly modi-
fied the price and also provided "Terms and Conditions in accordance with
main contract CC/Wks/1 ". That contract required the contractor to enter into
subcontracts providing for materials brought on site to vest in the owner, and
at another point similarly provided that all things brought on the site should
vest in the owner. The supplier delivered goods to the site, and the contractor
later went into liquidation at a time when the goods had still not been incor-
porated and he had not yet been paid for them. Held, by Mervyn Davies J.,
by supplying the goods the suppliers had accepted the main contractor's
counter-offer and withdrawn their own conditions, and the property had
passed to the owner: Sauter Automation Ltd. v. Goodman (Mechanical Ser-
vices) Ltd (1986).66
1·036 (5) A dredging contract was entered into which contained an arbitration
clause. Difficulties were later experienced by the owner in providing an area
for deposit of the spoil, and it was decided instead to construct an artificial
island, for which the contractor was asked to quote a price. The Court held
that this change was outside the scope of the original c,antract and not a vari-
ation. The contractor submitted a detailed quotation for the new work, and
the owner wrote a letter accepting the contractor's quotation on October 4 in
the_ following terms: "We thank you for your quotation dated 28 September
which we are pleased to accept, and confirm our verbal instructions asking
you to undertake this work with the utmost dispatch. Our official works order
will follow in due course." The contractor apparently commenced work, and
the owner's "official works order" dated October 19provided for "the supply
of all plant, labor, etc. as per your quotation of 28 September 1978" and
repeated on its face the contractor's quotation. It was also, however,
expressed to be subject to printed conditions on the back, one of which con-
tained an arbitration clause. Held by the Court of Appeal, the new contract
was fully completed by the owner's letter of October 4, so that there was no
arbitration clause applicable when a dispute later arose in regard to the arti-
ficial island. The later official works order was surplusage having no contrac-
tual force: Blue Circle Industries Pie v. Holland Dredging Co. (U.K.) Ltd.
(1987)."
1,1 2 App.Cas. 666. See, for a very comparable modern case where complete charterparties
became incorporated in this way, Howard Marine and Dredging Co. Ltd. v. Ogden & Sons
(Excavations) Ltd. [1978] Q.B. 574.
"-' 67 L.G.R. 395.
66
(1986) 34 BLR 81.
07
(1987) 37 BLR40.
SECT. 2] FORMATION OF A SIMPLE CONTRACT 21
(6) A contractor, asked to start demolition work, submitted a progress
claim and in response to a request to submit a contract forwarded two printed
copies of a standard form for signature, but was later told "We never sign
contracts." A further progress claim under the standard form was submitted
and paid. On receipt of the building permit the contractor wrote that he was
proceeding on the understanding that the conditions of contract were
accepted. Work proceeded and progress payments in accordance with the
standard form were made until the work was nearly finished, when the owner
ran out of funds. The printed standard form gave the contractor a charge on
the land. The trial judge held the contract was only an oral contract. Held, by
the New South Wales Court of Appeal, in the circumstances there had been
an acceptance of the printed agreement tendered by the contractor: Empir-
nall Hldgs. Pty. Ltd. v. Machon Paull Partners Pty. Ltd. (1988).M
It will be seen from the above cases that where there are conflicting and 1·037
successive offers and counter-offers, with no explicit final acceptance, the
cut-off point at which a contract is regarded as being concluded will often
be when goods are delivered or construction work carried out without
further discussion or demur to the latest counter-offer. In such cases
acceptance will be inferred from the conduct of the recipient of the last
counter-offer. However, commencing work will not always imply accept-
ance of a preceding offer or counter-offer. The following case is a classical
object lesson in the rules of offer, withdrawal of offer, counter-offer and
acceptance.
ILLUSTRATION
A contractor was required to tender on a fixed price basis with an alterna- 1·038
tive price if the fluctuations ( variation of price) clause was to apply. Tenders
were to be open for six months. The owner informed the contractor of his
intention to accept once certain approvals had been obtained. However, very
substantial price rises then took place in the industry, and after five months
the contractor wrote asking for sympathetic consideration of a revision of his
fixed price tender. A month later, just before expiry of the tender period, the
owners wrote accepting "your tender", and three weeks later wrote saying
they were preparing documents on the fixed price basis, but on the following
day they also wrote saying that they would examine the effect of the price
increases notified by the contractor. The contractor started work and later
refused to sign the fixed price contract documentation. Held, by Cooke J., (a)
the wording of the contractor's original letter was not sufficient to constitute a
withdrawal of his fixed price tender; but (b) the owners' acceptance was inef-
fective since it was not clear which of the two tenders was being accepted; (c)
the owners' later letter making their fixed price intention clear was ineffective
since it was out of time; and ( d) the contractor's starting work could not in the
circumstances be interpreted as an acceptance of the fixed price terms pro-
posed in the owners' latest letter; so that (e) the contractor was entitled to
reasonable remuneration for the work. Peter Lind v. Mersey Docks and
Harbour Board (1972).&J
""(1989) 8 A.C.L.R. 65. C.A .. N.S.W.
6
" [1972] 2 Lloyd's Rep. 234. The contractor's entitlement would be strictly in quasi-contract:
see infra, Section 11.
 22 GENERAL PRINCIPLES OF LAW [CHAP. 1
1·039 Of recent years the commonest source of difficulty in cases of conflict-
ing offers or counter-offers has been the widespread growth in commerce
of the practice of stipulating the parties' conditions of trading in printed
form, frequently on the back of printed forms of estimate, quotation or
tender on the one hand, or of order or purchase order on the other. In-
genious attempts have also been made by express draftsmanship of these
printed conditions to accord priority in the event of conflict to the individ-
ual party's own terms or conditions. This practice has become known to
lawyers as "the battle of the forms". It has been suggested that in the last
resort a combination of such provisions and an unusual wariness by both
parties may ultimately lead to an obligation to pay a reasonable price for
any work done, in the absence of any concluded contract at all,7° but it is
submitted that in the great majority of cases the last undisputed counter-
offer will usually prevail where goods have been supplied or work done.11
1-040 Where an acceptance is made by post, the rule is as stated by Lord
Herschell in Henthorn v. Fraser72 :
"where the circumstances are such that it must have been within the contem-
plation of the parties that. according to the ordinary usages of mankind. the
post might be used as a means of communicating the acceptance of an offer,
the acceptance is complete as soon as it is posted".
No doubt the reason for this rule is the same as that for the communi-
cation of withdrawal of an offer (see supra), -namely that a person who has
accepted an offer not known to be revoked should be in a position safely to
act on that footing. In the case of negotiations conducted by telex, where
the communications are virtually instantaneous and receipt is automati-
cally confirmed, this factor is not present, and the contract is concluded at
the time and place where the acceptance is received. 7)
1·041 In the case of building contracts it is very common for the tender or offer
of the contractor to be accepted at some considerably later date, often
after changes in the work or modifications in the tender provisions or
designs have been discussed and agreed. It is also common for form31 con-
tracts to be exchanged and signed some considerable period after work
has commenced. While it is usually clearly the parties' intention that the
accepted contract should apply retrospectively to work already done, the
parties frequently do not expressly say so, or take account of changes in
the work occurring since the original tender (by altering the price arid
contract drawings or specifications for instance), but rely on provisions in
the contract for ordering and valuing variations or otherwise dealing with
7', See Treitel. Law of Contract. (8th ed.) pp. 19-20; Chitty on Contracts (25th ed.). para. 59,
and the cases of Butler Machine Tool Co. Ltd. v. Ex-Cell-O Corp. (England) Ltd. [1979]
1 W.L.R. 401: and Peter Lind & Co. Ltd. v. Mersey Docks and Harbour Board [1972} 2
Lloyd's Rep. 234.
71
See, for a typical modern example. Chichester Joinery v. John Mow/em (1988) 42 BLR
100.
1
' [1892] 2 Ch. 27. at p. 33. ~· _.,
1
·' Entores Ltd. v. Miles Far East Corporation [1955] 2 Q.B. 327; Brinkibon v. StahO.g Stahl
[1983] 2 A.C. 34.
SECT. 2] FORMATION OF A SIMPLE CONTRACT 23
changes such as changes in wage·rates or cost of materials, notwithstand-
ing that these provisions, not unnaturally, are drafted so as to operate after
and not before the contract is made. Wherever possible the law will either
imply a term for retrospective operation of the contract provisions or con-
strue the final acceptance as applying the contract provisions retrospec-
tively to changes in the work agreed and undertaken prior to contract in
anticipation of ultimate acceptance.74
Finally, where work has been completed it has been suggested that the
courts will be more wil~ng to imply terms and find that a contract exists
than in other cases.74a
(6) Agreem~nts to Agree and Vagueness
Quite apart from the very common cases in the field of construction con- 1-042
tracts where the terms are fully agreed, but a later formal contract is also
contemplated, or where "letter of intent" wording is used 75 an agreement
will not be enforceable as a contract if it is in effect "an agreement to
agree" or lacks sufficient precision. This can arise in a number of ways.
Thus the parties may provide expressly for future agreement as to a matter
of sufficient importance to render the agreement as it stands too uncertain
to be enforceable. Alternatively, the agreement may have used
expressions which are too vague or lacking in precision to be enforceable.
Again, the parties may simply have failed to reach any or any final agree-
ment on a term necessary to give the agreement as a whole sufficient cer·
tainty. The courts will not, to supplement such inadequacies, make the
bargain for the parties, nor speculate as to their intention, however prob-
able. This certainty or precision needed to bring a binding contract into
existence may be compared with the high degree of certainty required
before the courts will agree to imply a term into an existing binding
contract.76
"It is a necessary requirement that an agreement, in order to be binding, must 1·043
be sufficiently definite to enable the court to give it a practical meaning. Its
terms must be so definite, or capable of being made definite without further
agreement of the parties, that the promises and performances to be rendered
by each party are reasonably certain. " 77
As already mentioned, however, mere absence of an agreement as to
price will not be ~n obstacle if the remaining terms or circumstances show
an intention to pay and be paid.78
1
See Trollope & Col/s Ltd. v. At()mic Power Constructions [1963J 1 W.L.R. 333 and City of
•
Box Hi/Iv. Tauschke {1974] V.R. 39, post, Chap. 3, paras. 3·057-3·059.
1•• Trentham v. Archital Lux/er (1992) 63 BLR 44, C.A.
1
·' These cases are dealt with infra, Section 11 and post, Chap. 3, paras. 3·055-3.065.
11, See infra, Section 6, and, for a particularly good example in the case of implied terms, the
case of Trollope & Colts v. N. W. Metropolitan Hospital Board there referred to, and also
illustrated post, Chap. 10, Section 5, para. 3(7).
11
Scammell v. Ouston [1941] A.C. 251, at p. 268,per Lord Wright.
1~ See supra, para. 1·017, and see Foley v. Classique Coaches, infra, paras. 1·047, and Subsec-
tion (8) infra, paras. 1·061 et seq.
 24 GENERAL PRINCIPLES OF LAW (CHAP.!
However, in the case of commercial contracts, the courts are loth to
hold that there is no binding contract, particularly if the parties have par-
tially performed their promises as if their agreement was binding. "In
commercial documents connected with dealings in a trade with which the
parties are familar the court is very willing, if satisfied that the parties
thought that they made a binding contract, to imply terms and, in particu-
lar, terms as to the method of carrying out the contract, which it would be
impossible to supply in other kinds of contract. " 79 "The object of the law of
contract is to facilitate the transactions of commercial men and not to cre-
ate obstacles in the way of solving practical problems."80
1·044 Phrases such as "subject to war clause" ,81 "to be had on hire-purchase
terms",82 "subject to force majeure conditions",83 and "Fair and reason-
able sum based on agreed estimates of net cost and general overheads with
a five per cent. profit margin",84 have been considered too vague and the
agreements of which they formed part have been held not to be binding
contracts. In each case the phrase was capable of more than one meaning
and the court was therefore unable to say that the parties had ever agreed
any one of the meanings, or that there was ever a consensus ad idem. On
the other hand, the phrase "usual covenants" in agreements between a
prospective landlord and tenant has been held to be enforceable.85
In accordance with the normal rules of construction, however, extrinsic
evidence may be received in order to resolve an ambiguity in a contract or
to identify a particular term which the contract may incorporate by refer-
ence: if this can be done, the contract will not fail for uncertainty.86
Further, if the court concludes that some vague expression used by the
parties is in fact wholly meaningless, the expression can be disregarded,
and, provided that the agreement is sufficiently definite in other respects,
there will be a binding contract.
"In my opinion a distinction must be drawn between a clause which is mean-
ingless, and a clause which is yet to be agreed. A clause which is meaningless
can often be ignored, whilst still leaving the contract good: whereas a clause
which has yet to be agreed may mean that there is no contract at all, because
the parties have not agreed on all the essential terms. " 87
Though an expression regarded as meaningless can be disregarded,
however, the essential terms necessary to make the contract commercially
79 Scammell v. Ouston [1941] A.C. 251, at p. 255, per Lord Maugham. See also Edwards v.
Sky ways Ltd. [1964] 1 W.L.R. 349, infra, para. 1·082, for a similar approach, and see Tren-
tham v. Archital Luxfer (1992) 63 BLR 44, C.A.
,i,, Per Lord Guthrie in R. &J. Dempster Ltd. v. Motherwell Bridge and Engineering 1964 S.C.
308, Scotland. See also per Lord Wright in Hillas & Co. Ltd. v.Arcos Ltd. (1932) 147 L.T.
503, at p. 514, quoted in Chitty, op. cit. at para. 118.
ii Bishop and Baxter Ltd. v. Anglo-Eastern Trading Co. Ltd. [1944] K.B. 12.
~2 Scammel v. Ouston, supra.
"3 British Electrical Industries Ltd. v. Patley Pressings Ltd. [1953] 1 W.L.R. 280.
114 Courtney & Fairbairn Ltd. v. Tolaini Bros. [1975} 1 W.LR. 297.
KS Hampshire v. Wickens (1878) 7 Ch.D. 555; Flexman v. Corbett [1930} 1 Ch. 672.
116
See Shamrock S.S. Co. Ltd. v.Storey (1899) 81 L.T.413. See also infra, paras. 1·.;'.16 et seq.
K7 Nicolene Ltd. v. Simmonds [1953] 1 Q.B. 543, at p. 551,perDenning L.J. See alsO"in Aus-
tralia, Whitlock v. Brew [1968} C.L.R. 445, at p. 461.
FORMATION OF A SIMPLE CONTRACT 25
SECT. 2]
workable must have been agreed, and this includes not merely the terms
which the parties themselves regarded as req~red to bri~g ~ contract into
existence, but those which, even though they did not realise 1t, were essen-
tial for this purpose. 88 • •
The question whether or not words used 1n a contract point !o th.e
necessity of further agreement so as to vitiate th_e whole contract, is ulti-
mately a question which depends upo!1 all the circumstances of the par-
ticular case. In addition to the following cases reference should a~so be
made to the trade usage cases, infra, Section 7(3), and Section 9,
Interpretation.
ILLUSTRATIONS
(1) Timber in a sale agreement was described as "of fair specifi~ati~n". 1·046
Held, by the House of Lords, a standard of reasonableness could be imphed:
Hillas & Co. Ltd. v. Arcos Ltd. (1932).119
(2) An agreement by the Government for the .sale of its total sto~k of old
tentage which might become available up to a stipulated date provided ~hat
price, dates of payment, and manner of delivery should b~ a~eed from time
to time as the tentage became available. There was an arb1trat1on clause, and
a deposit paid. After a dispute on price the Government re.fused to supply
further. Held, by the House of Lords, the agre:oment was incomplete and
unenforceable: May & Butcher Ltd. v. R. (1929).
(3) o. agreed to purchase a motor-van from S. bµt stipulated that a cert~in
proportion of the price should be "had on hire-purchase terms over a penod
of two years." Held, by the House of Lords, that since there ~ere several types
of hire-purchase agreement, there was no consensus ad idem and no con-
cluded contract: Scammel v. Duston (1941 ).91
(4) F. sold some ~f his land to C. on conditi';ln that C. wo~ld buy all the!r 1·047
petrol" for their business as motor-coach propnetars ~ro1!1 F. ~ pumps on. his
retained land "at a price to be agreed between the parties 1n wnting from time
to time." Tue agreement contained an arbitrati?n _clause. Fo; three years the
defendants bought all their petrol fro~ th.e pla1nt1ff, but a dispute arose and
the defendants claimed there was no b1nd1ng contract. Held, by the Court of
Appeal, that a term could be implied in the contract that the p~tro.l should be
sold at a reasonable price, that if any dispute arose as to the P.nc~ tt was to be
determined by arbitration, and that accordingly there was a b1nd1ng contract:
Foley v. Classique Coaches Ltd. (1934). 92 •
[Note: It seems that this decision may have been at least partly 1nflu~nced
by the presence of an arbitration cl~use, but see Robert Goff J., who reJected
this view of it, in Beer v. Bowden, mfra., paragraph 1-051.J
(5) A charterparty provided that the C,:ossbill should proceed to Grimsby
and load coal "in the usual manner accordmg to the custom of the place ... the
~~ Nicolene Ltd. v. Simmonds [1953] 1 Q.B. 543; Trollope & Col/s Ltd. v.Atomic Power Con-
structions [1963J 1 W.L.R. 333, post, Chap. 3, paras. 3·057-3·059, per Megaw J. See,
for an example of a disregard of a meaningless term, London Borough of Newham v.
Woodrow-Anglian Ltd. (1981) 19 BLR 99.
11'1147 L.T. 503.
90 [1934] 2 KB 17n. See also post, Chap. 3, paras. 3·073-3·074.
91 {1941] A.C. 251.
91. [1934] 2 K.B. 1.
 26 GENERAL PRINCIPLES OF LAW [CHAP. I
loading time to be 36 running hours on terms of usual colliery guarantee." A
strike of coal miners resulted in congestion of shipping at the port and the
Crossbil/ did not get under the coal tip until 10 days after arrival at the port:
thereafter there was no delay in loading. In an action for demurrage by the
shipowners, heid, by the Court of Appeal, that the term "usual colliery
guarantee" meant that form of guarantee which was in general use at
Grimsby: that the evidence showed that there were three forms commonly
used at Grimsby, all of which provided that time did not run until the ship was
under the tip, and accordingly the charterers were not liable for demurrage:
Shamrock SS. Co. Ltd. v. Storey (1899). 93
[Note: This is, of course, a case where trade usage saved the contract term
relied on.]
1·048
(6) An agreement for the sale of a quantity of reinforcing steel bars which
was otherwise complete was expressed to be subject to "the usual conditions
of acceptance". Held, by the Court of Appeal, that, there being no "usual
conditions of acceptance", the condition was meaningless and could be
ignored, and that the contract was complete and enforceable: Nicolene Ltd. v.
Simmonds (1953).94
(7) A contract to grant a lease which was to be non:assignable contained
the words "The lease shall contain such other covenants and conditions as
shall be reasonably required by (the plaintiffs)." The defendants entered and
paid rent under the agreement, but refused to accept a prohibition against
"underletting or parting with possession of the premises or any part thereof".
Held, by the Court of Appeal, the contract was not so vague as to be
unenforceable, the proposed covenant went beyond the meaning of non-
assignability, and the requirement was unreasonable: Sweet & Maxwell Ltd.
v. Universal News Services Ltd. (1964).95
(8) An agreement was concluded between steel suppliers and consumers
for delivery of agreed tonnages of steel over a three-year period, on what was
called an "open order" basis, "the prices to be mutually settled at a later and
appropriate date". There was evidence that the steel was in short supply, that
there had been a previous course of dealing and that price was a secondary
matter. Held, by the Court of Session, Inner House, the agreement could be
enforced: R. & J. Dempster Ltd. v. Motherwell Bridge and Engineering
(1964)."
[Note: While an understandable and, it is respectfully submitted, fully
researched and entirely correct decision, the circumstances were clearly very
unusual. In more normal circumstances an agreement with this wording
would not have been enforceable.]
1·049 (9) An agreement for the supply of a stipulated number of day-old chicles
provided prices for the first year of a five-year agreement "and thereafter such
other figures as may be agreed between the parties". The agreement was ter-
minable only on four years' notice, and there was an arbitration clause in
general terms. Held, by the Court of Appeal, that the arbitrator would have
power to deterrp.ine reasonable figures for the second year, and there was a
binding agreement: F. & G. Sykes (Wessex) Ltd. v. Fine Fare Ltd. (1966). 97
(10) A lease contained an option for renewal "at such rent as might be
agreed". Held, that the option was void for uncertainty: King's Motors (Ox-
ford) Ltd. v. Lax (1970).'"
93 81 L.T. 413.
9< [1953} 1 Q.B. 543.
" [1964] 2 Q.B. 699.
96
1964 S.C. 308 Scotland.
"' [1967) 1 Lloyd's Rep. 53.
n [1970] 1 W.L.R 426.
SECT. 2] FORMATION OF A SIMPLE CONTRACT 27
(11) An acceptance of a tender in an advertised sale of land by tender where
all details were agreed, and which stated that acceptance would create a con-
tract, contained the words "subject to contract". Held, by Goff J., the words
could be disregarded as meaningless: Michael Richards Properties Ltd. v. St
Saviour's Parish, Southwark (1975). 911
(12) A contractor with access to finance for the owner inquired whether, if 1·050
finance was successfully obtained by him, "you will be prepared to instruct
your quantity surveyor to negotiate fair and reasonable contract sums in
respect of each of the three projects as they arise. (These would incidentally
be based upon agreed estimates of the net cost of the work and general over-
heads with a margin of 5 per cent. which I am sure you will agree is reason-
able.)" At the contractor's insistence before introducing the proposed
financiers, the owner replied "In reply to your letter, I agree to the terms
specified therein and I look forward to meeting the interested party regarding
finance". The contractor obtained the required offer of finance, but though
quantity surveyors were appointed agreement on price proved impossible,
and the owner made use of the finance to employ other contractors. The con-
tractor sued for damages. Held, by the Court of Appeal, overruling Shaw J.,
there was no enforceable contract. Per Lord Denning, M.R. There was no
agreement on price or any method by which it was to be calculated. If the
price had been left to be agreed by a third person or arbitrator, that would
have been different. Here the agreement was to negotiate a price, and the
letter showed that estimates had not yet been agreed: Courtney & Fairbairn
Ltd. v. Tolaini Bros. (1975). 1
[Note: The contractor in this case was claiming damages for breach of con-
tract. There seems little doubt that he might have been entitled to the value of
his services in quasi-contract based on unjust enrichment-see infra, Section
11.]
(13) A contract quotation stated "The above quotation will remain Fixed
Price until 3 June 1975; any work carried out after this date to be negotiated".
The work had been expected to be completed by the named date, but work
was carried out after that date and the contract was finally terminated. The
owners contended that the work after the date should be valued at the orig-
inal contract prices modifed by any increased costs after the named date.
Held, by the Court of Appeal, that the only term to be implied was one for
reasonable current prices prevailing after the date: Constable Hart & Co. Ltd.
v. Peter Lind & Co. Ltd. (1978). 2
(14) Engineering contractors by a Letter of Intent requested a supplier of 1·051
steel nodes for a lattice·work steel cladding in Saudi Arabia to commence
manufacture "pending the preparation and issuing to you of the official form
of sub·contract", and the supplier quoted a "budget price" of £200,000 and
commenced work. Thereafter there were many revisions of design, and nego-
tiations as to modifications of price and as to the contract conditions to be
used. Eventually all the nodes were delivered and the supplier sued for
£229,000. The contractors counterclaimed £867,000 alleging damages for
delay in delivery. Held, by Robert Goff J, that either an executed or executory
contract could result from a letter of intent, and there might be express or
implied tenns as to quality or the time for completion under such a contract.
Here, despite the work being completed, the negotiations had never reached
agreement on either matter. Moreover, following Courtney & Fairbairn v.
Tolaini, price had not been agreed, and this alone would prevent a contract
91
[1975] 3 All E.R. 416; illustrated post, Chap. 3, paras. 3·057-3·059.
1
[1975] 1 W.L.R. 297.
1 (1978) 9 BLR 1.
 28 GENERAL PRINCIPLES OF LAW
coming into being in a transaction of this kind. There was accordingly no obli-
gation to complete by any particular time, whether reasonable or otherwise,
and the counterclaim must be dismissed: British Steel Corporation v. Cleve-
land Bridge and Engineering Co. Ltd. (1981). 3
[Note: The plaintiff, on this analysis, was entitled to recover in quasi-con-
tract on the legal basis of unjust enrichment-see infra, Section 11. Robert
Goff J. also held that, if it became necessary to decide the point, there had in
any case been delivery within a reasonable time.]
(15) A lease for 10 years stipulated a rent for the first five years and then for
renewal at "such rent as shall thereupon be agreed between the landlords and
the tenant but no account shall be taken of any improvements carried out by
the tenant in compiling the amount of increase, if any". There was no refer-
ence to any third person or arbitrator. Held, by the Court of Appeal, following
Foley v. Classique Coaches Ltd.,4 that a fair or reasonable rent should be
implied. The tenancy had to continue for a further five years, and the alterna-
tive would be to deny any increase at all. Per Robert Goff J., the presence of
the arbitration clause was not the deciding factor in Foley's case: Beer v.
Bowden (1981).s
1·052 (16) A lease contained a tenn for renewal "at such rents as shall have been
agreed between the lessor and lessee". Held, by the Court of Appeal, follow-
ing Beer v. Bowden, that under such wording the reviewed rent should be
what it would have been reasonable for these landlords and tenants to have
agreed having regard to any negotiations between them, as for example past
expenditure of the tenant on improvements, and not an objectively fixed mar-
ket rent for new tenants. Per Buckley L.J.: "The landlords have granted a
14-year tenn and the Court must endeavour to fill any gap in the terms of the
lease by means of a fair and reasonable implication as to what the parties must
have intended their bargain to be": Thomas Bates & Son v. Wyndham's
(Lingerie) Ltd. (1981).'
(17) A lease gave an option to purchase the freehold "at such price ... as
may be agreed upon by two valuers or in default of such an agreement by an
umpire to be appointed by such valuers". The landlord stultified the pro-
cedure by refusing to appoint his own valuer. Held, by the Court of Appeal
(applying many older precedents with reluctance), that there was no specifi-
cally enforceable agreement if the landlord refused to appoint. But held, by
the House of Lords, that the option agreement was a valid contract, though
with defective machinery, for a sale at a reasonable price, and that not only
was there a breach of contract for which nominal damages would be recover-
able, but if necessary the Court could order specific performance and provide
its own machinery to enable a reasonable price to be ascertained: Sudbrook
Trading Estate Ltd v. Eggleton (1983). 7
(18) A tenderer for 18 units of houses, with all the documentation, includ-
ing a time schedule and contract period based on 18 houses, was informed that
the owners had "approved acceptance of your tender on a 9 units trial basis.
Written advice will be required prior to the commencement of the balance of
the contract." Held, by Nicholson J., applying Whitlock v. Brew,8 that the
3
[1984J 1 All E.R. 504; [1981) 24 BLR 94.
4
[1934} 2 K.B. 1.
5
[1981} l W.L.R. 522, at p. 527.
6
[1981) 1 AIIE.R.1077, atp.1089; {1981J 1 W.L.R.505. See this case infra para. 1·123, in the
context of rectification of the contract to permit arbitration of the new rent. ,·
'[1983]1 A.C. 444. ''
8
[1968) C.L.R. 445.
SECT. 2] FORMATION OF A SIMPLE CONTRACT 29
words were too vague and uncertain to be given any meaning and should be
disregarded: H. & S. Alexanderv. Housing Commission of Victoria (1985). 9
In spite of the obvious anxiety of the courts to rescue contracts lacking 1·053
clarity, these decisions show that, in building contracts, such expressions
as "subject to the usual rise and fall clause" {there being many types of
such clause), or "payment by monthly certificates subject to usual reten-
tions" {there being many possible percentages of retention), or "joinery to
be a P-C item" {if there are no contractual provisions governing and defin-
ing P-C items), endanger the whole agreement, unless it is possible by
extrinsic evidence to resolve the ambiguity, or the clause is so vague as to
be meaningless, or relates to a matter not essential to the contract so that
the whole remains fully workable in the commercial sense.
The above cases show, it is submitted, that the introduction of the 1·054
express word "reasonable" by the draftsman will do much to assist in the
conclusion of a binding contract. Nevertheless, in Beer v. Bowden 10 the
Court of Appeal for reasons of business efficacy were prepared to imply
that term. Many United States construction contracts contain provisions,
particularly in regard to changes or variations but also in relation to other
permitted claims, which assume prior agreement of the parties upon both
liability and price. It would seem that in such cases on grounds of business
efficacy it would also be necessary to imply a reasonable price where
agreement was not forthcoming. However, in executory construction con-
tracts of any substance it is simply not possible to arrive at a reasonable
price for an entire project by evidentiary or other means, having regard to
the complexities and almost infinite technical variety of size, design and
quality, as well as factors such as access, so that the implication of a term
for reasonableness becomes correspondingly more difficult. Thus in
Courtney & Fairbairn Ltd. v. Tolaini Bros. 11 Lord Denning M.R. said:
"Now the price in a building contract is of fundamental importance. It is so 1·055
essential a term that there is no contract unless the price is agreed or unless
there is an agreed method of ascertaining it, not dependent on the negotia-
tions of the two parties themselves. In a building contract both parties must
know at the outset, before the work is started, what the price is to be or, at all
events, what agreed estimates are. No builder and no employer would ever
dream of entering into a building contract for over £200,000 without there
being an estimate of the cost and an agreed means of ascertaining the price."
(The £200,000 figure represented the sum in issue before Lord Denning
M.R., and there is no implication, it is submitted, that projects of less value
would be governed by different considerations.) Robert Goff L.J. in Brit-
ish Steel Corporation v. Cleveland Bridge12 clearly took the view that Lord
Denning M.R. 's remarks related to any reasonably substantial contract,
~ (1985) 44 A.C.L.R. 85.
m See n.5, supra.
II
See n.1, supra.
12 See n.3, supra.
~'
 30 GENERAL PRINCIPLES OF LAW (CHAP.1
and it is submitted that in fact Lord Denning M.R. 's view would be correct
for any project other than minor works of a jobbing, or works of a stereo-
typed and easily valued, character. However, the cases also show that if,
on the other hand, the parties decide to leave the fixing of price, however
difficult to ascertain or speculative, to a valuer or other third person, the
courts will give effect to that intention. It is submitted that the mere pres-
ence of an arbitrator in the proposed contracting arrangements will not
necessarily be sufficient. The question will be whether the circumstances
indicate that the parties had the price resolution problem in mind as a
matter with which the arbitrator was expected to deal, in which case the
courts will give effect to that intention by holding a binding contract. If, on
the other hand, the arbitration clause owes its existence to more general
considerations and no apparent connection with price-resolution, it is sub-
mitted that the clause will be neutral on the question whether or not there
is binding contract.
1·056 On the other hand there may be cases where, despite the project being
of a substantial character, price is not an essential or relevant factor. R. &
J. Dempster Ltd. v. Motherwell Bridge and Engineeringo is a particularly
interesting example, where all the relevant authorities were considered.
In all cases it should be borne in mind that if work has been done and a
binding contract does not subsequently come into being, recovery will
usually J:,e possible in quasi-contract where a start of work has been
requested and a benefit conferred on the owner: see per Robert Goff L.J.
in the British Steel Corporation case supra, and see infra, Section 11.
(7) Agreements "Subject to Contract"
1·057 The acceptance of an offer is sometimes stated to be "subject to a proper
contract" or "subject to a formal contract." "It is a question of construc-
tion whether the execution of the further contract is a condition or term of
the bargain or whether it is a mere expression of the desire of the parties as
to the manner in which the transaction already agreed to will in fact go
through. In the former case there is no enforceable contract either
because the condition is unfulfilled or because the law does not recognise a
contract to enter into a contract. " 14 The effect of the words "subject to a
proper contract to be prepared by the vendor's solicitors" was considered
by the Court of Appeal in Chillingworth v. Esche 15 where many earlier
cases were referred to, and the use of the shorter expression "subject to
contract" has now become a commonplace in the world ofconveyancing,
where questions of title and other matters often cannot be gone into at the
time of reaching agreement on price.
13
See n.96, supra.
14
Per Parker J. in Hatzfeldt-Wildenburg v. Alexander [1912} 1 Ch. 284, at p. 289. For the
general principle see also Mastersv. Cameron (1954) 91 C.L.R. 353 (H. Ct., Au~ttalia) and
see Sturgeons v. Municipality of Toronto (1968) 70 D.L.R. 20 (S.C., Ontario).,,
~ [1924] 1 Ch. 97.
1
SECT. 2] FORMATION OF A SIMPLE CONTRACT 31
These short-form expressions are more usually employed in the field of
conveyancing and leases than in construction contracts. However, even in
the conveyancing field there can be exceptional cases where, if nothing
remains to be negotiated, the words "subject to contract" may be treated
as meaningless and fail to prevent a contract coming into being. 16
The background in construction contracts is very different. Not only is 1·058
the tendered documentation usually expressly designed to obtain a tender
offer capable of immediate binding acceptance, but it is the very same
documentation which frequently also expressly contemplates a later for-
mal contract. 17 In the United Kingdom some of the standard form con-
ditions of contract against which contractors are required to tender
themselves require a subsequent entry into a formal contract (see, for
example, Clause 9 of the ICE conditions of contract and the correspond-
ing clause in the FIDIC international conditions). The reasons for this
requirement are partly the desirability, from the owner's point of view, of
obtaining a contract under seal (so doubling the limitation period under
English law for defective work, for example) and partly to see to it that the
complicated documentation of a large construction contract has been
assembled in proper order with any typographical or arithmetical errors
or minor loose ends corrected by agreement. In the great majority of cases
it is not the sense of this requirement of a formal contract that the parties
do not both regard themselves as bound by and entitled to enforce against
each other the contract already concluded by the earlier acceptance of the
tender. 18 The only exceptions will usually be cases where there remain
important outstanding matters for agreement, or where full authority to
conclude the contract has not been obtained from some higher authority
by the owner's representatives (although in that situation a more specific
qualification of the invitation to tender or in the contract documents
themselves might be expected).
It should also be remembered that where work commences without a 1·059
formal contract and is allowed to continue by the owner when all terms
have been agreed, this will almost always bring into play principles of
waiver or estoppel so as to prevent a subsequent denial of the contract by
the owner if no formal contract is concluded. 19 Furthermore, where a for-
mal contract is subsequently concluded, not only will it usually be inter-
preted as superseding any previous agreements, but in the absence of
indication to the contrary, it will be treated as applying retrospectively so
as to validate actions or claims under the contract in respect of the period
prior to the formal execution of the contract. 20 Cases of construction con-
16
Michael Richards Propertiesv. Saint Saviour's Southwark [1975] 3 AllE.R. 416 and see also
Alpenstow Ltd. v. Regalian Properties Plc [1985] 1 W.L.R. 721.
11
See the Ron Engineering case, supra, para. 1 ·025.
iH See this well expressed by the Australian High Court in Sinclair Scott v. Naughton (1929)
43 C.L.R. 310,post, Chap. 3, paras. 3·055-3·056.
19
See, e.g. City of Box Hillv. Tauschke Pty. Ltd. [1974] V.R. 39,post, Chap. 3, paras. 3·057-
3·059. Eor estop.£,el see infra, Section 10.
w See Trol~ Lolls Ltd. v. Atomic Power Construction Ltd. [1963] 1 W.L.R. 333, post,
Chap. 3, paras. 3·057-3·059.
 32 GENERAL PRINCIPLES OF LAW [CHAP. I
tracts where the execution of a contemplated formal contract has not
taken place are further considered post, Chapter 3, Section 3(2)(a), Ten-
der Subject to Condition.
1·060 Another form of conditional pre-contract arrangement which contem-
plates the conclusion of a later definitive contract is the so-called "letter of
intent" type of document which is common in commerce. Whether prop-
erly regarded as an offer or an acceptance (since letters of intent usually
respond to a quotation from the contractor), their effect is considered,
infra, Section 11 and post, Chapter 3, paragraph 3·071. So, too, are cases
where architects or contractors render preliminary services gratuitously
in the expectation of later receiving a full contract: see infra, Section 11
and post, Chapter 2, Section 9(l)(c) and (ct) and Chapter 3, Section 4(1)
respectively.
There are, of course, many other conditions which parties may seek to
impose which may prevent a contract coming into being. 21
Where a later contract is in fact executed, however, it is usually pre-
sumed to supersede all previous agreements. 22
(8) Consideration
(a) Generally
1·061 A promise not under seal is unenforceable unless supported by con-
sideration. The House of Lords in Dunlop v. Selfridge (1915) 23 adopted
the following definition of consideration: "An act or forbearance of one
party, or the promise thereof, is the price for which the promise of the
other is bought, and the promise thus given for value is enforceable."24
Thus detriment is as valid as benefit in providing consideration.25
1·062 This rule can have important practical and legal consequences. In the
first place, a third person who has not given consideration ("a stranger to
the consideration") cannot sue upon the promise ( except as an assignee),
even though he may be a party to the agreement, if the consideration has
been given by some other party. For example, a sub-contractor may be
asked to quote for work on the owner's land, and may then agree upon the
work and the price with the building owner or his A/E. But, if it is agreed
that the person who will actually place the order with him (that is, who
promises to pay for the work) is to be the main contractor, then the build-
ing owner (who has not given any consideration) cannot sue, for instance,
for damages on the sub-contract. Looked at in reverse, the building owner
cannot be sued for the price, even though the sub-contractor has, by doing
21 See post, Chap. 3, paras. 3·055-3·065, where the subject of these and other similar con-
ditions is considered in greater detail.
22 See post, Section 8, "Collateral Agreements".
2.1 [1915] A.C. 847, at p. 855.
i 4 From Pollock on Contracts (8th ed.), p. 175.
i., See Comyn Ching & Co. Ltd. v. Oriental Tube Co. Ltd. [1979] 17 BLR 47, at pp. 79-80.
SECT. 2] FORMATION OF A SIMPLE CONTRACT 33
the work or promising to do it, furnished ample consideration, because
there is no promise by the building owner on which the sub-contractor can
sue. 26 (The only exceptions would be where there was some collateral con-
tract between the owner and sub-contractor, or where the main contractor
was acting as agent for the owner.27 ) So in all cases where a builder has
carried out or undertaken work, he miµ;t be able to establish the
employer's promise, express or implied, to pay for the wbrk. Where there
is no express promise, a promise to pay will often be implied, but there
may be cases where, despite the carrying out of work, no promise to pay
will be implied. Conversely, a contractor or sub-contractor who has done
work on an owner's land cannot sue the owner if their contract was with a
third person, despite the benefit to the owner.28
ILLUSTRATIONS
(1) In 1952 a contractor carried out a road contract for a city council. In 1-063
1953 the surface deteriorated and the contractor became concerned at the
effect on his reputation locally and his prospects of obtaining further work
from the council on other contracts. At the time he was owed a balance of
$1,800 on the 1952contract. He then repaired the road, though not requested
to do so, and the council did not prevent him from doing so. Later he did not
obtain the further work for which he had hoped, and claimed to be paid a
reasonable price for the 1953 work. Held, by the Court of Appeal of New
Brunswick, applying the testz9-would a reasonable man in the position of the
council have believed that the contractor intended to do the work at his own
expense?-that the contractor was not entitled to payment for the work: City
of Moncton v. Stephen (1956).30
(2) A council was dissatisfied with the condition of certain work. The con-
tractor asserted that it was not his fault, but the council made it plain that they
would not pay when the contractor said he would do the work of repair with-
out prejudice to his making a claim. Certain councillors had told him he would
get no more work if he did not do the work of repair. The contractor did the
work expressly reserving a claim. Held, by the Court of Appeal of Ontario,
unless the employer had agreed to the basis of doing the repair work, which it
had not, the contractor was not entitled to payment even if his original con-
tentions were correct: Morton Construction v. City of Hamilton Corp.
(1962)."
[Note: This case by today's standards seems somewhat harsh and comes
close to current ideas of economic duress. 31 •]
2<1See post, Chap. 13, "Sub-contracts". See, for a typical case, Concrete Construction Ltd. v.
Keidan 1955 (4) S.A. 315,post, Chap. 13, Section 2(2).
27 Almost never the case in construction contracts.
'"See for a good (non-construction) example Brown & Davis Ltd. v. Galbraith [1972]
1 W.L.R 997, infra.
2" For the test, see Anson on Contract (20th ed.), p. 26, and Pollock on Contracts (13th ed.),
p. 9.
Ju 5 D.L.R. (2d) 722, Canada.
JI [1962] D.R. 154. Distinguish the Privy Council decision in Molloy v. Liebe (1910) 81 L.T.
616, P.C.,4\lustratedpost, Chap. 7, Section 2(4)(d), and cf Peter Kiewit & Sons v. Eakins
Constructio~1960) 22 D.L.R. (2d) 465: [1960] S.C.R. 361, there illustrated, and also
post para. 4·219.
• As to which see infra, Section 13, para. 1·390.
31
 34 GENERAL PRINCIPLES OF LAW [CHAP. I
1·064 (3) Surveyors agreed to prepare drawings, arrange tenders, obtain consents
and settle accounts for alterations to a house on behalf of the defendant, who
required it partly to live in and partly to let as lodgings, for a sum of £30. The
cost of the work was originally estimated to be £600, but the price quoted by
the contractor was £660, plus £400 in the form of P.-C. sums for decorations
and kitchen equipment. The trial judge held that the agreed fee of £30 was to
cover possible extras but not wholly different work. After work had started,
more work was ordered, bringing the total to £2,283. The surveyors prepared
no specifications or drawings, etc., for this additional work, but supervised it
and settled accounts. They did not say anything about an additional fee at the
time, but ultimately submitted accounts and sued for an additional 100 gui-
neas based on professional scale fees. Held, by the Court of Appeal, that in
the absence of any new promise to pay reasonable remuneration, the sur-
veyors could recover nothing. In the present case the parties had never dis-
charged their original agreement. The defendant, who was a woman, had
never heard of scales, and the surveyors were professionals. It was a hard case,
but as between the parties it was better that the surveyors should suffer the
hardship: Gilbert & Partners v. Knight (1968). 32
1·065 (4) A damaged motor car was taken to repairers by the owner, who
informed them he was comprehensively insured. They sent in an estimate,
which was then authorised by the insurance company's assessor after dis-
cussion with the repairers, except as to £25 which the owner had to pay him-
self under the policy. The owner was not informed of the amount of the
estimate. The repairers subsequently sent the account to the insurers, except
for the £25. The latter did not pay, giving as their reason that the owner was
not satisfied with the repairs. The repairers then commenced proceedings
against the owner, and very shortly after the insurers became insolvent. The
repairers admitted in cross-examination that they had looked to the insurers
for payment. Held, by the Court of Appeal, overruling the County Court
judge, that the repairers could not sue the owner for the balance over £25:
Brown & Davis Ltd. v. Galbraith (1972).1.>
[Note: This claim might have been successful in quasi-contract, it is sug-
gested; see infra, Section 11.]
(5) A. promised B. that if he would unload A.'s goods trOm C.'s ship, A.
would not make any claim if they were damaged. The goods were part of a
larger consignment of goods which B. had already undertaken to unload for
C. Held, by the Privy Council, followingScotson v. Pegg, that notwithstanding
that B. was already bound to C., there was sufficient consideration and A. 's
promise could be enforced: New Zealand Shipping Co. Ltd. v. Satterthwaite &
Co. Ltd. (The Eurymedon) (1975). 34
1·066 (6) Owners instructed amain contractor to use a particular brand of plastic-
coated piping which was to be laid by the plaintiffs, who were specialist heat-
ing sub-contractors. During construction, joints made with the piping failed
on test, and the plaintiffs sought a variation order for different piping from the
architect. The defendants, who were the suppliers of the piping, then gave the
plaintiffs a widely-worded indemnity if they continued using the same piping.
There were performance guarantees in the main contract specification. The
piping again failed and had to be replaced altogether. The ow.ners then sued
the heating engineers; the main contractor and the plaintiffs, Who ultimately
32
[1968] 2 All E.R. See, for a contrary case, the decision of the Court of Appeal of Jamaica in
Kelly & Partners v. Northshore Development Co. Ltd. (1963) 5 W.I.R. 379, West Indies,
illustrated post, Chap. 2, paras. 2·283-2·284.
Ji [1972] 1 W.L.R. 997.
3
' [1975] A.C. 154. For a contrary U.S. view, see Chitty (26th ed.), para. 199, n.45.
SECT. 2] FORMATION OF A SIMPLE CONTRACT 35
contributed one-third of an agreed sum paid in settlement of the owner's
claim. The plaintiffs now sued the defendants on the indemnity. The trial
judge held that since the plaintiffs had not, as he found, been negligent, they
would not have been liable in tort to the owners. On appeal, the defendants
also argued that there was no consideration for the indemnity, and that all the
plaintiffs had done was promise to continue to perform their existing sub-
contract. Held, by the Court of Appeal, there was consideration for the
indemnity given by the defendants. Per Robert Goff L.J., although the plain-
tiffs had not been induced to enter into any contract, they were induced to
forbear from pressing for a variation order, and were persuaded to take a risk
which they did not want to run. That was within the classic definition of con-
sideration in Currie v. Misa. 35 Detriment to the promisee and benefit to the
promisor were alternative, not cumulative, requirements; but in any case
there was clear benefit to the promisor as well, so that both elements were
present. To the argument that the plaintiffs did no more than promise to per-
form their existing sub-contract with the main contractor, that, too, was, fol-
lowing Scotson v. Pegg, 36 valuable consideratj.on for the defendants' promise.
As to the indemnity, it extended to liabilities or claims having a reasonable
chance of success, and since there was at least an arguable case for breach of
the express performance warranty as well as for negligenCe, the compromise
was reasonable and the defendants liable under the indemnity for the moneys
paid by the plaintiffs and their costs: Comyn Ching & Co. Ltd. v. Oriental
Tube Co. Ltd. (1979)."
Consideration problems can also arise where preparatory services are 1·067
performed on a construction project in the expectation of payment, if a
contract is awarded, out of the profits of the contract, but no contract is in
fact concluded. It is a question of degree, depending on the extent and
nature of the work done, whether a promise to pay for work of this nature
can be implied if the contract is not, in fact, awarded. 38 The problem can
also arise in relation to variations in the contract work, which a contractor
may carry out in circumstances where no express request or promise by
the owner to pay can be shown, either because he did not know of the
variation or, while knowing of it, did not realise that a change of price was
likely to be involved.39 It is for this reason (among others) that variation
clauses are included in nearly all construction contracts under which the
owner agrees to be bound by an AJE 's instruction, usually in writing, if the
result is in fact a variation of the contract work, whatever his own state of
knowledge may be.40
An act or forbearance done in the past may be the motive for the giving 1·068
of a promise, but it is not a good consideration to support the promise, for
"past consideration is no consideration. " 41 Thus, if a contractor in re-
J> (1875) L.R. 10 Ex. 153.
J6 (1861) 6 H. & N. 295.
J 17 BL~_pp. 79--80.
7
J~ Seeposi; ~..-aµ, paras. 3·075, for cases of preparatory work done by contractors, and post,
Chap. 2, paras. 2·249-2·250, for work done by architects.
19
• For a suggested test in this situation, see the passage from Re Chittick & Taylor (1954) 12
W.W.R. 653, Canada, quoted post, Chap. 7, Section 2(4)(e).
40
See post, Chap. 7, Section 2(4).
• See Roscorla v. Thomas (1842) 3 Q.B. 234.
1
 36 GENERAL PRINCIPLES OF LAW [CHAP.!
sponse to an owner's request erects a house on the owner's land without a
price being agreed, and after completion the owner promises to pay-him
£4,000, can the builder enforce the promise to pay £4,000? He can, usually
of course, recover a reasonable sum for erecting the house, relying upon
the owner's promise to pay to be implied from his original request to the
contractor to erect the house. Moreover the owner's offer of £4,000 would
usually be some evidence at least against the owner of what was a reason-
able sum. Provided that the work is done at the promiser's request and it
was always intended to be paid for, it would now seem that the promised
sum can be recovered. 42
Another aspect of the requirement of consideration is that in principle
there can be none for a promise to pay for something which the promisee
is already bound by his contract with the promisor to do. 43 It seems, how-
ever, that where there is a practical benefit or "avoidance of disbenefit"
obtained by the promisor from ensuring that the promisee does not break
his contract there will, in the absence of fraud or duress by the promisee,
be good consideration for the promise, notwithstanding that the promisee
is already bound and so suffers no detriment.
ILLUSTRATION
1·069 Sub-contractors in financial difficulties due to their prices being too low and
to poor supervision of their employees were in delay, exposing the main con-
tractor to substantial liabilities for liquidated damages to the owner. The con-
tractor promised additional sums per house in return for completion to time,
but when he failed to pay them, the sub-contractors stopped working. Held,
by the Court of Appeal, that there were a number of practical benefits
obtained by the contractor, and the sub-contractors had been entitled to the
extra payments: Williams v. Roffey Bros. (1990). 44
1·070 There is no requirement of law that consideration should be adequate,
or that the person giving the promise should receive a fair or reasonable
return for the promise: the slightest action or forbearance by the promisee
can be sufficient consideration. 45 In normal commercial contracts, how-
ever, if the consideration is obviously so inadequate as to be derisory, the
'2 See Chitty op. cit. para.165,andperLordScarmanin Pao On v. Lau Yiu Long [1980] A.C.
614, at p. 629.
-0 Stilk v. Myrick (1809) 2 Camp. 317 where sailors had been promised extra wages for com·
pleting a voyage which they had already contracted to do. See for a more modem example
in Canada, a construction case Parsons Bros v. Shea (1965) 53 D.L.R. (2d) 86,post, Chap. 4,
para. 4·255.
44 [1990] 1 All E.R. 512, commented on in a Note, (1990) 106 L.Q.R. 183, which pointed out
that economic duress had not been pleaded. The Court of Appeal gave leave to appeal,
it should be noted. The case was followed by Hirst J. in Anangel Atlas Cia Naviera S.A.
v. lshikawajima·Harima Heavy Industries Co. Ltd. (No. 2) [1990] 2 Lloyd's ~ep., 526 at
p. 545. See further infra, Section 13, Economic Duress, para. 1·390.
'·' See Thomas v. Thomas (1842) 2 Q.B. 851.
SECT. 2] FORMATION OF A SIMPLE CONTRACT 37
burden of establishing the contract is correspondingly the greater. Never-
theless there is no principle of law which will relieve a party from a foolish
or disastrous bargain once its terms are clearly established.
(b) Accord and satisfaction
Consideration may also be of importance in supporting or invalidating 1·071
an agreement to compromise a dispute or claim, commonly known as
accord and satisfaction. Here, as in any other 'agreement, there must be
consideration. Thus even if a claim or a defence is in fact invalid, a
compromise of the claim will be effective provided the party putting for-
ward the claim or defence in question believes it to be valid. Even a claim
regarded by both parties as doubtful can, it would seem, be compro-
mised.46
However, there must be an element of give and take, and not a simple
case of submission to an intransigent position, however honestly held,
taken by the other party. The deciding line can be a very fine one, as illus-
trated by the conflict of judicial opinion in the following case.
ILLUSTRATION
Two sisters negotiated with a property company on the general basis that 1·072
certain properties inherited from their father should be conveyed to the com-
pany, which would be responsible for the properties' debts, pay the sisters
£8,500 at once, and a half share of the ultimate proceeds on realisation of the
properties. However, minutes of agreement later drawn up by the solicitor
acting for both parties in the honest belief of himself and the sisters that it
represented the agreement reached, gave the sisters one-half of the ultimate
gross proceeds of sale without giving credit for the debts paid or for the
£8,500, and these minutes were then signed by the parties. When the proper-
ties were about to be sold by auction the company refused to proceed with the
sale until, after a long discussion into the small hours, the sisters, who were
under financial pressure, eventually yielded and signed a second agreement
on the terms asserted by the company. The company alleged that the second
agreement was a binding compromise. Held, by the House of Lords (Lords
Cohen and Denning dissenting), the sisters' second agreement was gratuitous
and unsupported by consideration, and entered into in the erroneous belief
that the sale could not proceed without the agreement of the company, and
was accordingly not binding on them: Hunter v. Bradford Property Trust Ltd.
(1970)."
The position becomes more complicated if a debt is liquidated ( that is, a 1·073
definite~~__t.ained sum where neither liability nor amount can be dis-
puted, or a less precise unliquidated claim has subsequently been ascer-
tained and admitted). Here a promise not under seal to pay or accept a
•• Miles v. New Zealand Alford Estate Co. (1886) 32 Ch.D. 266.
47
1970 S.L.T. 173. Compare D. & C. Builders Ltd. v. Rees, illustrated infra, para. 1·075.
 38 GENERAL PRINCIPLES OF LAW (CHAP. I
lesser sum (or the same sum at a later date), being obviously less than what
is self-evidently already due, will not be enforceable (although such a
promise may invoke principles of waiver entitling the debtor to reason-
able notice before the full amount of the obligation is enforced by the
creditor).48 On the other hand, in construction contract disputes the sums
claimed by either side will rarely if ever ( unless ascertained and agreed as
due by the other side) rank as liquidated sums. In the case of such unliqui-
dated claims, arguable differences as to liability or the amount due will
almost invariably be present, so as to provide without difficulty the necess-
ary consideration from each side to support any compromise agreement
reached.
ILLUSTRATIONS
1·074 (1) A judgment creditor agreed in writing not to take "any proceedings
whatever" on the judgment in consideration of an immediate payment of
£500 and the remainder by instalments over a number of years "until the
whole of the said sum ... shall have been satisfied". Following full payment
some years later the creditor claimed judgment interest in addition. Held, by
the House of Lords, following Pinnel's case (1602) 49 there was no consider-
ation for the promise and the creditor was entitled to recover: Foakes v. Beer
(1884)."
[Note: Although other reasons based on an interpretation of the creditor's
letter were referred to in some of the judgments51 the case has been followed
as 'a leading authority on the law of consideration ever since.]
(2) A defendant sent a cheque for a lesser sum than that claimed for breach
of contract "in full of all demands" and enclosed a receipt in that form for
signature. The creditor instead sent a receipt on account and paid in the
cheque. Held, by the Court of Appeal, there had been no accord to bar the
plaintiff's claim: Day v. McLea (1899). 52
1·075 (3) Decorator partners presented their bill for a balance of £482. The
defendant's wife said that he was unable to pay and could only afford £300.
She and her husband both knew that the plaintiffs were in desperate straits for
cash. When one of the partners suggested accepting the payment on account
and giving a year to pay the balance, she insisted that it was £300 or nothing,
and that it must be in final settlement. He replied "We have no alternative but
to accept", and when he later came to receive the money, she insisted upon
the words "in completion of the account" being added to the receipt when she
paid the £300 by cheque. On a preliminary issue, the County Court judge
found as a fact that the amount due had been ascertained and was not in
dispute at the time of the final discussions with the defendant's wife, so that
there was no consideration for the promise to accept £300. Held, by the Court
of Appeal, dismissing the appeal, that following Foakes v. Beer,'.i-1 payment of
! .14 [1966] 2 Q.B. 617. Explained in Chitty, op. cit., as a case of economic duress - see infra,
·~ See infra, Section 10, paras. 1·255-1·256.
•~ 5 Rep. 117a.
i11 (1884) 9 A .. C. 605.
51
See Chitty op. cit. at para. 209, n.65.
52
22 Q.B.D. 610.
i, See n.50, supra.
SECT. 2] FORMATION OF A SIMPLE CONTRACT 39
a lesser sum, whether by cash or by cheque, was not a settlement binding on
the creditor: D. & C. Builders Ltd. v. Rees (1966). 54
[Note: This case overrules Goddard v. O'Brien (1882)55 and other cases
holding that payment by cheque rather than cash would, for that reason
alone, constitute consideration.]
(4) Sub-contractors claimed that certain work cons~tuted ~ variation for 1·076
which additional payment was due, which was at all times disputed by the
main contractor. When work was completed more than a year later, the sub-
contractors submitted their account "for the payment of all outstanding ser-
vices". After making some minor deductions which were not in dispute !he
main contractors sent their cheque, stated to be "payment of all outstanding
moneys on the contract and therefore is final payment in accordance with the
supplementary conditions, with the exception of any increased costs of labour
and materials which you may wish to submit at a later date". Ten months later,
and three years after they had put forward their variation contentions, the
sub-contractors submitted a variation claim. Held, by the Court of Appeal of
New Zealand (Whitehouse J. dissenting on the exact interpretation of the
letters exchanged), that, distinguishing Foakes v. Beer, there was a concluded
agreement which prevented the claim being raised. Per Richmond J., the rule
in Foakes v. Beer does not apply on the facts. The sub-contractor's account
was not for a liquidated or ascertained amount of which the sum then claimed
was a part only and the main contractor's reply constituted an agreement
between the parties as to the final amount due under the contract: James Wal-
lace v. William Cable Ltd. (1980).56
(5) A building owner sent a cheque for $11,000 in settlement of an account
for $14,000, with accompanying words "Enclosed cheque is tendered .in full
and final payment of our account with you, accordingly our account 1s now
clear". The contractor's office manager banked the cheque without informing
the contractor, and in fact had no authority to compromise a claim on his
behalf. Held, by Smellie J,57 that the essence of an accord must be agreement
as a fact, and the banking of the cheque was not by itself conclusive. But here
there had been a genuine preceding dispute between the parties, and, viewed
objectively, the words constituted an offer which the offic~ manager had
ostensible authority to accept in this way: Dunrae Manufacturing Ltd. v. C. L.
North & Co. (1988).~
It has been suggested that the D. & C. Builders case could well have
been decided on the basis of doctrines of ei::onomic duress, 59 but it is 1·077
respectfully suggested that, given the County Court Judge's findings in
that case, the rule in Foakes v. Beer was not only logically applicable but
produces a satisfactory result, in the field of liquidated claims, consistent
with the rules for enforceability of compromise agreements of unliqui-
dated claims. In that case, the plaintiff's reluctant acceptance of the lesser
para. 1·390.
S.19Q.B.~ ..
s6 [1980] 2 N.Z.L.R. 187, at pp. 194-195.
,, Following Equitable Securities v. Neil [1987] 1 N.Z.L.R. 233; Dalgety Ltd. v. Morton [1987]
1 N.Z.L.R. 411; not following MahonJ. in Homeguard Products N.Z. Ltd. v. Kiwi Packag-
ing [1981} 2 N.Z.L.R. 322; and considering Day v. McLea, supra, n.52.
sa [1988) 2 N.Z.L.R. 602.
59 See Chitty op. cit. atparas.185 and 210. See also Pao On v. Lau YuiLong [1980] A.C. 614,
and see infra, Section 13, para. 1·390.
 40 GENERAL PRINCIPLES OF LAW [CHAP. I
sum was not made in consideration of the defendant abandoning some
bona fide defence, since to the knowledge of the defendant there was none
at the time of the alleged agreement. The only logical reason for criticising
the rule in Foakes v. Beer would be a value judgment of policy in favour of
encouraging settlement of debts at less than their full value.
The law on this subject is, of course, of great practical importance in the
construction field, where disputes over the final account are the rule rather
than the exception, whether in large sophisticated or small informal con-
1·078
tracts, as is evidenced by the attempts made in many standard forms to
accord a degree of finality to the final certificate in this regard. 60
It is frequently believed in commerce that statements made, when offer-
ing payment of a suni. less than the amount claimed, to the effect that the
payment is made in full settlement will bar the unwary creditor from suing
for the full amount of his debt, for example, if a creditor accepts a cheque
and pays it into his own bank account. This is not in fact correct,61 and in
each case the precise language used and conduct on both sides requires to
be examined closely to see whether the creditor's agreement with the
debtor has been expressed or can be implied from his conduct. Thus in one
Scottish Sherriff's Court case a cheque for £216 was sent in response to a
request for payment from the creditor's solicitors for £562, the debtor stat-
ing simply that £216 was the full sum due. The creditor's solicitors replied
saying that the cheque had been cashed but was being treated as payment
on account only. In another Scottish Sherriff Court case a cheque for £98
was sent "in final settlement" of the balance of an account, which the
creditor paid into his account prior to bringing proceedings for the dis-
puted balance. In neither case was the plaintiff barred form pursuing his
claim, though a trial of the issue on the pleadings was ordered in the sec-
ond case. 62 These cases should be contrasted with the language used in the
James Wallace case (supra, note 56). The safest course for a creditor in this
position is to offer to pay in the cheque on account and, failing the debtor's
agreement, to return the cheque. But in principle it will suffice to pay in
the cheque while sending a letter stating that it is accepted on account,
notwithstanding that the debtor has stipulated that payment in will be
taken as acceptance of his settlement proposal. 63 Payment in without
demur might be unsafe, however.
(c) Forbearance to sue
1°079 While closely allied to cases of accord and satisfaction, forbearance to
sue will usually differ in that the consideration for some new promise of
the debtor is the granting of time by the creditor. Usually, therefore, the
60
6
1
See post, Chap. 6.
Day v. McLea, supra, n.52.
62 Lord Dounev. John Dye & Son Ltd. 1972 S.L.T. 30, Sh.Ct.; Henderson v. McDonald Swim-
ming Pools Ltd. 1972 S.L.T. 37, Sh.Ct. :· ;"'
63
See Auriemia Ltd. v. Haigh and Ringrose Ltd. {1988) 4 Const. L.J. 200, pef"Judge Fox-
Andrews Q.C., and the unreported cases there referred to.
SECT. 2] FORMATION OF A SIMPLE CONTRACT 41
.\
l
' debtor will need to accept some additional burden if consideration is to be
present to enable the agreement to be enforced against the creditor (or
indeed if the creditor is to have any practical inducement to enforce the
I! agreement rather than ·the original obligation). Here, again, the agree-
ment will not be enforceable by the forbearing party if he does not believe
his claim to be valid,64 but it will be otherwise if the claim is merely specu-
lative or doubtful or if, while invalid, the forbearing party reasonably
lI believes it to be valid.65
In certain circumstances the promise to forbear to sue may be implied
without any express promise by the creditor (as, for example, if banks
continue to extend credit). 66 But the creditor must show that he seriously
t intended to pursue the claim, and but for the debtor's promise would have
1 done so. The cases in support of this proposition are rather perfunctory in
I dealing with it,67 but as a matter of Principle this must, it is submitted be
I
correct, since otherwise the compromise would be effectively fraudulent.
This, again, can be of practical importance in commerce since it is not
uncommon for a debtor, known tobe impecunious and so not worth suing,
l to be put under constant pressure by a creditor to obtain funds elsewhere
or provide guarantees or security.
I' ( d) Collateral agreements with third parties
i
I
It goes without saying that the foregoing discussion is concerned pri- 1·080
marily with the immediate parties to a contract. Agreements made with
other parties, for example a promise by a third party to pay less than the
sum due from the debtor in exchange for the creditor's agreeing to release
i the debtor from his obligation, are clearly enforceable by the third party,
not the debtor himself, who will not have furnished consideration for the
collateral agreement.
f
I
!
i
(9) Intention to Create Legal Relations
In addition to the presence of consideration ( though the two things will in 1-081
,.j,.
the great majority of cases go together) there must be an intention (as
always in English law, objectively and not subjectively assessed) to create
a lega~ng obli~atio~. This will nearly always be ~scer.tained f~om
I the generhi surrounding circumstances of the transaction m question,
.
I including, for example, whether it is of a commercial or domestic nature.
04
Wade v. Simeon (1846) 2 C.B. 548.
61
Callisherv. Bischoffsheim (1870) L.R. 5 Q.B. 449.
""Alliance Bank v. Broome (1864) 2 Dr. & Sm. 289.
67
Cook v. Wright (1861) 1 B. & S. 559, at p. 569 and Syros Shipping Co. S.A. v. Flaghill
Trading Co., The Proodos C [1980] 2 Lloyd's Rep. 390, at p. 392.
 42 GENERAL PRINCIPLES OF LAW [CHAP.1
ILLUSTRATIONS
1·082 (1) Representatives of an airline which was reducing its staff agreed with
the pilots' union that redundant pilots would be given "an ex gratia payment
approximating to" the total of contributions previously made by the airline to
the pilots' pension fund. Consideration was admitted to be present. Held, by
Megaw J ., (a) the onus of showing no intention to create legal relations, in the
case of an agreement regulating business affairs, was a heavy one and the use
of the words "ex gratia" as part of a promise to pay simply indicated that no
pre-existing liability was present, and were not inconsistent with the inten-
tion; and (b) the words "approximating to" were not too vague to be enforce-
able, and in the circumstances connoted the rounding off downwards to the
nearest round figure of the sums involved: Edwards v. Skyways Ltd. (1964). 68
(2) A parent company wrote a "comfort letter" to merchant bankers when
asking for finance facilities for a subsidiary saying "It is our policy to ensure
that (the subsidiary) is at all times in a position to meet its liabilities to (the
plaintiffs)". Held, by the Court of Appeal, the statement in its context related
to present fact and no promise as to future conduct could be implied. It cre-
ated a moral responsibility only: Klein wort Benson v. Malaysia Mining Cor-
poration (1989). 69
1-083 This will not usually create a problem in the construction field. Usually a
legal obligation to pay a price, whether reasonable or otherwise, lies at the
heart of both large and small projects. Traditional situations which may
give rise to this defence are private domestic agreements, social agree-
ments ( as, for example, club arrangements) and certain express "without
legal obligation" or "honour" agreements. 70 The surrounding circum-
stances, where there is no specific wording excluding liability, may also
show the absence of the necessary intention. Representations made to
induce persons to contract may also be of the "mere puff" variety, 71 and so
not rank as misrepresentations giving rise to liability in contract or tort.
Some cases can be on a difficult borderline, with the courts divided in their
interpretation.
ILLUSTRATION
A representative of forwarding agents assured a long-standing customer
that his goods would be transported in containers carried below decks. The
representation was made in the course of a courtesy call and not relate(\ to any
particular transaction, and indefinite with regard to its duration. Kerr J. held
there was no intention for the statement to be legally binding but held, by the
0
~ [1964] 1 W.L.R. 349.
•• [1989] 1 ·W.L.R. 379.
7
n Rose & Frank v. Crompton (1925] A.C. 445; Taylor v. Brewer (1813) 1 M. & S. 290.
7 n [1976] 1 W.L.R. 1078.
' See Lambert v. Lewis [1980] 1 All E.R. 978; Carhill v. Carbolic Smoke Ball'.'99. [1893]
1 Q.B. 256. See also Esso Petroleum Ltd. v. Commissioners of Customs and Ex'c'ise [1976}
1 W.L.R. 1.
SECT. 2] FORMATION OF A SIMPLE CONTRACT 43
Court of Appeal, that the customer attached importance to the carriage of his
goods below decks and would not have agreed to the changed method of car-
riage by containers but for the promise: J. Evans & Son (Portsmouth) v.
Andrea Merzario Ltd. (1976). 72
In construction contracts there will be relatively few successful
1·084
examples of this defence, whether based on express or implied exclusions
of liability. The Canadian case of Morton Construction v. City of
Hamilton 73 may be regarded as an example. Others might be in the field of
preparatory services (such as preliminary inquiries or sketches by archi-
tects in the hope of obtaining a commission, or preparation of drawings or
pricing of estimates by contractors in the hope of obtaining a contract).74
But the onus will be a heavy one on a defendant putting forward this
defence even in contracts outside the construction field.
However, one area where the absence of the requisite animus contra-
hendi is frequently established is that of collateral agreements or warran-
ties, where absence of the contracting intention reduces the alleged
warranty to the status of a mere representation and its lesser remedies.1 5
SECTION 3. CONTRACTS UNDER SEAL
(1) Generally
A contract under seal ( sometimes called a specialty) is a contract made by 1·085
deed, that is to say, a contract in writing sealed and delivered by the parties
to it. Where an individual is a party to a contract under seal, his signature is
also necessary. A corporation, however, has no signature, and the affixing
of its seal is a sufficient execution of the deed.
It is perfectly possible for a building contract to be in writing sealed by
one party but only signed by the other. In such a case, although the under-
takings of the party sealing the contract claim their validity from that fact,
those of the other party are binding by reason only of such consideration
as may exist (but which in construction contracts will almost invariably be
present.)
There are few practical differences between a valid contract under seal 1·086
and a valid simple contract which is in writing, so far as their construction,
performance and enforcement are concerned. Perhaps the most import-
ant is thi~,4English limitation legislation a right of action on a con-
tract under seal is;in general, barred 12 years after its accrual, whereas a
right of action on a simple contract, whether in writing or oral, is similarly
barred after the lapse of only six years. In cases where only one party
7
·' See supra, Subsection (7), para. 1·063.
74
See infra. Section 11 and post, Chap. 2, Section 9(c) and ( d) and Chap. 3, Section 4(1 ).
7
·' See the cases infra, para. 1·142 and in Section 8; "Collateral Agreements", infra.
 44 GENERAL PRINCIPLES OF LAW
has sealed the contract it would seem the longer period will be available
against him only. From the owner's point of view it is most desirable that
the contract should be sealed by the contractor, since, in the absence of
any contractual provisions cutting down his right to do so, he will be able
to recover damages for any defect in the work which he may discover
within the longer period. It is an important feature of construction con-
tracts that the progressive covering up of work as the contract proceeds
frequently produces concealed defects which escape detection by the
owner's supervisory team. In particular it will only rarely be possible to
detect such defects at the time when the final certificate is given, unless
symptoms have already begun to emerge at that early date.
1·087 A second difference, though of considerably less importance in prac-
tice, relates to the recitals which are commonly found in legally drafted
conveyances and other formal contracts, though not usually in building or
engineering contracts. There is a somewhat formalistic rule that, in a
sealed contract, statements of fact contained in the recitals (as opposed to
the body of the deed) operate by way of estoppel against the parties to the
contract in any action or proceeding based upon the contract itself. Thus if
the recitals to a building contract under seal were to recite that the con-
tractor had examined the site and satisfied himself as to the accuracy of the
site levels and dimensions shown upon the contract drawings, the con-
tractor could not in any subsequent action upon the contract deny that he
had done either of those things (assuming them to be relevant to any dis-
pute, for example to an assertion of mistake or misrepresentation.)
Whether a recital in a deed is intended as an admission by both parties or
by only one of them is a question of construction. In the example quoted,
the admissions would be binding upon the contractor but not upon the
employer also. Similar statements contained in a simple written contract
would not, however, give rise to any estoppel, though they might be some
evidence of the truth of the facts stated. A third difference is that a prom-
ise under seal which is not also supported by consideration cannot be
specifically enforced76 and the covenantee is left to his remedy in damages.
(2) Contracts with Local Authorities
1·088 A natural person can enter into contracts under seal or into simple con-
tracts, but the basic rule of the common law is that a corporation, which is
an artificial legal person, "can only contract under seal, for the proper
legal mode of authenticating the act of a corporation is by means of its
seal" .17 Many statutory exceptions to this rule exist, for example, trading
compan'ies incorporated under the Companies Acts have always been
able to enter into valid simple contracts. 78 But for many years no statutory
1o For the limited availability of specific performance in building contracts, s't:epost, Chap. 4,
Section 4.
11 Per Lord Coleridge CJ. in Austin v. Guardians of Bethnal Green (1874) L.R. 9 C.P. 91.
7K See s.36 of the Companies Act 1985.
[CHAP.1 SECT. 3] CONTRACTS UNDER SEAL 45
exception existed in the case of local authorities, with the result that a
considerable body of case law grew up to deal with the anomalies and
difficulties to which the rule gave rise in practice, and four pages of text in
the eighth edition of this work were devoted to this subject. This is no
longer necessary, since by the Corporate Bodies' Contracts Act 1960 any
person acting under the authority of a corporation, whether express or
implied, can validly enter into a contract on their behalf, whether orally or
in writing. Though the Act does not apply to companies under the Compa-
nies Acts, the Companies Acts' provisions have a similar effect.
The legal difficulties which can arise in relation to contracts made with
corporations or companies can now only be concerned with the extent of
the authority of persons purporting to make contracts on their behalf, and
(to a considerably lesser extent in practice) the operation of the doctrine
of ultra vires which, if the subject-matter of the contract is outside the
purposes for which the corporation was formed or the powers conferred
upon it, may have the effect of invalidating the contract.
SECTION 4. VARIATION OF CONTRACTS
The terms of a simple contract may be validly varied by subsequent agree- 1·089
ment of the parties, so long as there is consideration to support the vari-
ation agreement. If, at the time when the variation agreement is made,
obligations.remain partly unperformed under the original contract by
both parties, there will almost invariably be consideration for the new
agreement. If, however, one party to the contract has wholly performed
his obligations, and thereafter agrees without advantage to himself or det-
riment to the other party to forgo some part of the performance of the
outstanding obligations of the other party, there will be no consideration
to support his agreement to do so on the principles already discussed, see
supra, Section 2(8). The variation agreement will therefore be unenforce-
able if not under seal and the original contract requiring full performance
will remain. However, consideration may be present in such a case if some
bona fide dispute exists and a claim is given up in return for the promise to
accept less.79
Variations of a contract which are not supported by consideration may 1·090
often take the form of a forebearance by a promisee to insist upon full
performance by the promisor of his contractual obligations. A party to a
c o n ~ o has agreed to forgo full performance by the other may sub-
sequen(i y oe prevented from insisting on full performance by the rules of
waiver or estoppel. Neither the doctrines of estoppel nor waiver (see Sec-
tion 9, infra80 ) represent any inroad, however, upon the requirement of
consideration stated above in the context of Variation of contracts, since a
waiver is not permanently binding unless supported by consideration, and
1~ See supra, Subsection 8(b), Accord and Satisfaction.
11t1 See infra, Section 10.
 46 GENERAL PRINCIPLES OF LAW (CHAP. I
a party cannot successfully raise a permanent estoppel unless he can show
that he has subsequently acted to his detriment on the faith of the state-
ment or conduct complained of (as might happen, for example, if an NE
agreed to accept defective work, so that work proceeded and subsequent
repairs would as a result be impractical or very costly). In cases of waiver,
reasonable notice of an intention once more to insist upon full perform-
ance must be given, so as to enable the other party to resume full perform-
ance as before. 81
A simple written contract may be varied by a subsequent oral agree-
ment, and, a fortiori, an oral contract can be varied by a written agree-
ment, or by a deed under seal (in such a case there is, of course, no
necessity for any consideration to support the variation).
At common law a contract under seal could only be varied under seal. sz
In equity, however, it could be varied by a simple contract either written or
oral.83 By virtue of section 44 of the Supreme Court of Judicature (Con-
soldiation) Act 1925, the equitable rule now prevails, with the result that a
contract under seal can in general be varied in the same ways and subject
to the same restrictions as a simple contract.
1·091 None of the foregoing discussion, which relates to changes or variations
made to the contractual provisions of a contract (including, if necessary,
the description of work undertaken) is, however, applicable to variations
of the work ordered under the express power conferred on the owner or
his A/E to order "variations" (United Kingdom) or "changes" (United
States) which is found in nearly all standard forms of construction con-
tract.84 If the work is varied in accordance with this power, no change in the
te:ms of the c~ntract is involved, and the variation order need only comply
with the requrrements of the contract in order to be effective and the
p~esence of consideration becomes irrelevant. If, however, the agrees Affi
with the contractor to vary the contract in some respect which is outside
his express powers under the contract, for example, if he agrees with the
contractor that the maintenance period shall be altered from six to four
months, then the agreement will be unenforceable ( quite apart from any
question of his authority to make it85 ), unless supported by consideration.
SEcrION 5. VOID AND VOIDABLE CONTRAcrs
(1) Generally
1·092 Notwithstanding the fact that an agreement may have been reached which
satisfies the legal requirements as to seal or consideration, in certain cir-
81
Birmingham & District Land Co. v. L.N. W.R. (1888) 40 Ch.D. 268. See infra, para. 1·256.
2
~ Kaye v. Waghorn (1809) 1 Taunt. 428.
83
Steeds v. Steeds (1889) 22 Q.B.D. 537. ~· '
114
See post, Chap. 7, for this subject.
1
"' As to which see post, Chap. 2, paras. 2·061-2·063.
SECT. 5] VOID AND VOIDABLE CONTRACI'S 47
cumstances such an agreement may be unenforceable as a contract
because it is said to be void or voidable. If a contract is void, there is in law
no contract at all. If a contract is voidable, there is a contract valid until
such time as one of the parties takes steps to have it set aside; however, the
right to have it set aside may be lost by delay, or by conduct affirming the
contract, or by some innocent stranger to the contract acquiring rights or
title to property under it. Thus, where there is a contract for the sale of
goods which is void, no title to the goods passes from the seller to the buyer
and accordingly the buyer cannot, in general, pass any title in the goods to
a third party, from whom they can be recovered. If, however, such a con-
tract is only voidable, then title to the goods does pass and only reverts
when the contract is avoided. If, before steps are taken to avoid the con-
tract, the buyer resells the goods, he passes a good title to a purchaser
without notice of the defect of title, and it is then too late to avoid the
original contract.
As will be seen, recovery in quasi-contract may in some cases of 1·093
illegality be permitted where work has been done. The commonest cate-
gories of void contracts are contracts affected by mistake or illegality
(such as contracts in breach of licensing or other regulations), and the
majority of voidable contracts arise as a consequence of misrepresen-
tation, or while not illegal, from failure to comply with requirements, usu-
ally statutory in origin, as to their form, for example where writing, or an
even more formal record such as seal, is required for special categories of
contract. Illegality, which may affect a contract already in being as well as
its formation, is considered in Chapter 4.86 In this Chapter it is proposed to
consider shortly the law relating to mistake and misrepresentation.
(2) Mistake
(a) Of fact
Mistake as to fact, but not as to a general proposition of law, may pre- 1·094
vent the formation of a contract by robbing an apparent agreement of the
reality of consent. "If mistake operates at all, it operates so as to negative
or in some cases to nullify consent."87 A mistake which merely goes to the
motive or purpose of one of the parties cannot prevent the formation of a
contract.88 For example, an owner who, in the mistaken belief that the
subs~':-:?f-~e site has insufficient bearing capability for the building he
desires to erect, signs a contract for piles to be driven, cannot avoid the
contract for mistake when he discovers his error, whether he does so
before or after t~e work has begun.89 Equally, a party who signs a contract
s6 Section 3(6) post, paras. 4·273 et seq.
s7 Per Lord Atkin in Bell v. Lever Bros. Ltd. [1932] A.C., at p. 217.
BS See City of Calgary v. Northern Construction (1986), illustrated infra, para. l · 108.
m Compare the mistake as to planning status in Amalgamated Investment Ltd. v.John Walker
Ltd. (1977), illustrated infra, para. 1·107, see also Frederick Rose (London) Ltd. v. William
Pim & Co. Ltd. [1953] 2 Q.B. 450.
 48 GENERAL PRINCIPLES OF LAW [CHAP. I
under a misapprehension as to the true meaning of its provisions or in
ignorance of those provisions, cannot set up his mistake as a defence to an
action upon the contract.90 If mistake is tO operate at all, there must be an
element of mutuality in the mistake, either in the sense that both parties
were under a common mistake at the time of making their agreement, or
that one party was mistaken to the knowledge of. the other. The only
~xception to this is in certain rather rare cases of mistake where the par-
ties, unknown to each other, mean something different by their contract,91
1·095 Until the decision of the Court of Appeal in Solle v. Butcher92 it would
have seemed a safe statement of the law to say that operative mistake (as
opposed to misrepresentation) always rendered a contract void ab initio,
and not voidable. In that case (and indeed in subsequent cases), however,
Denning L.J. (as he then was) expressed a contrary view, and the court in
fact offered the plaintiff a choice between a new lease at a different rent or
rescission, a remedy hardly applicable to a contract void ab initio. The
question must therefore be regarded as open,9_3 but Lord Denning M.R. 's
view also appears to have been accepted in a case of unilateral mistake by
the Court of Appeal of British Columbia.94 However, unilateral mistake
known to the other party may be in a different category from common
mistake and derive its remedies from the law of fraud or unconscionability
rather than true mistake. The case of Magee v. Pennine Insurance95 sug-
gests that the law as to the exact nature of common mistake was in a state
of confusion in the United Kingdom at the time of the 1979 Supplement to
the tenth edition of this book. In 1983 a majority of the High Court of
Australia supported the Lord Denning voidability view96 but the matter
still seems open in the House of Lords. Its practical importance arises
from the differing effect on the rights of third parties of void and voidable
contracts.
_Mistake of fact may also enable a party to recover sums paid by him, but
this has nothing to do with the avoidance of contract, and depends on the
law of quasi-contract.97
(b) Common mistake
l ·096 If at the time of contracting both parties were under a common mistake
(sometimes referred to as "mutual mistake") as to "the existence of the
subject-matter" of their contract, the contract will be void. Thus where at
the time when a contract was made for assignment of a life insurance pol-
icy the assured was already, unbeknown to the parties, dead, the contract
L'Estrange v. Graucob [1934J 2 K.B. 394.
ll<l
91
See (d), infra.
" [1950] 1 K.B. 671.
2 2 Sollev. Butcher [1950] 1 K.B. 671, at p. 691,per Denning L.J. See also Bellv. Lever Bros.
91
· The power appears to be accepted in Chitty op. -cit. at para. 378.
94
Imperial Glass Ltd. v. Consolidated Supplies Ltd. (1960) 22 D.L.R. (2d) 759, Canada, illus-
trated infra, para. 1·104.
95
[1969] 2 Q.B. 507, illustrated infra, para. 1·105.
% See Taylorv.Johnson [1983}45 A.L.R. 265 (contract for sale Of land) and Chitty Oy. cit. at
para. 327. ,.
97
See infra, paras. 1·261-1·262.
SECT. 5] VOID AND VOIDABLE CONTRACTS 49
was until recently considered to be void,98 or at least voidable.99 If at the
time when a contract for the repair and alteration of a building was signed,
the building had already been destroyed by fire, such a contract would also
be void. (If, however, the building, though standing at the time of the con-
tract, was subsequently destroyed by fire without the fault of either party
and before the works had begun, there would be a valid contract, though it
might be discharged on the ground of frustration. ) 1
A common mistake not relating to "the existence of the subject-mat-
ter," but only to its "quality", no matter how fundamental, is not, it would
seem, sufficient to render the contract void.
"Once a contract has been made, that is to say, once the parties, whatever
their inmost states of mind, have to all outward appearance agreed with suf-
ficient certainty in the same terms on the same subject-matter, then the con-
tract is good unless and until it is set aside for failure of consideration, or for
fraud, or upon some equitable ground. Neither party can rely on his own
mistake to say it was a nullity from the beginning, no matter that it was a
mistake which to his mind was fundamental, and no matter that the other
party knew that he was under a mistake. A fortiori, if the other party did not
know of the mistake, but shared it. "2
(c) Unilateral mistake
Despite the above statement of Denning L.J., where the mistake of one 1·097
party is known to the other cit the time of agreement, such a mistake need
not, as in common mistake, relate to the essential subject-matter of the
contract. In such a case, provided the mistaken party is mistaken as to
what is, objectively regarded, a fundamental term of the contract, the
other party will not be permitted to rebut the mistaken party's plea that
the parties were never ad idem, and the contract will be void (or possibly
f only voidable: see supra). But the mistake must be a mistake as to a term of
the contract,3 and not as to some extraneous matter merely affecting
motive. 4 If one party enters into an agreement under a mistake which is
not only known to but has been induced by the other party, the case is, of
course, even stronger.
If
Where the mistake does not relate to a term of the contract, and has not
been induced by the other party, although such a contract is not void or
voidable, the court may nevertheless refuse to order specific performance
if the party suing "snapped at an offer which he must have perfectly
'f 98
~
Scottv. Coulson [1903] 2 Ch. 249.
I 99
1
Seesupra.
See Taylorv. Caldwell (1863) 3 B. & S. 826 and Chap. 4,Section3(3), infra, "Frustration".
I'
[1932] A.C. 1. Cf Nicholson & Venn v. Smith*Marriott (1947) 177 L.T. 189. It was this
passage suggesting voidability as the basis in all cases which was supported by the majority
of the High Court of Australia in Taylorv. Johnson, supra.
3
As, e.g. in the Imperial Glass case, infra, para. 1-104.
• Smith v. Hughes (1871) L.R. 6 Q.B. 597; Metcalfe Realty Co. v. Elite Interiors Ltd. [1966J
2 O.R. 433 (Canada); City of Calgary v. Northern Construction (1986) 2 W.W.R. 426, illus-
trated infra.
 50 GENERAL PRINCIPLES OF LAW [CHAP. I
well known to be made by mistake",5 and in such a case the party will be
left to his remedy at law for damages.
1·098 Cases illustrative of these principles have chiefly been concerned with
mistaken identity. Thus if A., posing as B., makes an offer which C. accepts
in the belief that it comes from B., the contract is void provided always that
the identity ofB. was material and that B. in fact existed.6 In such a case A.
is also, of course, guilty of a fraudulent misrepresentation as to his ident-
ity, so that the contract is in any event voidable,7 but, as has been pointed
out, if an innocent third party has acquired rights under a contract the
defrauded party will be bound by the contract unless it was wholly void, so
the distinction between mistake or misrepresentation may sometimes be
vital.
There is an analogous situation in which there is also no contract, but it
is not a true illustration of operative mistake. If A. makes an offer to B.
which is received and accepted by C., there is no contract, simply because
C. cannot accept an offer which has not been made to him. aThus if a build-
er submits a tender to X., a private person, the tender cannot be accepted
so as to form a binding contract by the X. Co. Ltd. (If, however, after
receipt of the purported acceptance by the X. Co. Ltd., the builder begins
work, he may by his conduct have accepted the counter-offer to work for
the company, and there will then be a valid contract between himself and
the company.)
(d) Parties mistaking each other
1·099 A further class of mistake which can frequently arise in practice occurs
where each party to the contract unwittingly attaches a different meaning
to the agreement, or a particular term of it. In the vast majority of cases,
the courts will apply the usual objective tests of construction to the lan-
guage used and conduct of the parties when making the agreement, and if
it was understood by one of the parties in a sense conforming to that con-
struction, will uphold the contract accordingly. 9 But in a rare class of case,
the parties may, through no fault on either side, mean something different
by the contract which they have apparently made, and if the objective test
of construction assists neither party, the contract will be avoided. The
classical example of this type of mistake is to be found in the case of Raffles
v. Wichelhaus (1864), 10 illustrated below. Equally there can be a further
class of mistake where both parties are mistaken as to the meaning of the
I have bought them had he not believed them to be old. But the plaintiff had
f
I''
> Tamplin v. James (1880) 15 Ch.D. 221; Webster v. Cecil (1861) 30 Beav. 62.
6
Cundy v. Lindsay (1878) 3 App.Cas. 459; King's Norton Metal Company v. Edridge (1897)
14 T.L.R. 98;Phi/lipsv. Brooks [1919] 2 K.B. 243. And see Lewis v.Averay (No. 2) [1973]
1 W.L.R. 510, C.A.
1
See infra, para. 1·127 et seq.
"Bou/ton v. Jones (1857) 2 H. & N. 564.
9
This is so even where one party informs the other of the interpretation he places upon the
contract before the contract is signed. The true construction of the agreement .will still
prevail; see Bootv. City of London Corp. [1959] 1 W.L.R. 1069, infra, para. 1·115.:.
11
'2 H. & C. 906.
SECT. 5] VOID AND VOIDABLE CONTRACTS 51
contract, as in Frederick Rose (London) Ltd. v. William Pim Ltd. (1953) 11
also illustrated below.
(e) Non estfactum
Finally, under the heading of mistake which prevents the formation of 1·100
contract, there is the defence of non est factum, which is of ancient origin
arising before the emergence of a consensual law of contract. If a party
signs a document under a mistake as to its fundamental character and
effect, he can subsequently deny that it was "his deed" in law, with the
result that the contract will not be binding upon him. 12 A mistaken belief
merely as to the contents of the contract is not sufficient. 13 The disparity
must be "radical" or "very substantial", and the plea may be defeated if it
was negligent to sign the document. 14 If a builder were to sign a contract
under the belief that it was for the building of one house whereas in truth it
was for the building of two houses, the plea of non est factum would not be
available to him. If, however, he signed a contract which he believed to be
for the construction of a house whereas in truth it was for the purchase of a
house, then the contract would not be binding upon him. This rule, in the
very rare cases in which it can be applied, affords some mitigation of the
principle stated in L'Estrange v. Graucob. 15
ILLUSTRATIONS
(1) The defendant, having a set-off against B., ordered goods from him. The 1·101
plaintiff having, unknown to the defendant, taken over B. 's business, supplied
the goods ordered. Held, that there was no contract of sale for the goods
between the plaintiff and defendant: Boulton v. Jones (1857). 16
(2) A commercial contract provided for the sale of cotton by A. to B. "ex
Peerless from Bombay". In fact, two ships named Peerless sailed from Bom-
bay, one in October and the other in December. The buyer proved he meant
the October vessel, while the seller meant the December one. Held, the con-
tract was void: Raffies v. Wichelhaus (1864). 17
: ~ e plaintiff sold a quantity of oats to the defendant knowing that the
diie;•.::.<illl: erroneously believed them to be old oats and that he would not
11 [1953] 2 Q.B. 450.
12 Thoroughgood's Case (1584) 2 Co.Rep. 9; Saunders v. Anglia Building Society [1971] A.C.
1004.
13 Blay v. Pollard [1930} 1 K.B. 628.
14 Saunders' case, illustrated infra.
15 Infra. See, however, the strict limitations on the rule enunciated in Gallie v. Lee [1969]
2 Ch. 17, illustrated infra.
16
H. & N. 564.
17 2 H. & C. 906.
 52 GENERAL PRINCIPLES OF LAW [CHAP. l
not induced the defendant's mistaken belief by any representation, neither
did the term "old" form part of the description of the oats sold. Held, that the
contract was not void for mistake: Smith v. Hughes (1871).is
(4) The defendant signed a deed believing it to be a transfer to the real
owner of an interest held by himself as nominee. Actually it was a mortgage
under which the defendant acknowledged receipt of £1,000 and agreed to
repay it with interest. The µiortgage was later transferred to the plaintiff, who
was innocent of the deception. Held, the defendant was not bound by the
deed: Howatson v. Webb (1907). 19
(5) The defendant signed a document which he knew related to a dissol-
ution of partnership, but which contained certain terms of which he was not
aware and to which he would have objected had he known of them. Held, that
he was bound by the document and could not raise the defence of non est
factum: Blay v. Pollard (1930).20
H02
( 6) The plaintiffs employed the defendant as managing director of one of
their subsidiary companies upon a five-year agreement. Before the agree-
ment expired the defendant became redundant and the plaintiffs agreed to
pay him compensation for loss of office. Subsequently the plaintiffs dis-
covered that the defendant had committed breaches of his agreement for
which he could have been dismissed without compensation. Held, that there
was no common mistake which rendered the agreement to pay compensation
void: Bellv. Lever Bros. (1932).21
(7) The plaintiff signed a printed sales agreement for the purchase of a slot
machine. In small print at the foot of the agreement it was provided that any
express or implied condition, statement or warranty was excluded. The
machine failed to work and the plaintiff brought an action alleging, inter alia,
that she knew nothing of the exclusion. Held, that the plaintiff having signed
the agreement without having been induced to do so by fraud or misrepresen-
tation was bound by the exclusion clause, whether or not she knew of its exist-
ence when she signed the agreement: L'Estrange v. Graucob (1934). 22
(8) The defendant leased a flat to the plaintiff at£250 a year. Both parties,
who were in business as estate agen~, believed that the premises were not
controlled under the Rent Acts, on the ground that they were of different
identity from a letting of the property in 1938 at £140 a year. Subsequently it
transpired that the 1938 letting had established a standard rent of £140 and
the premises were controlled. After the lease was executed, the plaintiff sued
for repayment of excess rent paid by him. Held, by the Court of Appeal (Jen-
kins L.J. dissenting on the ground that the mistake was a mistake of law), that
the lease should be set aside, on the defendant undertaking, after serving the
necessary notices to permit the standard rent to be raised to £250, to grant a
new lease at that rental to the plaintiff: Solle v. Butcher (1950).z.l
H03 (9) Plaintiff merchants received an inquiry from the Middle East for a type
of bean described as "feveroles". The plaintiffs inquired of the defendant
merchants in tum. Neither had heard of "feveroles" but the defendants inno-
1~ L.R. 6 Q.B. 597.
19
[1907) 1 Ch. 537.
20
[1930] 1 K.B. 628.
21
[1932] A.C. 161. ,·
22
[1934] 2 K.B. 394. Consumer legislation deals differently with this today, of colli'Se.
' [1950] 1 K.B. 671.
2
SECT. 5] VOID AND VOIDABLE CONTRACTS 53
cently misrepresented to the plaintiffs that "feveroles" were the same as
"horse beans" (in fact they were one of three special sizes of horse bean). In
consequence the plaintiffs contracted to buy from the defendants 500 tons
described as "Moroccan horse beans". Simultaneously the defendant sellers
purchased the same quantity from their own suppliers (with as it happened, a
different size of horse bean correctly described as "feves" in that contract),
and the-plaintiffs similarly sold on to their customers in Egypt, who on deliv-
ery brought proceedings on discovery of the incorrect size of bean being sup-
plied. The plaintiff buyers brought proceedings for rectification of their
contract with the defendant sellers. They proposed in the event of being
granted rectification to bring proceedings on the rectified contract for failure
to deliver the correct feveroles. Held, by the Court of Appeal, the claim to
rectification must fail. Per Denning L.J., there was undoubtedly a common
mistake, induced innocently by the defendants, as to the existence of the sub-
ject-matter of the contract. This would have entitled the plaintiffs to have the
contract set aside had they acted in time. But they had not taken this position,
and there were now other contracts in being on each side which were not
affected by the mistake: Frederick Rose, (London) Ltd. v. William Pim Ltd.
(1953)."
(10) A. quoted to B. in terms which showed that he had made an error in 1·104
computing his price. B. entered into a binding contract with C. in regard to the
same subject-matter on receipt of A.'s quotation, without noticing the error.
B. later noticed the error, but accepted A.'s quotation without informing A.
of the mistake. Held, by the Court of Appeal of British Columbia, that it does
not necessarily follow that an offeree comes under a duty to reveal knowledge
or awareness of a mistake by the offeror or that failure to do so gives ground
for rescission, unless the circumstances are such as to support an inference of
fraud in concealing awareness of the mistake. There were no grounds for set-
ting aside the contract on its particular facts: Imperial Glass Ltd. v. Consoli-
dated Supplies Ltd. (1960). 25
(11) A wrestling promoter paid licence fees over a four-year period on a
daily and not an annual basis, in the mistaken belief, shared by the licensing
inspector, that the relevant by-laws so provided. On discovering the mistake,
he claimed sums for over-payment of fees. Held, by the Supreme Court of
Canada, he was entitled to recover: Jacobs v. City of Regina (1964). 26
(12) A vendor sold a house "subject to the existing tenancy thereof". Both 1·105
vendor and purchaser thought there was an existing statutory tenancy affect-
ing the house. The occupant left the house four months later, and it transpired
that the statutory tenants, whose son he was, had died some time previously in
circumstances which made it doubtful if he had any statutory tenancy at all.
~,;;:.. value with vacant possession was £2,250 and subject to a tenancy was
"£850. The purchaser sued for specific performance. Held, there was a com-
mon mistake as to a fundamental matter, even on the footing that it had been
open to the occupant to claim a statutory tenancy, and there was equitable
jurisdiction to set aside the sale: Grist v. Bailey (1967). 27
(13) A condition of a contract for the sale of land was that it included "four-
teen acres of tobacco-growing quota". Both parties were mistaken as to this.
24
[1953] 2 Q.B. 450. See infra, para. 1· 120, where this very interesting case is further illus-
trated on the reasons why rectification was not permitted.
25
22 D.L.R. (2d) 759, Canada. See also Alampiv. Swartz (1964) 43 D.L.R. (2d) 11, Canada.
l 1964 S.C.R. 326, Canada.
6
"[1967] Ch. 532.
 54 GENERAL PRINCIPLES OF LAW [CHAP.1
Held, on the facts this was a false and fundamental assumption going to the
root of the contract, which was accordingly void ab initio: R. v. Ontario
Tobacco Growers Marketing Board, exp. Grigg (1965).28
(14) In 1961 M. made certain mis-statements when applying for an
insurance policy on a car, to the effect that he himself had a provisional
licence, and that his son of eighteen would also drive the car. In fact he had no
licence, and the car was intended for the exclusive use of the son. The policy
was renewed from year to year, and transferred to a new car, when in 1965 the
son had an accident which damaged the car, and the father's claim for the
damage was compromised by agreement at a certain figure. A few days later
the insurance company discovered the true state of affairs, and sought to
avoid the agreement. Held, by Lord Denning M.R., following Solle v.
Butcher, that the contract was not void at law but was voidable in equity; by
Fenton Atkinson L.J., that the contract was void for a common mistake in a
fundamental and vital matter; and per Winn L.J. (dissenting), that the case
was indistinguishable from Bellv. Lever Bros., since the mistake did not relate
to the subject-matter of the contract, but only to the rights of the parties:
Magee v. Pennine Insurance (1969). 29
1,106 (15) A widow of 78 knew that her favourite nephew wished to raise money
on the house in which she lived, and signed a document which she could not
read, being without her glasses, on being told by a business associate of the
nephew, in the nephew's presence, that it was a gift of the house to the
nephew. In fact it was a purported sale to the business associate, who then
mortgaged the house to a building society. On a claim by the mortgagees for
possession, the widow pleaded non est factum. Held, by Russell and Salmon
L.JJ ., that the character and class and legal consequences of the document she
intended to sign were not so different from the reality, in spite of its being in
favour of a different person, as to found a plea of non est factum; by Lord
Denning M.R., that, not having required the document to be read to her, she
was estopped by her conduct from saying, as against the building society who
had advanced money in good faith, that it was not her deed: Gallie v. Lee
(1969). 30 Held also by the House of Lords (sub nom. Saundersv.AngliaBuild-
ing Society) and affirming the Court of Appeal, negligence would disentitle a
person from relying on a plea of non est factum. Moreover, the old distinction
in the cases between a mistake as to the character or nature of a document and
a mistake as to its contents was not satisfactory. The mistake must relate to its
practical effect and the disparity must be very substantial or fundamental:
Saunders v. Anglia Building Society (1971). 31
1,107
(16) A Polish property owner unable to speak English received $50 for a
six-month option to purchase his property. His agent had told him to expect a
further $50, and when he accepted this later payment he signed what he
thought was a receipt, but was in fact a second option. Held, by the High Court
of Australia, negligence was irrelevant as between the immediate parties, in
the absence of third party rights being prejudiced, and the second option must
be set aside: Peter/in v. Allen (1975).32
211
[1965] 2 O.R. 411, Canada.
m [1969] 2 Q.B. 507.
30
[1969] 2 Ch. 17; aff'd. sub. nom. Saunders v. Anglia Building Society [1971] 1 A.C.1004,
H.L.
JI {1971] A.C.1004. ~·
32
46 A.L.J.R. 239. See also in the English Court of Appeal the avoidance of a guarantee
signed by an illiterate person in Lloyd's Bank Plcv. Warehouse (1990) C.I.L.L. 566.
SECT. 5] VoID AND VOIDABLE CONTRACTS 55
(17) A purchaser asked a vendor in August whether the property was desig-
nated as of special historical interest, and was correctly informed that it was
not. Before the sale on September 25, however, the decision was taken in the
appropriate government department to list the building, but on the date of the
sale on September 25 the decision to list had not yet been communicated, and
the vendor was officially informed of it on the following day. As a result of the
listing it was worth a small fraction of the purchase price. Held, by the Court of
Appeal, there was no mistake at the time of the contract and the fact of listing
(not the prior internal decision to list), was the relevant matter the parties had
in mind: Amalgamated Investment & Property Co. Ltd. v.John Walker & Sons
Ltd. (1977)."
(18) The city of Calgary's conditions of tender were very similar to those in 1· 108
the Ron Engineering case34 entitling the contractor to withdraw his tender at
any time before the time fixed for opening tenders, but thereafter forfeiting
his deposit or entitling the City to damages should he subsequently withdraw
or fail to enter into a formal construction contract when required to do so. An
employee of the contractor attended the opening, and informed him that his
bid was the lowest by $395,000.. The contractor informed the City on the same
day that he had inadvertently omitted to add into his tender a sum of $181,000
representing some of his own work, and he ultimately refused to complete the
agreement unless the price was raised by $181,000. The City sued for damages
(which as it happened were less than the amount of the deposit). Held, by a
majority of the Alberta Court of Appeal, that, following the Ron Engineering
case, there was a breach of the earlier tender contract and that disposed of the
matter and entitled the City to recover the difference between the higher
tender which it ultimately placed and that of the contractor. Held further, by
Kerens J.A., that since the damages required to be calculated by reference to
the notional construction contract which the contractor should have entered
into, if was necessary to decide whether that contract could have been con-
cluded by the City's acceptance of it after the mistake was known. The con-
tractor's mistake, though now known to the City, was not, following Smith v.
Hughes 3s and Imperial Glass v. Consolidated Suppliers,'36 and not following
Belle River Community Arena v. Kaufmann, 37 a mistake as to a term of the
contract, but one of motive only, nor were there any grounds of unconscion-
ability or of unequal bargaining power or of a grossly inadequate consider-
ation to justify equitable intervention: City of Calgary v. Northern
Construction Ltd. (1986). 38
(3) Rectification
Mi~take_]Wich prevents the formation of a contract is to be distinguished 1·109
from Iliistake in the written expression of the agreement between the par-
ties. In the latter case the mistake does not invalidate the contract, but may
entitle one of the parties to have the written contract rectified by the court
so as to make it accord with the true agreement of the parties. In truth, it is
little more than a rule of evidence, as an exception to the rule that parole
n [1977] 1 W.L.R. 164.
,. See supra, para. 1·191-1·193.
35
See supra.
:l<i See s11pra.
37
(1978) 87 D.L.R. (3d.) 761.
38
[1986] 2 W.W.R. 426; affd. {1987] S.C.C.D 980, Sup. Ct., Canada.
 56 GENERAL PRINCIPLES OF LAW [CHAP.!
evidence will not be admitted to contradict or vary the terms of a written
agreement, though it is seldom discussed in these terms. Nevertheless, it is
convenient to consider the scope of the remedy of rectification at this
point.
1·110 If parties enter into an agreement, but there is an error in the reduction
of the agreement into writing, so that the written contract fails to express
accurately the common intent of the parties (whether by mis-statement,
omission or by the inclusion of prov_isions contrary to that intent) then the
court will correct the written contract so as to make it conform to the com-
mon intent. If, of course, the parties agree that the written contract is
erroneous, they can rectify it without reference to the court. It is only
when one party seeks.to adhere to the existing wording of the contract that
proceedings for rectification become necessary. It is not, however, necess-
ary that there should have been a previous agreement on all matters
before the execution of the written document which is sought to be recti-
fied. It is sufficient if there was prior agreement and a common continuing
intention on the point upon which rectification is sought.39
"It is sufficient to find a common continuing intention in regard to a particu-
lar provision or aspect of the agreement. If one finds that, in regard to a par-
ticular point, the parties were in agreement up to the moment when they
executed their formal instrument, and the formal instrument does not con-
form with that common agreement, then the court has jurisdiction to rectify,
although it may be that there was, until the formal instrument was executed,
no concluded and binding contract between the parties."40
The prior agreement may be oral only, and it is immaterial that the con-
tract itself is required to be under seal.41
1·111 On the other hand, a plaintiff seeking rectification will require "strong
evidence" or a "high standard of proof" within the ordinary civil standard
of balance of probability in establishing, against the contention of the
defendant, not only that there has been a mistake, but that there was a
clear common agreement which the unrectified contract does not
express.42 In effect, this means that the plaintiff must be able to indicate
with reasonable precision the substance of the alterations which he desires
the court to make to the written documents, though it is not necessary to
prove prior agreement as to any exact form qf words. 43 Furthe·rmore, the
evidence must be such as to leave no fair or reasonable doubt that the
written document does not embody the final intention of the parties.
3
Shipley Urban District Council v. Bradford Corporation [1936J Ch. 375, 598; Crane v.
~
Hegeman-Harris Inc. [1939] 1 All E.R. 662; Carlton Contractors v. Bexley Corporation
(1960) 60 L.G.R. 331; Earlv. Hector Whaling [1961] 1 Lloyd's List Rep. 459;Joscelyne v.
Nissen [1970] 2 Q.B. 86, C.A.
40
Crane's case, see supra, at p. 664,per Simonds J.
4
' Shipley Urban District Council v. Bradford Corporation; Carlton Contractors v. Bexley
Corp., supra.
42
See per Buckley andBrightmanL.JJ. in Thomas Bates&SonLtd. v. Wyndham's;_(Lingerie)
Ltd. [1981] All E.R.1077, at pp.1085, 1090. ,,.
4 D.L.R. (2d) 671, Canada.
; See M.R. Hornibrook Ltd. v. Eric Newham (1971) 45 A.L.J.R. 523.
SECT. 5] VOID AND VOIDABLE CONTRACTS 57
"The court can only act if it is satisfied beyond all reasonable doubt that the
instrument does not represent their common intention and is further satisfied
as to what their common intention was. For let it be clear that it is not suf-
ficient to show that the written instrument does not show their common
intention, unless positively also one can show what their common intention
was." 44
Thus there can be no rectification if the defendant never knew of or 1·112
accepted what is said to be the common intention45 (in other words, a case
of simple unilateral mistake). The written contract may not express accu-
rately the plaintiffs' intention or expectation, but if, in the absence of fraud
or misrepresentation by the defendant, it does reflect the defendants'
intention, the contract cannot be rectified. 46 So, too, if both the earlier and
the later agreements state the intention of both parties who are equally
mistaken in each case, and the later agreement simply restates what both
parties had previously agreed under a common mistake, there may be mis-
take avoiding the contract, but not rectification and enforcement. 47
It has been seen that in evolving the doctrine of mistake the law has 1·113
been more willing, for readily intelligible reasons, to avoid a contract
where a unilateral mistake known to the other party can be established,
than in the case of a common mistake, where a mistake of a more funda-
mental character is required. On principle, therefore, it was submitted in
the eighth edition of this work that the remedy of rectification should be
available in appropriate circumstances if a unilateral mistake known to
the other party could be shown, rather than a common mistake, and this
has now been established beyond doubt. If the parties are agreed, but the
formal contract fails to express the common intention by reason of a mis-
take of one of the parties of which the other is aware, and he keeps silent
and then seeks to rely on the formal contract, he will not be permitted to
resist a claim for rectification by alleging the absence of common intent.48
"Two things seem quite plain: that the defendants cannot be heard to say in
this court as a defence to an equitable claim to rectification that they misap-
prehended their own document ... still less can they be heard to say that they
did not misapprehend it, but sought to gain an advantage over the plaintiffs
by getting past the plaintiffs, without their being made aware of it, a change in
-~JJ!igation ... " 49
In such a case there is common agreement, which the defendant cannot 1·114
escape by proof of his own sharp practice in failing to disclose the mistake
.. Crane's case [1939] 1 All E.R. 662, at p. 664, per Simonds J.
45
Fowlerv. Scottish Equitable Life Insurance Society (1858) 28 L.J.Ch. 228.
-i,; See, e.g. Royston Urban District Council v. Royston Builders Ltd. (1961) 177 E.G. 589,
illustrated post, para.1·247.
-<1 See Frederick Rose (London) Ltd. v. William Pim Ltd. [1953] 2 Q.B. 450, illustrated infra.
48
Monaghan County Council'v. Vaughan [1948] LR. 306; George Cohen & Sons Ltd. v.
Dock:, Executive (1950) 84 Ll.L.R. 97; A. Roberts & Co. Ltd. v. Leicestershire C.C. (1961]
1 Ch. 555, illustrated infra, paras. 1·118-1·121; and see McMillan v. Chapman (1953) 2
•
9
Cohen's case (1950) 84 Ll.L.R. 97, at p. 111,per Evershed M.R.
 58 GENERAL PRINCIPLES OF LAW (CHAP.!
and his own change of intent to the plaintiff. 50 However the Court of
Appeal has now made it clear that it is not necessary, as used to be
thought, to show an element of fraud, misrepresentation, unfair dealing,
or sharp practice by the defendant. It is sufficient for it to be inequitable to
allow a party to insist on the binding force of the document, 51 but the mis-
take of a party must be actually and not merely constructively known to
the defendant. 52 On the other hand, if the defendant does not know of the
mistake, it is immaterial that he has not taken action or suffered detriment
as a result of the agreement, and he is entitled as of right to insist on it
being performed according to its original terrns. 53 It is perhaps unnecess-
ary to emphasise, however, that the parties must have been in agree-
ment-it is not enough that, without any prior agreement, one party
knows that the other is mistaken as to a term or its meaning. The following
case is not one of rectification, but illustrates the principle.
ILLUSTRATION
1· 115 A local authority decided to alter the fluctuations clause in its contract so as
to exclude from its operation payments under a holidays-with-pay scheme. It
accordingly wrote to contractors (including the plaintiff) notifying them of
the change in the wording and of its purpose and intended effect. Later the
contractor entered into a contract with the authority which used the new form
of wording, and at the end of the work claimed that the wording still entitled
him to increases in the cost of the holidays-with-pay stamps. The local auth-
ority sought to rely on their letter in support of the construction of the words
for which they were contending. Held, by Lord Somervell in the Court of
Appeal (approved on this point in the House of Lords), that the letter could
not be received in evidence: Boot & Sons Ltd. v. City of London Corp.
(1959)."
In the George Cohen case rectification was ordered of a document prof-
fered by the defendants. In such a case, too, if a party proffers a draft
purporting to give effect to an accord, this may well, depending on the
facts, amount to a representation giving rise to an estoppel, but it must be
intended and foreseeable that it would be relied upon. 55 Whilst relief upon
a defective instrument is more readily awarded against the party who pre-
pared or proffered it, nevertheless the plaintiff can, in a proper case,
obtain rectification of his own document. 56
50
See, e.g. McMillan v. Chapman (1953) 2 D.L.R. (2d) 671, Canada.
51
Thomas Bates & Son Ltd. v. Wyndham's (Lingerie) Ltd. [1981] 1 All E.R. 1079 where the
Court of Appeal reviewed in depth the question of unilateral mistake.
52
Agip. S.p.A. v. Navigazione Alta Italia S.p.A. (1984) 1 Lloyd's Rep. 353, C.A.
53
Centrovincial Estates v. Merchant Investors Assurance [1983) Com. L.R. 158.
s, [1959] 1 W.L.R. 1069. See also Royston Urban District Council v. Royston Builders Ltd.
(1961) 177 E.G. 589,post, para. 1·247.
"Agip. S.p.A. v. Navigazione Alta Italia (1984) 1 Lloyd's Rep. 353, C.A.
56
Collett v. Morrison (1851) 9 Hare 162;Jadis v. Porte (1915) 8 W.W.R. 768, Canada.
SECT. 5] VOID AND VOIDABLE CONTRACTS 59
There have also been cases between vendor and purchaser in which the 1·116
defendant has known of and sought to take advantage of a slip made by
the plaintiff in drawing up a lease or other conveyance and, notwithstand-
ing that the mistake has been unilateral, the defendant has been put to his
election either to have the deed rectified or to have it set aside. 57 The basis
of these decisions has now been seriously questioned in the Court of
Appeal,58 and it should be remembered that they were decided before it
was established that rectification was available in cases of unilateral mis-
take known to the other party.
If rectification of a written contract is granted, then the contract is to be
treated as rectified ab initio and not merely as from the date of the order of
the court. Thus the defendant may be successfully sued for a breach of the
contract committed before rectification, notwithstanding that it was no
breach by the terms of the unrectified contract.
Rectification in the sense discussed in this chapter depends upon differ- 1·117
ences between agreements made prior to the contract and the final terms
of the contract itself. The words "rectification" or "rectify" are often used
by the draughtsmen of building and engineering contracts in a quite differ-
ent sense, namely, to describe a process of resolving, under the terms of
the contract, discrepancies between the drawings, specification or bills of
quantities, or arithmetical inaccuracies in the bills of quantities.59 Some-
times errors in the bills or in arithmetic may result in an accepted contract
sum differing from the correctly calculated total of the prices in the bills.
In general such difficulties can, it is submitted, only be resolved by giving
effect to any relevant provisions of the contract governing the correction
of errors and the adjustment of the contract price according to the ordi-
nary rules of construction, and not by resort to the legal remedy of rectifi-
cation, since it can very rarely, it is submitted, be shown that the
pre-contract common intention of the parties was that the contract price
should be the true arithmetical total of the prices in the bills, or that it
should be a sum corrected to take account of some other error in the bills,
unless this can be established by the terms of the contract documents
themselves.60 It has already been noted that the law of unilateral mistake
will not avail a party seeking to set aside such a contract unless the mistake
is (su~tjypJ.y) known to the other party. Furthermore, an internal mis-
take in calculating the price goes to motive rather than to a fundamental
term of the contract, it is submitted. 61 In fact most modem building and
engineering contracts contain express provisions designed to ensure that
the tendered price (which may well have determined the selection of the
57
Garrard v. Frankel (1862) 30 Beav. 445; Paget v. Marshall (1884) 28 Ch.D. 255.
ls Riverlake Properties Ltd. v. Paul [1975] Ch. 133 and see Chitty op. cit. at para. 362.
59
See, e.g. Clause 10 of the pre-1963 RIBA standard form with quantities, Oause 12 of the
1963 RIBA standard forms, and Clause 6 of the 1955 ICE form.
r.o For a discussion of this topic with particular reference to the standard forms of contract, see
post, Chap. 7, Section 1(2)(b), paras. 7·015-7·019 and Chap 8, Section 1(2)(b)(v), paras.
8·047-8·048.
61
See supra, paras.1 ·102-1 ·106, and the cases of Imperial Glass Ltd. v. Consolidated Supplies
Ltd. and of City of Calgary v. Northern Construction Ltd. there illustrated.
 60
GENERAL PRINCIPLES OF LAW [CHAP.1
contractor and the decision to proceed with the project) should prevail
over any pricing errors of the contractor concealed within it. 62 Contractual
provisions for the correction of errors are considered infra, Section 9(3),
"Discrepancy and Divergence" Provisions, and post, Chapter 8, Section
1(2)(b).
The following are examples.of rectifica~ion in the legal sense associated
with the law of mistake.
ILLUSTRATIONS
1·118 (1) A contractor verbally stipulated at the time of tendering that a pro-
vision conferring finality upon the surveyor's decisions should not be insisted
upon, and this was agreed to. The surveyor refused to certify the amount to
which the contractor claimed to be entitled, and the employers relied on the
absence of a certificate. Held, as the contractor had entered into the contract
on the understanding that the certificates would not be binding, he was
entitled to have the contract rectified: Simpson v. Metcal/(1854). 63
(2) The defendants contracted to build an exhibition building for X. By the
contract the contract price was divided into two parts: (a) the actual cost of
labour and materials; (b) a fixed fee of £140,000. It was a term of the contract
that X.'s maximum liability should be £1,209,250 and that any "over-run"
should be borne by the defendants. The fee of £140,000 was divided as to
£70,000 for expenses and overheads and £70,000 for job-profit, but subject to
the over-run. The defendants employed the plaintiff as architect for the works
under a supplemental written agreement which provided that he should be
paid a minimum fee of £13,000 and "such further amount (not exceeding
£20,000 in all) as shall be equal to two equal seventh parts of the amount
which the company ( the defendants) shall under the terms of the building
agreement receive and retain in respect of the fixed fee of £140,000 payable
thereunder to the company." A dispute arose as to whether the two-sevenths
was to be calculated with or without deduction of the over-run from the fixed
fee of £140,000. Held, by the Court of Appeal, that, on the true construction of
the supplemental agreement, the plaintiff was entitled to two-sevenths with-
out prior deduction of over-run, but since on the evidence the plaintiff had
prior to the execution: of the agreement at all times accepted that his fee
should be subject to prior deduction of over-run, the agreement would be
rectified: Crane v. Hegeman-Harris Co. Inc. (1939). 64
1·119 (3) The plaintiffs advertised inviting tenders for the demolition of a work-
house. The advertisement did not make it clear whether it was intended that
the contrac(or should be paid or make payments for the work, but the specifi-
cations showed that it was intended that he should offer to make payments in
his tender, as the materials were valuable. The defendant noticed the ambi-
guity and took legal advice on the meaning of the specification, and then ten-
dered as follows: "Tender for demolition of Clones Workhouse according to
specifications, £1,200." The plaintiffs accepted this tender, and a formal con-
tract was later executed providing clearly for payment by the plaintiffs to the
6i See, e.g. Clause 13 of the 1963 RIBAconditions, and see post, Chap. 8, Section 1(2)(b)(v),
paras. 8·047-8·048.
63 24 L.T.(O.S.) 139.
64
[1939] 1 All E.R. 662.
SECT. 5] VOID AND VOIDABLE CONTRACTS 61
defendant. Held, the plaintiffs by their advertisement and the defendant by
his tender had both in fact intended to contract for payment by the defendant
to the plaintiffs. The defendant had attempted to take advantage of the plain-
tiff's error and his conduct was dishonest and approximated to fraud, and the
contract could be rectified: Monaghan County Council v. Vaughan (1948). 6s
(4) The plaintiffs and defendants, in negotiation for the renewal of the
plaintiff's existing lease of warehouse premises, agreed that the new lease
should be prepared by the defendants' solicitor and that "terms and con-
ditions in the present lease to be embodied in the new lease where appli-
cable". The old lease contained a covenant by the defendants to keep the
quay walls bounding the demised premises in repair, but in the defendants'
solicitor's draft this covenant was omitted. This omission was not pointed out
to the plaintiffs by the defendants nor did the plaintiffs discover it until after
the lease had been executed. Held, that the new lease should be rectified by
the insertion of the defendants' former covenants to repair the quay walls:
George Cohen & Sons Ltd. v. Docks Executive (1950). 66
(5) Both parties to a contract of sale of horse beans knew that the buyers l·UO
had been requested by their sub-buyers to supply beans described by them as
"feveroles", and both parties after inquiries by the sellers believed that
"horse beans" were the same as "feveroles", and would satisfy the require-
ments of the plaintiff's sub-buyers, whereas feveroles were in fact a special
size of horse bean (see the facts more fully illustrated supra, paragraph 1·060).
The contract ultimately concluded between the plaintiffs and defendants
described the consignment as "horse beans", and the beans supplied con-
formed to that description, but were not feveroles, but a different size called
"feves". Both parties thought they were buying and selling "feveroles". The
buyers sought rectification, and would then have sued the sellers on the recti-
fied corftract. Held, by the Court of Appeal, that while the contract might have
been avoided at an earlier stage for a common mistake67 it could not be recti-
fied. The parties' oral agreement and the later written agreement both em-
bodied the same mistake. It was not a case of the later document not giving
effect to an earlier agreement: Frederick Rose London Ltd. v. William Pim
Ltd. (1953).~
[Note: Notwithstanding that the parties' mistake was caused by the defend-
ants, it is respectfully submitted that this decision was on analysis entirely
correct_. It would have worked injustice to allow rectification since, if the
description of the beans was to be altered so, too, would the price have to be
'""""re-c2,Ipulated as well. Not even that would avoid injustice as between the par-
u.;;,, since other contracts, both "upstream" and "downstream", were
involved which could not possibly be affected by the operative mistake as
between the plaintiffs and defendants.]
(6) A contractors' revised tender specified a period of completion of 18 1·121
months. The county architect and his assistant decided that the period should
be 30 months, and caused the clerk's department to draw up formal contract
documents accordingly, which meant that the same month but a different
year was shown as the date for completion. The contractors were then
informed by letter that their tender had been accepted, without being told of
the intention to change the date of completion. Later the contract documents
65
[1948] I.R. 306.
6~ {1950] 84 Ll.L.R. 97.
61
See supra, paras. 1·102-1·104.
1>K [1953] 2 Q.B. 450.
 62 GENERAL PRINCIPLES OF LAW [CHAP. l
were sent to the contractors, who sealed and returned them, without noticing
the change in the date. Before the council sealed the contract themselves, two
meetings were held between the assistant county architect and the contract-
ors, at each of which the contractors referred to their plans to complete in 18
months and produced a progress schedule on this basis. The council finally
executed the contract without the contractors ever being specifically
informed of the changed date. On a claim for rectification by the contractors,
the council objected that to ground rectification there must be either a com-
mon mistake or dishonest conduct by the defendant. Held, by Pennycuick J.,
that a party is entitled to rectification of a contract if he can prove that he
believed a particular term to be included in a contract and that the other party
concluded the contract with the omission or variation of the term, in the
knowledge that the first party believed it to be included, and that, on the facts
of the case, the contractors were entitled to rectification: A. Roberts & Co.
Ltd. v. Leicestershire County Council (1961). 69
l·U2 (7) The trial judge found as a fact that during negotiations a lessee and her
solicitor understood that she was not to be liable for exterior or structural
repairs. In conformity with this the lease as executed provided only for contri-
bution by her to the cost of exterior decoration. The lessor sought rectification
of the lease on the ground that it did not reflect a previous agreement due to a
common mistake, or else to its own unilateral mistake, and further contended
in the alternative that if there was only unilateral mistake not known to the
lessee, the lessee should be put to election between rectification or rescission.
Held, by the Court of Appeal, that while, following Roberts v. Leicestershire
County Council (supra), there could be rectification in a case of unilateral
mistake, the plaintiff was not entitled to rectification in the face of the trial
judge's finding that the lessee did not know of the mistake and was not guilty
of sharp practice. Further, doubting Garrard v. Frankel7° there was no prin-
ciple of law entitling a party to rescission, nor a right to put the other party to
election between rescission and rectification, in a case of simple unilateral
mistake not known to the other party: Riverlate Properties v. Paul (1975). 71
1-123 (8) A lease contained a renewal provision "at a rent to be agreed between
the landlords and the tenants but in the default of such agreement at a rent to
be fixed by an arbitrator". A first renewal of the lease provided similarly for
further renewal. A second renewal was subsequently agreed, but although on
that occasion it was agreed during negotiations that the new lease should be
renewable on the same terms, the new clause provided only for renewal at
"such rents as shall have been agreed between lessor and lessee" without any
reference to arbitration. The tenants then refused to agree to an increased
rent on the third renewal, or to the appointment of an arbitrator, and claimed
a new lease either rent-free or else at the old rent {they subsequently aban-
doned the rent-free argument). The trial judge ordered rectification permit-
ting arbitration, and gave a declaration that the new rent should be a market
rent. Held, by the Court of Appeal, where there was an earlier common inten-
tion and the defendant knew of the plaintiff's later mistake, it was not necess-
ary to show sharp practice, but merely knowledge that the mistake would
benefit the defendant or (per Eveleigh L.J.), in some cases only, be detrimental
00
[1961] 1 Ch. 555. See also Carlton Contractorsv. Bexley Corporation (1962) 60L.G.R. 331,
illustrated post, para. 2·066, and contrast the Royston Urban District Council case, illus-
trated post, para. 1·115. See also Boot v. City of London Corp., supra.
70
(1862) 30 Beav. 445.
1
' [1975] Ch. 133.
SECT. 5] VOID AND VOIDABLE CONTRACT'S 63
to the plaintiff: Thomas Bates & Son Ltd. v. Wyndham's (Lingerie) Ltd.
(1981).n
(9) Charterparties contained an escalation clause with a base figure 1·124
expressed in United States dollars. The plaintiffs claimed rectification by sub-
stituting a base figure calculated in lire, alleging a common mistake based on
earlier negotiations. The trial judge found that although the question of the
two currencies had been discussed between the parties, there had been no
final agreement about it. He further found that the insertion of the figure in
dollars into the final contract had been carried out on the specific instructions
of the defendant's representative. Held, by _the Court of Appeal, there was no
doubt that the defendants had intended that the dollar figure was the one to
be included in the charterparties. Consequently, the plaintiffs could only rely
on their own unilateral mistake. The trial judge had found that the mistake
was not known to the defendants. All the cases showed that actual knowledge
of the plaintiff's mistake by the defendants, and not imputed knowledge, was
essential and the claim must fail. The loss suffered by the plaintiffs was
attributable to their own carelessness in failing properly to read the pro-
visions of the charterparty, coupled with the supervening circumstance of the
fall of the lire in relation to the dollar: Agip S.p.A. v. Navigazione Alta Italia
S.p.A. (1984)."
Absolute precision in formulating the required term in the rectified 1·125
contract will not be necessary if the required change in the sense of the
contract is clear.
ILLUSTRATION
A main contract contained a fluctuations clause, but it did not cover the
same period as a then contemplated sub-contract. Both main and sub-con-
tractor had as a fact always intended the main contract clause to operate in the
sub-contract. After making certain payments on interim certificate the main
contractor took the point against the sub-contractor that the sub-contract
contained no fluctuations provision at all. Held, by the High Court of Aus-
tralia, that the sub-contract should be rectified, the difficulty over dates being
~lbY rectifying it i~ the sense that ~y p~yments received by the main con-
uactor under the main contract provision 1n respect to the sub-contract work
should be payable to the sub-contractor: M.R. Homibrook (Pty.) Ltd. v. Eric
l'vewham {1971).74
Where there is a manifest error or omission on the face of a written 1·126
contract, the court will correct the error or supply the omission, but this is
done as a matter of construction and without extrinsic evidence, and not as
a matter of rectification. Thus where the condition of a bond stated that it
should be void if the debtor whose debt was being guaranteed did "not"
pay, the court read the bond without "not," which was manifestly inserted
12
[1981] 1 All E.R. 1079.
n [1984] 1 Lloyd's Rep. 353.
14 [1971] 45 A.L.J.R 523.
 64 GENERAL PRINCIPLES OF LAW [CHAP. I
in error. 75 And where there was a clearly incorrect reference to an "RIBA
1965 Edition" sub-contract form where none existed, this was ignored in
the light of evidence as to what it would be understood to mean in the
industry.76
Finally, a difficult question can arise whether an arbitrator has jurisdic-
tion to rectify the contract out of w~ich his jurisdiction arises, fortunately
recently resolved in the Court of Appeal.77
(4) Misrepresentation
(a) Generally
1-127 Where one party ( the representee) has been induced to enter into a con-
tract as a result of a misrepresentation by the other party (the representer)
such a contract is said to be voidable, in the sense that it may be set aside at
the suit of the representee in appropriate circumstances. This traditional
remedy of rescission has in most common law countries been sup-
plemented in the last 50 years, as a result of either case or statute law, by a
right to damages either additional to or in substitution for the right of
rescission. The laW on what should be a reasonably simple subject has
become unusually complicated in the United Kingdom by reason partly of
the Misrepresentation Act 1967, which imposed a series of changes on the
pre-existing case law and conferred for the first time a right to damages for
negligent misrepresentation and, secondly, by the emergence at about the
same time in the House of Lords, overturning major nineteentb. century
precedents, of a new tortious liability in negligence for economic loss
caused by negligent statements. As will be seen, this n~w tort of negligence
is in some respects considerably more radical and wide-ranging than the
right of damages contained in the Act, quite apart from its availability,
unlike the Act, against non-contracting parties. On the other hand, the
circumstances in which this new liability in negligence arises are in a few
respects more circumscribed, since only some representations made in cir-
cumstances emphasizing their seriousness and the representee's high
degree of reliance on the representor, and, perhaps most importantly,jus-
tifying an inferred assumption of responsibility on the latter's part, will be
sufficient to found this new liability, which i~ referred to throi.ighout this
book, after the case which gave rise to it,78 as the Hedley Byrne principle or
liability.
It is proposed first to summarise very shortly the pre-1967 position, then
to review equally shortly the basic objectives of the 1967 Act, and finally to
15
Wilson v. Wilson (1854) 5 H.L.C. 40, at p. 67. See also Annamunthodo v. Oilfield Workers
Trades Union [1961J A.C. 945. · being;
16
See Modern Building Wales v. Limmer & Trinidad Co. Ltd. {1975] 1 W.L.R. 1281, referred
to infra, para.1·207.
n Ashville Investments v. Elmer Contractors Ltd. [1989} Q.B. 488 and see the ~.ases there
reviewed and post, Chap. 18, "Arbitration", Section 3(2)(e), paras. 18·096-18;,100.
7ll Hedley Byrne & Co. Ltd. v. Heller & Partners Ltd. [1964] A.C. 465.
SEcr.5] VOID AND VOIDABLE CONTRACTS 65
consider the present state of the law in the light of the Act and of the new
Hedley Byrne liability.
(b) Misrepresentation defined
Initially, it is important to clarify certain matters of de~nition. In. ordi- 1-128
nary life, inaccurate statements, perfectly properl! de~cr1bed as _misrep-
resentations in the normal sense of the word, can give nse to loss in many
different ways and situations. Thus negligent advice by solicit~rs, A/Es or
surveyors to their clients will frequently take the fo~m of rru~repre~en-
tations of fact or opinion; for example, a doctor may give a neghgent ~1ag-
nosis or prescribe a wrong course of treatment, a surveyor may give a
negligent valuation, an architect may issue a negligent certificate as to the
value of work done a solicitor may give an incorrect opinion on the law,
and a soils enginee; may give a negligent report as to the state of the site.
In all these cases there will almost invariably be a duty of care owed to the
client based not in tort but on the pre-existing contractual relationship
between him and his adviser, and this will cover purely financial loss which
arises naturally from misrepresentations of that kind. Where there is no
contract between the representor and representee, on the other hand, the
Hedley Byrne principle may now impose, in closely defined circumstances,
a similar duty of care where purely financial loss is.likely to arise from t_he
making of a particular negligent statement. This respresents a maJo.r
extension of the earlier law of negligence, which applied only where physi-
cal damage to person or property arose as a result of negligent acts ~r
omissions, and where economic or financial loss was recoverable only 1f
arising as a consequence of the physical damage to person or property
which was the essential and indispensable element of the then tort of neg-
ligence (the Donoghue v. Stevenson19 principle). .
It is essential to appreciate that liability for negligent representations 1·129
arising in the context of a pre-existing duty of care, whet~er in contra~t or
tort, have nothing to do with the contractual law of rrusrepre~entatlon,
which is concerned with the effect of pre-existing misrepresentations upon
a subsequently concluded contract. Misrepresen~ations in the ~ontext of
the Jaw of misrepresentation prior to and followrng on the passing of the
Misrepresentation Act 1967 are thus of a much narrower class. These are
misrepresentations which:
( a) are made by one contracting party or his agent to the other party or
his agent, and not by or to some third person; . .
(b) are made before the contract between the two parties has come into
(c) are not mere statements of opinion.
19
[1932] A.C. 562.
 66 GENERAL PRINCIPLES OF LAW
(d) are not made, or do not subsequently become, terms of the con-
tract, or part of any collateral contract between the parties (in ei-
ther of which events damages will be recoverable for breach of the
relevant term, and perhaps rescission for repudiation, without
recourse to any doctrine of misrepresentation); and
(e) have the effect of persuading or inducing the representee to enter
into the subsequent contract with the representer.
1-130 Thus, to give some examples, no question of misrepresentation in the
present sense will arise if an architect negligently tells his client that a
particular builder is reliable, on the faith of which he places a contract
which he otherwise would not have done. Here, the architect may be liable
for any damage so caused by reason of breach of his own contract with his
client in giving negligent advice80; similarly, if an architect negligently
assures a sub-contractor that a main contractor is due to be paid consider-
able sums for work done, with the result that the sub-contractor continues
to work for and give credit to the main contractor notwithstanding sus-
picions as to his financial status. Here the architect (who is not, of course,
in contractual relations with the sub-contractor) may be liable to him in
tort on the Hedley Byrne principle,81 or perhaps on an imputed contract,a2
but not under any principle of contractual misrepresentaion. Again, if an
architect negligently over-certifies (that is, misrepresents) moneys due to
the contractor, he may be liable in contract to his client83 or, where he
negligently under-certifies, to the contractor under the Hedley Byrne prin-
ciple,84 should the contractor or owner respectively become insolvent
before the certificate is paid. On the other hand, if a representative of a
firm selling fire alarm systems informs a prospective customer that the
alarm will continue to work even if the wires are cutss or the representative
of an owner of sea-barges, in a response to a question from a prospective
charterer, gives an inaccurate figure of their usable capacity86 these are
classical misrepresentations in the contractual context.
(c) Summary of pre-1967 law
1-131 The pre-1967 law of contractual misrepresentation can be very shortly
summarised. If the misrepresentation was fraudulent, the representee
could rescind (that is, terminate) the contract, or sue for damages, or both.
(In such a case, contrary to the normal rule in contract, his damages if he
io See, e.g. Pratt v. George Hill Associates (1988) 38 BLR 25.
si See Day v. Ost [1973] 2 N.Z.L.R. 385.
si Compare Comyn Ching v. Oriental Tube Co. (1979) 17 BLR 47, 79-80, see supra para.
1·066.
RJ Sutcliffe v. Thackrah [1974] A.C. 727.
84
Compare Arenson v. Carson Beckman Rutley & Co. [1977] A.C. 405; but see now, how-
ever, Pacific Associates v. Baxter (1988) 44 BLR 33, C.A., illustrated infra, para. 1·303.
ss Davis & Co. (Wines) Ltd. v. Afa-Minerva (EM!) Ltd. (1973) 9 BLR 99 see infra para.
1·142.
s6 Howard Marine and Dredging Co. Ltd. v. A. Ogden & Sons (Excavations) Ltd.'l,l'.978] Q.B.
574 see infra, para. 1.136.
[CHAP. 1 SECT. 5] VOID AND VOIDABLE CONTRACTS 67
rescinds may be computed on an "indemnity" basis, so as to restore him to
the position he would have been in had he never entered into the con-
tract.) If, however, the misrepresentation was "innocent", then however
negligent it may have been, and however damaging, no damages were
recoverable (unless the representation had been made a term of the con-
tract) and the representee's sole remedy was rescission. But, as will be
seen, that remedy could very easily be lost without any fault on the part of
the representee, and in many cases of innocent but negligent represen-
tation the representee would thus find himself without any remedy at all.
Moreover, rescission might not, in many practical situations, be a remedy
of which the representee would necessarily wish tb avail himself.
(d) Summary of the Misrepresentation Act 1967
The Act set itself five principal objectives, as follows: 1-132
(a) Most importantly, a right to damages for innocent misrepresen-
tation was now conferred. Liability was not expressed to arise as a
duty of care ( that is, based on negligence). Instead, mere proof of
inaccuracy imposed liability on the representee "unless he proves
that he had reasonable ground to believe and did believe up to the
time the contract was made that the facts represented were true":
section 2(1) of the Act. It is not clear whether this wording is
intended to set a different standard of proof from that in negli-
gence,87 but the express reversal of the burden of proof is of very
great practical importance to plaintiffs, distinguishing it from any
case of Hedley Byrne liability, and the continuation of belief in
reasonable giounds up to the time of the contract may be an
additional important practical burden on the representer if he is to
avoid liability. The section also contains a puzzling qualification
making liability dependent upon whether the representer would
have been liable for making the representation fraudulently, the
precise purpose of which seems obscure.88
(b) Two important but rather obscure obstacles to obtaining rescission
which had arisen under the previous case law (where the represen-
tation was also a term of the contract, and the "executed contract"
exception) were also removed: see sections 1(a) and l(b) of the Act.
( c) Balancing these obstacles to rescission for innocent misrepresen- 1-133
tation now removed by the Act, the court is given a wide discretion
wherever rescission is claimed to award damages instead: see sec-
' tion 2(2). However, in cases of fraudulent misrepresentation
rescission (subject to any question of estoppel or affirmation of the
contract) remains as of right.
'
87 See the judgment of Buckley L.J. in the Court of Appeal in the Howard Marine case illus-
trated infra, and see Chitty op. cit. at para. 418.
88 The suggestions in Chitty op. cit. at para. 439 are not very convincing.
 66 GENERAL PRINCIPLES OF LAW
(d) are not made, or do not subsequently become, terms of the con-
tract, or part of any collateral contract between the parties (in ei-
ther of which events damages will be recoverable for breach of the
relevant term, and perhaps rescission for repudiation, without
recourse to any doctrine of misrepresentation); and
(e) have the effect of persuading or inducing the representee to enter
into the subsequent contract with the representer.
1-130 Thus, to give some examples, no question of misrepresentation in the
present sense will arise if an architect negligently tells his client that a
particular builder is reliable, on the faith of which he places a contract
which he otherwise would not have done. Here, the architect may be liable
for any damage so caused by reason of breach of his own contract with his
client in giving negligent advice80; similarly, if an architect negligently
assures a sub-contractor that a main contractor is due to be paid consider-
able sums for work done, with the result that the sub-contractor continues
to work for and give credit to the main contractor notwithstanding sus-
picions as to his financial status. Here the architect (who is not, of course,
in contractual relations with the sub-contractor) may be liable to him in
tort on the Hedley Byrne principle,81 or perhaps on an imputed contract,s2
but not under any principle of contractual misrepresentaion. Again, if an
architect negligently over-certifies (that is, misrepresents) moneys due to
the contractor, he may be liable in contract to his client8:l or, where he
negligently under-certifies, to the contractor under the Hedley Byrne prin-
ciple,84 should the contractor or owner respectively become insolvent
before the certificate is paid. On the other hand, if a representative of a
firm selling fire alarm systems informs a prospective customer that the
alarm will continue to work even if the wires are cut85 or the representative
of an owner of sea-barges, in a response to a question from a prospective
charterer, gives an inaccurate figure of their usable capacity86 these are
classical misrepresentations in the contractual context.
(c) Summary of pre-1967 law
1·131 The pre-1967 law of contractual misrepresentation can be very shortly
summarised. If the misrepresentation was fraudulent, the representee
could rescind (that is, terminate) the contract, or sue for damages, or both.
(In such a case, contrary to the normal rule in contract, his damages if he
Nil See, e.g. Pratt v. George Hill Associates (1988) 38 BLR 25.
81
See Day v. Ost [1973) 2 N.Z.L.R. 385.
81
Compare Comyn Ching v. Oriental Tube Co. (1979) 17 BLR 47, 79-80, see supra1 para.
1·066.
83
Sutcliffe v. Thackrah [1974] A.C. 727.
84
Compare Arenson v. Carson Beckman Rutley & Co. [1977] A.C. 405; but see now, how-
ever, Pacific Associates v. Baxter (1988) 44 BLR 33, C.A., illustrated infra, para. 1·303.
85
Davis & Co. (Wines) Ltd. v. Aja-Minerva (EM/) Ltd. (1973) 9 BLR 99 see infra, para.
1·142.
si; Howard Marine and Dredging Co. Ltd. v.A. Ogden &Sons (Excavations) Ltd. [l,978] Q.B.
574 see infra, para. 1.136.
[CHAP.1 SECT. 5] VOID AND VOIDABLE CONTRACTS 67
rescinds may be computed on an "indemnity" basis, so as to restore him to
the position he would have been in had he never entered into the con-
tract.) If, however, the misrepresentation was "innocent", then however
negligent it may have been, and however damaging, no damages were
recoverable ( unless the representation had been made a term of the con-
tract) and the representee's sole remedy was rescission. But, as will be
seen, that remedy could very easily be lost without any fault on the part of
the representee, and in many cases of innocent but negligent represen-
tation the representee would thus find himself without any remedy at all.
Moreover, rescission might not, in many practical situations, be a remedy
of which the representee would necessarily wish tb avail himself.
(d) Summary of the Misrepresentation Act 1967
The Act set itself five principal objectives, as follows: 1-132
(a) Most importantly, a right to damages for innocent misrepresen-
tation was now conferred. Liability was not expressed to arise as a
duty of care (that is, based on negligence). Instead, mere proof of
inaccuracy imposed liability on the representee "unless he proves
that he had reasonable ground to believe and did believe up to the
time the contract was made that the facts represented were true":
section 2(1) of the Act. It is not clear whether this wording is
intended to set a different standard of proof from that in negli-
gence,87 but the express reversal of the burden of proof is of very
great practical importance to plaintiffs, distinguishing it from any
case of Hedley Byrne liability, and the continuation of belief in
reasonable giounds up to the time of the contract may be an
additional important practical burden on the representor if he is to
avoid liability. The section also contains a puzzling qualification
making liability dependent upon whether the representor would
have been liable for making the representation fraudulently, the
precise purpose of which seems obscure.ss
(b) Two important but rather obscure obstacles to obtaining rescission
which had arisen under the previous case law (where the represen-
tation was also a term of the contract, and the "executed contract"
exception) were also removed: see sections 1(a) and 1( b) of the Act.
(c) Balancing these obstacles to rescission for innocent misrepresen- 1-133
tation now removed by the Act, the court is given a wide discretion
wherever rescission is claimed to award damages instead: see sec-
tion 2(2). However, in cases of fraudulent misrepresentation
rescission ( subject to any question of estoppel or affirmation of the
contract) remains as of right.
s1 See the judgment of Buckley L.J. in the Court of Appeal in the Howard Marine case illus-
' trated infra, and see Chitty op. cit. at para. 418.
88 The suggestions in Chitty op. cit. at para. 439 are not very convincing.
 68 GENERAL PRINCIPLES OF LAW [CHAP.!
(d) Clauses excluding or restricting liability for misrepresentation are
to be of no effect unless deemed to be reasonable: see section 3.
This section was later amended by section 8 of the new Unfair Con-
tractTerms Act 1977 so as to substitute the more specific and com-
plicated criteria of reasonableness in section 11(1) of the 1977 Act
for the simpler generalised requirement of the 1967 Act.
(e) The Hedley Byrne liability
1·134 It is proposed at this point to discuss this new liability in negligence with
specific reference to the remedies available under the law of contractual
misrepresentation only. 89 The new liablility in tort requires some positive
statement or act or intervention rriade in a serious commercial or other
setting where it is clear from the nature of the enquiry and the importance
attached to it and from the relative special knowledge or skill of the
defendant that a high degree of reliance will be placed upon him, and an
assumption of responsibility by the defendant can be inferred from his
decision to make the representation or give the advice in the particular
circumstances in question. Some examples of this in the construction field
have already been given supra.
It will be seen that while this duty may include cases where the loss
arises from a contract subsequently entered into by the representee, no
other contract need be involved at all. It was at one time thought that the
duty was limited to business or professional advisers, 90 but it is now clear
that this is not so.91 Although the requirement of a high degree of reliance
by the representee will almost always mean that the negligent representer
is in possession of some special knowledge or expertise not available to the
representee.
1·135 It will be seen that the Hedley Byrne principle imposes liability for a far
wider class of representations than the strictly inter-party representations
of contracting parties, and is therefore only a serious alternative to plain-
tiffs considering contractual misrepresentation remedies to the extent
that a Hedley Byrne liability can properly be said to exist at all between
contracting parties. While in the comparatively early case of Essa
Petroleum v. Mardon 92 such a liability was upheld clearly by all the judges
in the Court of Appeal, Lord Denning M.R. subsequently expressed
doubts as to whether such a duty between opposing contracting parties
during informal pre-contract negotiations could arise. 93 Similar doubts
have been expressed in this situation in New South Wales. 94 Approaching
""The wider aspects of this liability are discussed infra, Section 12(2), para. 1·280 et seq.
9CI Mutual Life & Citizens' Assurance Co. Ltd. v. Evatt [1971J A.C. 793, P.C.
91
Essa Petroleum Co. Ltd. v. Mardon [1976] Q.B. 801, illustrated infra, para.1·154; Shad-
dock v. City of Paramatta (1981) 36 A.L.R. 385, H. Ct., Australia and see also the examples
given in the text, supra para. 1·130, and infra, Section 12(2).
91
[1976] 1 Q.B. 801.
9
~ Howard Marine &Dredgingv. Ogden [1978] Q.B. 574,atpp. 591-592and see Bridge L.J.'s
doubts ibid. at pp. 598--599. . .,
94
Dillingham Construction Pty. Co. v. Downs [1972] 2 N.Z.W.R. 49, where it wllS.held that
liability could exist.
SECT. 5] VOID AND VOIDABLE CONTRACTS 69.
the matter on first principles, there does seem to be a fundamental incon-
sistency, not so much of principle as of fact, in asserting a Hedley Byrne
liability owed, presumably, by one of two subsequently contracting parties
to the other during the course of negotiations. All the authorities on the
Hedley Byrne liability stress the serious nature of the inquiry, with its
importance and the fact of reliance being clear to the representer so as to
lead to an·inference of an assumption of responsibility on his part. It is
hard to see how contracting parties in negotiation could fail to meet these
requirements without the representation becoming incorporated as an
additional term of the contract, or at least taking the form of a collateral
agreement or warranty,.thus rendering the liability in tort otiose. The fol-
lowing case is an excellent illustration of these difficulties.
ILLUSTRATION
Contractors required two sea-going barges for rem"oval of spoil and dump- 1·136
ing out to sea. After telephone conversations with the barge owners in which
they inquired as to the cubic metre carrying capacity of the barges, but not the
tonnage capacity, they tendered for their contract. On obtaining the contract,
they held a meeting with the barge owner's marine superintendent where
they inquired for the first time about the tonnage capacity. The marine super-
intendent was away from his own office, but relying on his recollection of the
entry in.Lloyd's Registerforthe two barges of 1,800 tonnes he gave a figure of
1,600 tonnes (after making generous deductions for the weight of fuel, etc.).
In fact Lloyd's Register had made a mistake, and the true dead weight was not
1,800 tonnes but just under 1,200 tonnes, so that after appropriate allowances
the pay load was approximately 1,050 tonnes. The true figures were available
in documentation relating to the barge owner's previous acquisition of the
barges at their London office. Subsequently a contract was entered into in
charter party form containing a clause "Charterers' acceptance of handing
over the vessel shall be conclusive evidence that they have examined the ves-
sel and found her to be in all respects sea-worthy, in good order and condition
and in all respects fit for the intended and contemplated use by the charterers
and in every other way satisfactory to them". When sued for a balance of hire
charges for the barges, the contractors counterclaimed for damages for
breach of collateral warranty, and under section 2(1) of the Misrepresen-
tation Act 1967 and alternatively for a negligent statement in tort. The trial
judge found for the barge-owners on both ground~. Held, by the Court of
Appeal, (a) that in the circumstances ~here had been no collateral warranty
intended to have contractual effect so that breach of contract did not apply;
(b) per Bridge and Shaw L.JJ. (Lord Denning M.R. dissenting), that on the
facts there were no reasonable grounds for believing the facts represented to
be true, so that the barge-owners were liable in damages under the Misrep-
resentation Act 1967; (c) per Lord Denning M.R. (Shaw, L.J. dissenting) that
on the facts there was no "special relationship" giving rise to a duty of care,
per Bridge L.J., that if a duty of care existed he doubted if there had been
negligence; and (d) per Bridge and Shaw L.JJ ., (Lord Denning M.R. dissent-
ing), that the exclusion clause was not fair ot reasonable and could not be
relied upon: Howard Marine and Dredging v. Ogden (1978). 95
"·' [1978] Q.B. 574.
 70 GENERAL PRINCIPLES OF LAW [CHAP. l
1·137 [Note: This case would appear to support the view that the duty under the
Misrepresentation Act 1967 may be more severe than the common law
Hedley Byrne duty in negligence, apart from any question of burden of proof.
It also shows that experienced judges can easily differ on any set of facts as to
the existence of"reasonable grounds" under the Act and also as to the exist~
ence of the necessary "special relationship" required for each Hedley Byrne
liability. On the facts of the case many observers might be disposed to agree
with Lord Denning M.R. both as to liability and the reasonableness of the
exclusion clause.9sa]
1·138 The practical importance of the Act in the field of building, and even
more of civil engineering contracts, where exchanges of information
about the state of the site and of the sub-soil often precede execution of
the contract, is c;onsiderable. Rescission, practically never available to
contractors previously because of the restriction now probably removed
by a section l(b) of the Act,% affords a remedy which is possibly more
valuable than damages to a builder who finds that, for reasons unconnec-
ted with the representation, he has underestimated on his pricing of the
contract, and wishes to escape from it altogether. Generally, however,
contractors will not be anxious to make use of the rescission remedy, with
its heavy litigation risks, and will prefer to make a financial claim for dam-
ages. The search for a means of invoking the Act is likely to fasten upon
the descriptions of the state of the site and the accounts of pre-contract
investigations which owners' advisers frequently insert in the tender docu-
ments for the assistance of contractors, while at the same time expressly
disclaiming responsibility for such statements. It may even include rep-
resentations said to arise by inference from quantities or provisional
quantities or other indications in the bills, drawings or specifications, for
example of the extent of rock in excavations, of soft or made-up ground, of
existing foundations requiring to be broken out, of wet conditions necessi-
tating sheet-piling or well-pointing, or other contingent difficulties which
are almost invariably contractor's risks in building and civil engineering
contracts. 97
1·139 It must remain a matter of speculation how the courts and arbitrators
will apply the "fair and reasonable" exception to section 3 of the Act when
faced with this type of claim (now effectively section 11(1) of the Unfair
Contract Terms Act 1977); no doubt an important consideration would be
that if, in building and civil engineering cases, disclaimers of liability by
employers for such matters were widely held to be invalidated by the Act,
the tendency would be for employers and their advisers to avoid giving
any information at all to tendering contractors for fear of rendering the
contract liable to be set aside. The exercise of the discretion to award dam-
ages under section 2(2) whenever rescission is claimed might also do much
to check abuse of the Act. It is submitted that in general the uncertainties
95
See also the comment on this case infra, para. 1·173.
' different: see the decision of the Privy Council in W. I. Bishop Ltd. v.J. Maclaren Co. [1937]
% See discussion infra, paras. 1·149-1 ·150.
'17 See post, Chap. 4, Sections l(l)(b), 2(2){a) and 3(3), and see also \ch), infra,
paras.1·165-1·166.
SECT. 5] VOID AND VOIDABLE CONTRACTS 71
with which building and civil engineering work are associated are well
understood by the industries concerned and are accepted as contractors'
risks. Furthermore the finanacial background to such contracts generally
means that the parties are aware that, apart from such adjustments as the
contracts permit, a firm price which will not be exceeded is commercially
essential from the owner's point of view. In addition, in many engineering
contracts specific financial protection is given to the contractors in respect
of risks which are not reasonably foreseeable. 98 All these factors should
militate against too rigorous an application of section 3 of the Act to dis-
claimers of responsibility for representations said to arise from the terms
of the contract documents.9 9
The form of the Act is such, however, that the great bulk of the preced-
ing law relating to innocent misrepresentation is still relevant and the
remainder of this subsection is devoted to a more detailed discussion of
the law on the subject with references to the provisions of the Act where
these have the effect of modifying the pre-existing rules.
(I) The law as modified by the Act of 1967
The combined effect of the preceding law and of the Act is that, if one 1·140
party to a contract is induced to enter into it by a material misrepresen-
tation of fact made by the other party, then, subject to the matters men-
tioned below, the contract is voidable at the option of the party misled,
whether the representation is innocent or fraudulent, but where the rep-
resentation is innocent, damages cannot be recovered unless it is also a
term of the contract, 1 or, if it is not, unless the representor is unable to
prove that, up to the time of the contact being made, he both believed and
had reasonable grounds for believing, that the facts represented were
true. 2
"Properly speaking a representation is a statement or assertion made by one
party to the other, before or at the time of contracting, of some matter or
circumstance relating to it. Though it is some-times contained in the written
instrument, it is not an integral part of the contract: and consequently the
contract is not broken if the representation proves to be incorrect. A quest-
ion may, however, arise whether a descriptive statement in the written instru-
ment is a mere representation, or whether it is a substantive part of the
contract. This is a question of construction which the court ... must
determine. " 3
A representation is thus to be distinguished from a statement of fact the 1·141
truth of which is warranted by one of the parties so as to make it a term of
93See post, Chap. 8, Section 1(2)(d).
99
The comments in the foregoing paragraph were described as useful by Lord Denning M.R.
in his dissenting judgment in the Howard Marine case, supra, at p. 594.
' In certain parts of Canada, too, it would seem that the law quite apart from the Act, is
2 D.L.R. 625, Canada, based on s.1053 of the Civil Code of Ontario.
2
Misrepresentation Act 1967, s.2(1).
3 Per Williams J. in Behn v. Burness (1862) 1 B. & S. 877.
 72 GENERAL PRINCIPLES OF LAW [CHAP.1
the contract, and the breach of which will found an action for damages.
The distinction is shown in the following cases:3a
ILLUSTRATIONS
1·142 (1) A dealer taking a car in part exchange was shown the car and asked its
date of manufacture. The owner said it was a 1948 model, it being so described
in the log-book, and it was so described in a post-contract invoice. Unknown
to the owner, the log-book had been forged by a previous owner, and the car
was, in fact, much older. Held, by the Court of Appeal (Morris L.J. dissent-
ing), that the statement was a mere representation only and not a warranty or
term of the contract: Oscar Chess Ltd. v. Williams (1957). 4
(2) Defendant suppliers installed an alarm system for plaintiff jewellers.
Prior to its being ordered, the supplier's representative told the plaintiffs that
the alarm would continue working even after the wires had been cut. The
alarm system in fact ceased to work when thieves ripped out the control panel,
and the defendant suffered losses which would not have occurred had the
alarm continued to ring. Held, by Judge Fay Q.C., that the system as installed
was suitable for its required purpose within the general description of alarm
systems under which it was sold, so that there was no breach of any implied
term of the contract to that effect. But the statement was a misrepresentation,
and in the absence of evidence that there were reasonable grounds for believ-
ing the statement to be true, damages were recoverable under section 2(1) of
the 1967 Act: Davis & Co. (Wines) Ltd. v. A/a-Minerva (EM!) Ltd. (1973).5
(3) The designers and suppliers of a television mast, who were sub-con-
tractors under a main contract entered into in December 1983, wrote directly
to the owners in response to technical inquiries from them on November 11,
1984, at a time when difficulties had been experienced with oscillations and
vibration of another mast previously completed under another contract, and
after dealing with queries by the owners and suggestions by them for monitor-
ing the effect of wind-resistance on the design, concluded with the words
"However, we are well satisfied that the structures will not oscillate danger-
ously ... ". As a result, work continued without further investigation of the
stability of the masts. The Court of Appeal found that the design was not
negligent, but held that the letter constituted a contractual warranty sup-
ported by consideration. 6 Held, by the House of Lords, that although not
strictly a collateral warranty, it was nevertheless, followingHeilbut Symons &
Co. v. Buckleton7 necessary to show an animus contrahendi. Here there was
no intention to enter into a contractual obligation to be found in the owner's
letter or in the sub-contractor's letter of reply. But (overruling the Court of
Appeal) the sub-contractor's design had been negligent, and the represen-
tation itself was, in the light of the situation at that time, also negligent, so that
the sub-contractors were liable to the owners under the Hedley"Byrne prin-
ciple: Independent Broadcasting Authority v. EM! Electronics Ltd. (1980).8
[Note: This case is an example, of the availability of the wider Hedley Byrne
remedy, where the Misrepresentation Act 1967 could not apply in the
absence of a supervening contract between representor and representee.J
i,See also the Esso Petroleum, Carman Construction and George Winipey cases, illustrated
infra, paras.1·154, 1·167 and 1·168.
• (1957] 1 W.L.R. 370.
5
9 BLR 99.
6 11 See Johnson v. Agnew [1980] A.C. 367, and for damages on repudiation see post, Chap. 8.
Compare for a similar situation on the facts Comyn Ching v. Oriental Tube (1979) 17 BLR
47, illustrated supra, para. 1 ·066.
7
[1913] A.C. 30, quoted post, para. 1·212.
H14BLR1.
SECT. 5] VOID AND VOIDABLE CONTRACTS 73
It should be pointed out that although the remedy for misrepresen- 1·143
tation is usually termed rescission, the term is also used 9 in the very differ-
ent case where a party elects to treat a breach of a fundamental term of a
contract by the other party as a repudiation bringing the contract to an
end, whereupon his own obligations cease but he is also entitled to dam-
ages.10 The party misled by an innocent misrepresentation which is not a
term of the contract cannot, subject to recovery being permitted under
section 2 (1) of the Act of 1967, sue for damages, but can either, if it is
sufficient for his needs, declare his intention no longer to be bound by the
contract, or, if not, sue for rescission, if he requires the assistance of the
court to be restored to his position before the contract. (As stated, this will
often not be a remedy of which contractors will wish to avail themselves.)
Rescission in the context of misrepresentation means setting the contract
aside and restoring the parties to their position before the contract was
concluded (in contrast to repudiation, where damages are designed to put
a party in his position had the contract been performed). 11
Where a statement which induces a contract is also a term of the con· 1·144
tract, it was formerly regarded as doubtful whether it might, if so desired,
be relied upon as a representation so as to obtain rescission, or whether it
could only be relied upon as a term of the contract so as to obtain dam-
ages. 12 (The right to treat the contract as at an end as well as to sue for
damages in the case of breach of a term of a contract only arises if the term
is of a sufficiently fundamental character or, to use the legal terminology,
is a "condition" as opposed to as "warranty", or if the conduct of the party
in breach evinces an intention no longer to be bound by the contract.) 13
The doubt referred to appears to have been disposed of by section l(a) of
the Act of 1967, which permits rescission notwithstanding that the misrep·
resentation is a term of the contract; if otherwise, the party concerned
would be so entitled without alleging fraud. This would appear to mean
that the exact contractual status of the term in question as a condition of
warranty is now irrelevant, but that the term must have induced the rep-
resentee to enter into the contract, which in many cases of warranty may in
practice prove to be a major obstacle in the way of a party seeking
rescission. Other requirements before rescission can be obtained are as
follows:
First, there must be a positive misrepresentation: a mere failure by one 1·145
party to make a disclosure of material facts to the other is insufficient
(except in the class of contracts which are uberrimae fidei, into which
building contracts do not fall). 14 Nevertheless a half-truth will be treated as
an untruth if its effect is to mislead. 15 Further, if a representation which is
true when made becomes false during further negot_iations and before the
9
See, for instance, the language of the Law Lords in Heyman v. Darwins [1942} A.C. 356.
10
As to this, see post, Chap. 4, Section 3(1).
12
Leafv. lnternational Galleries [1950] 2 K.B. 86, infra, para. 1·153.
n For the discharge of contracts by breach, see post, Chap. 4, Section 3(1).
14
Keatesv. Lord Cadogan (1851) 10 C.B. 591.
15
Dimmack v. Hallett (1866) 2 Ch.App. 21.
 74 GENERAL PRINCIPLES OF LAW [CHAP. I
contract is concluded, this fact must, if known, be disclosed or it will be
treated as misrepresentation. 16
Secondly, the representation must be one of an existing or past fact. An
innocent representation which is a mere expression of opinion, or a prom-
ise as to future conduct, is not sufficient. Neither is a representation as to a
general proposition of law. A representation as to private right, which is in
a sense mixed fact and law, is, however, regarded as a representation of
fact. 17 So, too, is a promise or opinion if given fraudulently, 18 and in certain
circumstances a statement of opinion will carry an implied representation
that reasonable grounds for the opinion exist. 19 However, there are signs
that this rather crude distinction is becoming eroded and that the tr'ue test
should be whether the representation is of a kind upon which it is reason-
able for the representee to rely. 20
Thirdly, the representation must be made with the intention that it
should be acted upon by the other party.21
1·146 Fourthly, the representation must have induced the contract. If the
party seeking to set aside the contract did not know of the representation,
or did not rely on it, or knew it to be untrue, he will not be entitled to
relief. 22 On the other hand:
"if it is proved that the defendant, with a view to induce the plaintiff to enter
into a contract, made a statement to the plaintiff of such a nature as would be
likely to induce a person to enter into a contract, and it is proved that the
plaintiff did enter into the contract, it is fair inference that he was induced to
do so by the statement. "23
Fifthly, a party seeking rescission must act promptly after discovering
the untruth of the representation. If he thereafter affirms the contract
either by conduct or words his option to rescind will be lost.24 Thus a build-
er who began work on the site after learning of the untruth of the misrep-
resentation would no longer be entitled to rescind the contract, just as a
building owner who had been misled, but permitted the builder to begin
work on the site after discovery of the untruth, would also thereby have
elected to affirm the contract. Furthermore, where the misrepresentation
10
Davies v. London Marine Insurance Co. (1878) 8 Ch.D. 469, infra, para.1·152; With v.
O'Flanagan [1936] Ch. 575.
17
Cooperv. Phibbs (1867) L.R. 2 H.L. 149; Solle v. Butcher [1950} 1 K.B. 671.
18
See Edgington v. Fitzmaurice (1885) 29 Ch.D. 459, at p. 483,per Bowen L.J.
1
" Smith v. Land & House Property Corporation (1884) 28 Ch.D. 7; Brown v. Raphael [1958}
Ch. 636.
w See the cases referred to in Chitty op. cit. at para. 396 and see in particular Esso Petroleum
v. Mardon [1976) Q.B. 801, illustrated infra, para. 1·154.
21
Peek v. Gurney (1873) L.R. 6 H.L. 377.
22
Arkwrightv. Newbold (1881) 17 Ch.D. 324.
23
Per Lord Blackburn in Smith v. Chadwick (1884) 9 App.Cas. 187, at p. 196, infra,
para. l ·152.
2
• Clough v. L.N. W.Ry. (1871) L.R. 7Ex. 26. See also Wal/bridgev. W.H. Moore f:,rd. (1964)
48 W.W.R. 321, Canada, and see the full discussion of the authorities in Peymanw, Lanjani
[1985] Ch. 457.
SECT. 5] VOID AND VOIDABLE CONTRACTS 75
is innocent its untruth must also be discovered within a reasonable time or
the remedy of rescission may be lost.25
Sixthly, no innocent third party must have acquired rights for value un-
der the contract before steps are taken to avoid it.26 This principle is, how-
ever, chiefly applicable in practice to contracts for the sale of goods, and is
unlikely to affect building contracts.
Seventhly and finally, a contract could not be rescinded before the 1967 1·147
Act unless the parties could be restored to substantially the same position
as existed before the contract was concluded. It was sometimes said that
the test was whether the contract could be regarded as "executed" or
"executory," but the validity of this distinction may be doubted. 27
Rescission involves the restoration of benefits received under the con-
tract, and if this is not in substance possible by reason of acts in which the
party misled has himself participated, rescission may not be ordered.
ILLUSTRATION
Contractors completed a contract for a branch railway. Two years after-
wards they claimed rescission of the contract on the ground of innocent mis-
representation of the railway company's engineer as to the na!ure of the
strata through which the railway passed. Held, that the claim failed on the
ground that the contractors, by completing the contract with full knowledge
of the facts, had rendered restitutio in integrum impossible: Glasgow and
South Western Ry. v. Boyd (1915). 28
The circumstances in which rescission would be refused for this reason 1·148
have not been rigidly defined, but it would appear that the courts were
prepared, by ordering financial allowances to be made, to grant rescission
in some cases where complete restitution was strictly impossible, particu-
larly if the misrepresentation was fraudulently made. 29
"A court ... can take account of profits and make allowance for determi-
nation. And the practice has always been for a court ... to give this relief
whenever, by the exercise of its powers, it can do what is practically just,
though it cannot restore the parties precisely to the state they were in before
the contract".30
"The court must fix its eyes on the goal of doing 'what is practically just.' How
that goal may be reached must depend on the circumstances of the case, but
25 Leafv. lnternational Galleries [1950] 2 K.B. 86.
26 Babcock v. Lawson (1880) 5 Q.B.D. 284.
21 See, for an example of a case which was neither executed nor executory, Senanayake v.
Cheng [1966] A.C. 63, illustrated infra, para. 1·153.
u. [1915] A.C. 526.
2~ Erlangerv. New Sombrero Phosphate Co. {1878) 3 App.Cas.1218;Hulton v. Hulton [1917]
1 K.B. 813.
:io Per Lord Blackburn in Erlanger's case, at p. 1278.
 76 GENERAL PRINCIPLES OF LAW [CttAP.1
the court will be more drastic in exercising its discretionary powers in a case
of fraud than in a case of innocent misrepresentation .... In the case of fraud
the court will exercise its jurisdiction to the full in order, if possible, to pre-
vent the defendant from enjoying the benefit of his fraud at the expense of the
innocent plaintiff. "' 1
Certain authorities suggested that in the case of innocent misrepresen-
tation rescission could not be ordered after the execution of any formal
instrument transferring property under the·contract.32 The correctness of
these decisions has, however, been doubted. 33
1·149 The difficulty of defining exactly this seventh requirement makes it cor-
respondingly difficult to assess accurately the effect of section l(b) of the
Act of 1967, which provides that a party shall be entitled to rescission, if
otherwise entitled without alleging fraud, notwithstanding that the contract
has been performed. The exact result of the Act must await judicial
interpretation, but it is submitted that the effect is that the mere fact of
performance of the contract is not to be a bar to rescission, though this
seems to have been a position already reached by the courts in a number of
cases. Where, however, rescisssion would be difficult or impractical to
bring about, and would previously have been refused on that ground, it
seems at least possible that the Act effects no change in the law. 33a
In granting rescission the courts had no power to grant damages, and
this would seem to remain the position, unless section 2(1) of the Act (no
reasonable ground for belief in the truth of the facts misrepresented)
applies, in which case it would seem that damages can be awarded un?er
that section in addition to rescission. On the other hand, under section
2(2) damages can now be awarded as an alternative to rescission in all cases
at the instance of the defendant, and the contract declared to be subsisting,
if it seems equitable to do so having regard to the nature of the misrep-
resentation and the loss likely to be inflicted on either party if rescission
were granted or refused.
1-150 A question arises whether a plaintiff anxious to obtain damages but
unable to recover under section 2(1) by reason of the existence of reason-
able grounds for belief in the truth of the misrepresentation, could achieve
his object by bringing proceedings for rescission and inviting the court to
award damages in lieu under section 2(2), which does not mention reason-
able grounds as a defence. It is suggested that this might be considered
contrary to the policy of the Act, and that section 2(2) contemplates a
plaintiff genuinely desiring rescission and prima facie entitled to it, where
no doubt should the court exercise its discretion to refuse rescission (for
example, because of the effect on third parties) damages on an indemnity
basis might well be ordered notwithstanding reasonable grounds for
"1 Per Lord Wright in Spence v. Crawford [1939] 3 All E.R. 271, at p. 288.
Ji Seddon v. N. E. Salt Co. [1905] 1 Ch.326; Angel v. lay [1911] 1 K.B. 666. See also
Schonekess v. Bach (1968) 62 W.W.R. 673, Canada.
"" See per Scrutton L.J. in Bell v. Lever Bros. [1931] l K.B. 557, at p. 588; Solle v. Butcher
[1950] 1 K.B. 671, at pp. 695, 703; Leafv. International Galleries [1950] 2 K.B. 86, ~t pp. 90,
91; and H. A. Hammelmann, (1939) 55 L.Q.R., at pp. 95-96. \;'.
" 1• See also supra, para. 1·144.
SECT. 5) VOID AND VOIDABLE CONTRACTS 77
belief. Presumably in a full section 2(1) case where there were no reason-
able grounds, damages would not be on an indemnity basis, but on the
same basis as for breach of a contractual term (that is, placing the plaintiff
in the same position as if the representation had been true). There would
seem to be a lacuna in the Act at these points calling for clarification.
Nevertheless, as part of the order for rescission and for the purpose of
doing what is practically just, the court could grant, under the pre-1967
law, a ·successful plaintiff a right of financial indemnity against the defend-
ant in respect of "all obligations necessarily entered into under the con-
tract".34 This right of indemnity is narrower than the right to damages. 35
In considering these rules, it should be remembered that most of the 1·151
decisions upon rescission for misrepresentation have been concerned
with contracts for the sale of property of one kind or another, rather than
with building contracts. There is no reason to doubt, however, that in an
appropriate case under the pre-1967 law, rescission of a building contract
could be obtained before the execution of permanent works on the site
had begun. Once, however, building is substantially under way, strict resti-
tution ·may be difficult, if not impossible, to bring about. The property in
the partially erected building will have passed to the owner of the soil in
accordance with the maxim quic quid plantatur solo, solo cedit,36 and it will
be impracticable, if not impossible, to dismantle the building and restore
its constituent materials to their former condition. This makes it particu-
larly important in building cases to determine the exact ambit of sections
l(b) and 2(2) of the Act of 1967, since rescission may be a very attractive
remedy to a builder who comes to the conclusion that his contract prices
were in any case seriously underestimated, but who is not in a position to
invoke section 2(1) of the Act and claim damages.
ILLUSTRATIONS
(1) A company ordered the arrest of their agent in the belief that he had 1-152
committed a felony. Friends of the agent, knowing of the order, offered to
deposit money with the company as security for the deficiency for which the
agent might be liable if the company refrained from having the agent arrested.
The company was then advised that no felony had been committed and can-
celled its order for arrest, but accepted the friends' offer of money without
disclosing the changed circumstances. Held, that the contract should be
rescinded for misrepresentation: Davies v. London Marine Insurance Co.
(1878)."
(2) The prospectus of a company in which the plaintiff had bought shares
contained the false statement that a certain important person was on the
34
Newbigging v. Adam (1886) 34 Ch.D. 582, per Bowen L.J.
Whittington v. Seale-Hayne (1900) 82 L.T. 49, infra, para. 1·152.
.l!l
36
See post, Chap. 11, Section 1.
>7 8 Ch.D. 469.
 78 GENERAL PRINCIPLES OF LAW [CHAP.1
board of directors. The plaintiff, however, admitted that he had not been
influenced by this representation in reaching his decision to buy the shares.
Held, that the contract for the purchase of the shares could not be rescinded:
Smith v. Chadwick (1884).38
(3) The plaintiffs, who were poultry farmers, were induced to take a lease of
premises from the defendant on the faith of an innocent representation that
they were sanitary. In fact the water supply was poisoned and killed the poul-
try, and the plaintiffs were compelled by the local authority to renew the
insanitary drains. Held, in ordering rescission of the lease, that the plaintiffs
were entitled to an indemnity from the defendant against the cost of renewing
the drains and against the rates paid, as they were obliged by the lease both to
pay rates and repair the premises, but not against their financial loss in the
death of the poultry, since they were under no obligation to keep poultry on
the premises: Whittington v. Seale-Hayne (1900). 39
1-153 (4) The plaintiff purchased an oil painting from the defendants on the faith
of an innocent representation that it was an original Constable. Five years
later he discovered that it was not an original Constable and immediately
sought rescission of the contract. Held, by the Court of Appeal, that assuming
the remedy of rescission to be open to a buyer of goods after they had been
accepted, the plaintiff was not entitled to have the contract rescinded, as he
had not brought proceedings within a reasonable time: Leafv. International
Galleries (1950). 40
(5) A new partner was induced to join a firm of stockbrokers and invest
$20,000 in it by representations that it was "a gold mine". She began to act as
partner on April 20, 1959, and later, while temporarily in charge of the firm,
saw its books for the first time. She called a meeting of partners on June 30,
1959, and on the day following demanded her money back. On July 29, she
brought an action for return of the money, alleging innocent misrepresen-
tation. Held, by the Privy Council, on the facts the agreement contemplated a
continuing contractual relationship and could not yet be properly regarded as
executed, restitutio in integrum was possible, there had been no election
affirming the contract or unreasonable delay, and rescission should be
granted: Senanayake v. Cheng (1966). 41
1-154 (6) An oil company purchased land as a site for a proposed garage, and
made calculations of an estimated annual consumption ("EAC") of 200,000
gallons. After the purchase, but before construction, access to the main road
was forbidden on planning grounds, so that access had to be from a minor
road at the rear. However, no new calculation of the EAC was made, as it
obviously should have been. During subsequent negotiations with a prospec-
tive tenant, the company's area manager put forward the same EAC and ver-
bally assured the tenant that the company's personnel dealing with garage
developments had made the calculations for the figure. The prospective ten-
ant had expressed his doubts and suggested that the annual consumption
would only be 100,000 to 150,000 gallons, but he allowed himself to be per-
suaded, and a lease was entered into. The annual consumption turned out to
be disastrously less due to the changed access. The Misrepresentation Act
1967 was not yet in force, and the tenant after a long period of difficulties sued
in contract for breach of contractual warranty and alternatively in tort on the
Hedley Byrne principle. The company argued (a) that at highest the represen-
tation was one of opinion and not fact, so that there was no collateral agree-
9 App.Cas. 187.
J,'l
>9 82 L.T. 45.
40 [1950] 2 K.B. 86.
\ 4J
•1 [1966] A.C. 63.
SECT. 5] VOID AND VOIDABLE CONTRACTS 79
ment; (b) that, following Mutual Life and Citizens' Assurance Co. Ltd. v.
Evatt4 2 the Hedley Byrne principle only applied to professional or other per-
sons engaged in the business of giving advice; and ( c) that the principle did not
apply as between susbsequently contracting parties. Held, by the Court of
Appeal (overruling the trial judge), there was a breach of a contri:tctual war-
ranty and not a mere representation and ( affirming the trial judge) there was
als~ breach of a duty of care in negligence under the Hedley Byrne principle.
While there was no actual guarantee of the EAC, the representation related
to a crucial matter by a person professing special skill and knowledge and was
made with the express purpose of inducing the other party to contract. In such
a case, distinguishing Heilbut Symons & Co. v. Buckleton,43 the warranty was
a contractual one, to the effect that the estimate had been made with skill and
care, which it had not been. So far as liability in negligence was concerned, the
company had held themselves out as having far greater special knowledge
and skill than the defendant and the representation was made by a person
with much greater experience than the representee. In the last resort the test
was whether the parties must be taken to have intended that the represen-
tation was to form part of the basis of the contractual relations between them.
Per Lord Denning M.R., there was ample Commonwealth authority that
Hedley Byrne had been applied between contracting parties (citing Sealand
of the Pacific v. Ocean Cement Ltd. 44 and Capital Motors Ltd. v. Beecham.4s
Per Ormrod L.J. the two minority opinions of the Privy Council in Evatt's case
were to be preferred, namely that the special relationship required for the
Hedley Byrne principle to apply was created by the action of the defendant in
deciding to give the requested advice rather than from his carrying on the
business or profession of giving advice: Esso Petroleum v. Mardon (1976).46
[Note: This case should be compared and contrasted with the later Howard
Marine and IBA cases, illustrated supra, paras.1·136 and 1·142.]
(7) A contractor tendered for a fish hatchery building, and the drawings 1·155
indicated with dotted lines "future" fishway and holding ponds and rearing
ponds nearby on the owner's land. He obtained the contract and during con-
struction discoverd that contracts were about to be placed for the other struc·
tur~s on the o~er's Ian~ immediately adjoining the area of his own building,
which would interfere with access and other aspects of the construction. He
was advised in order to mitigate this to tender for one of the subsequent con-
tracts, and he accordingly made certain of obtaining it by putting in a higher
bid than might otherwise have been the case. He was in fact impeded by a
third contract. The Federal Court of Canada (Mahoney J.) had held that an
owner intending to place further contracts in the future which might affect the
earlier contract owed a duty of care not to withhold the material information
and in the circumstances such a withholding of information amounted to an
actionable misrepresentation. Held, by the Federal Court of Appeal, the
Government was in breach of its contractual obligations to the contractor in
depriving the contractor of possession of the area of the site to which he was
entitled under the first contract, which included reasonable areas of the own-
er's adjoining land in addition to the actual site upon which the structure was
to stand, and he was entitled to damages, although, reviewing the discussions
and conversations which had taken place between the contractor and the
41
[1971] A.C. 793, P.C.
See the quotations from the case infra, paras. 1·210-1 ·213.
"(1973) 33 D.L.R. (3d) 625.
4.'i [1975] 1 N.Z.L.R. 576.
"[1976] Q.B. 801.
 [CHAP.!
80 GENERAL PRINCIPLES OF LAW
owner's representatives at various times, no actionable representation (over-
ruling the trial judge) had been made in respect of the relevant contracts: The
Queen v. Walter Cabott Construction.Ltd. (1975). 47
1·156 The last case is of interest because it is frequer1:tly contended that own-
ers owe a duty of disclosure to contractors, in particular in regard to the
state of the site. Unfortunately, the Federal Court of Appeal in fact
devoted little or no discussion to overruling the trial judge on the misrep-
resentation aspect of the case, preferring (it is submitted entirely cor-
rectly) to decide it on contractual grounds of intereference with
possession (which made the owner's state of mind at the time of contract-
ing or any alleged misrepresentation entirely irrelevant). The subject of
the owner's duties in regard to the site has been discussed in some detail in
C.C.P.P.48 In the United States the Supreme Court of Alaska, in a well-
considered case, has defined a special governmental liability relevant to
disclose relevant information where the State occupies so uniquely
favoured a position in relation to the information in question that no ordi-
nary bidder in the position of the plaintiff could reasonably acquire the
information without resort to the State. 49
"When government possesses vital information indispensable to
satisfactory performance of the contract, which a contractor has no means of
ascertaining and which it would not assume in the light of deceptively worded
specifications, there is a duty of disclosure." 50
1·157 However, in the United States it is not unusual to find special liabilities
imposed on the State in its relations with contractors, particularly in the
Court of Claims, which are frequently not extended, whether by State or
federal courts, to private or even other public owners, so that it would be
unwise to press this special liability unduly in a Commonwealth jurisdic-
tion. It is axiomatic in the Commonwealth that, in the absence of a fidu-
ciary or professional or other contractual relationship, an affirmative duty
to disclose cannot arise, and in the United Kingdom it is fundamental to
the law of misrepresentation, both before and after the Act, as well as
under the Hedley Byrne principle, that some positive act or statement on
the part of the defendant is required before there can be liability, and
neither doctrine can impose an affirmative duty of disclosure or care (That
is, liability for some omission to act or give advice on the part of a defend-
ant). It is submitted that the position remains the same when the possible
liabilities of A/Es to contractors in tort are considered. 51
"[1975] 69 D.L.R. (3d) 54.
4H Paras. 5-13 and 27-32 to 27-33.
i• Morrison-Knudsen v. State of Alaskn 519 P. (2d) 834 (1974), illustrated infra. para. 1·160.
50 Helena Curtis Ind11striesv. U.S. 312 F. (2d) 1774 (1963), cited inNatus Corporation v. U.S.
371 F. (2d) 450. , '
s1 See C.C.P.P.• paras. 4----09 to4-10, 5-13 to 5-28, 6-11 to 6-12 and 7-38, and see infra, Sec-
tion 12(2)(d), para. 1·293 et seq.
SECT. 5] VOID AND VOIDABLE CONTRACTS 81
ILLUSTRATIONS
(1) Contractors undertook to deepen a harbour for a department of the 1·158
Crown which had been the owner, controller and developer of the harbour
for over a century. Unknown to the officers in control of the project, but
shown in the department's reference libraries and records, there had been
underground mining workings beneath the area to be dredged. The effect of
these made the performance of the contract more difficult and expensive. The
department had carried out investigations and surveys during the two years
prior to the contract and passed on a considerable amount of the information
in the contract documents with a statement that it "is given in good faith and is
believed to be accurate" and that the tenderer "must satisfy himself regarding
the adequacy and accuracy of his information on site conditions". The infor-
mation in this part of the specification was clearly short and incomplete and
intended as a starting point. Other annexures to the documents were much
more specific and showed the results of the surveys and soundings over a pe-
riod of one and two years. The contractors claimed that the supply in the
specification of some information as to site conditions imposed an obligation
to exercise reasonable care in the preparation of the material for incorpor-
ation in the contract and to supply accurate and adequate information rela-
tive to difficulties and hazard in the work. Held, by the Supreme Court of New
South Wales (Hardie J. ), that in view of the very special nature of the contract
the mere fact that the parties were in pre-contract negotiations did not by
itself necessarily preclude the application of the Hedley Byrne principle but,
in the light of the notice inviting tenders, the language of the contract docu-
ments, the nature of the pre-tender discussions between the party's represen-
tatives and the letters which had passed, and the relative knowledge and
intentions of the parties, there was no assumption or acceptance of responsi-
bility by the department for assembling and giving accurate and full infor-
mation and transmitting it to the plaintiffs so as to give rise to liability under
the principle: Dillingham Constrnction v. Downs (1972). 52
[Note: This is a careful and important judgment. The facts are somewhat 1·159
more complicated than indicated in the illustration, but are typical of many
construction contracts. While the judgment does refer to the disclaimer in
regard to the information in the specification, it is clear that this was only one
factor in the judge's decision. The contractors were hampered by the absence
of any firm representation, so that they were compelled to put their case on
the basis of a duty to assemble and supply fuller information. This disM
tinguishes the case from MorrisonMKnudsen v. Commonwealth, illustrated
infra (paragraph 1·169) in the context of exclusions of liability for misrep-
resentation, where there seems to have been a relatively clear representation
as to the nature of the strata to be encountered. It is submitted that, while
concerned to see whether there had been an assumption of responsibility by
the department as a prerequisite of a Hedley Byrne liability, the case also
turns upon the absence of any sufficiently positive representation and is auth-
ority for the proposition that a duty of disclosure does not exist during the
pre-contract period of a construction project as between owner and contract-
or. So to find would be to treat the owner/contractor relationship as being of
the same fiduciary character as that in the leading case of Nocton v. Ashbur-
ton.53 The case does· not seem to have been cited to Campbell J. in
Queensland Cons!rnction Ltd. v. Commonwealth,54 where in response to
s2 (1972] 2 N.S.W.R. 49. Compare the Atlas Construction case in Canada, illustrated infra,
para.1·166.
"[1914] A.C. 932.
" (1985) 4 A.C.L.R. 94.
 82 GENERAL PRINCIPLES OF LAW (CHAP.!
questions from an arbitrator a duty was held to exist with little or no
discussion.]
1·160 (2) Tenderers for an aircraft runway were required to obtain fill material
for the sub-base from gravel in the bed of an adjoining lake. One tenderer
rowed over the designated part of the lake, and observed that the material at
the lake bottom included small boulders which would require mechanical
dredging, as opposed to cheaper suction dredging. He visited the Engineer
and requested that a new location be selected where smaller material would
permit suction dredging. The engineer eventually informed him that this
would not be possible. When the ultimately successful tenderer started work
and claimed compensation for the additional cost of mechanical dredging, the
claim was rejected and he was informed about the other tenderer who had
made a correct appreciation for his pricing, whereupon the contractor
claimed against the owner on the ground of breach of duty in failing to dis-
close the information given to the engineer by the unsuccessful tenderer.
Held, by the Supreme Court of Alaska, the owner owed no duty to disclose in
such circumstances. The only duty of disclosure which the United States cases
showed might exist would be where the State occupied so uniquely favoured a
position in relation to an item of information that no ordinary bidder in the
position of the plaintiff could reasonably acquire the information in question
without resort to the State, and in such a situation the State could not rely
upon a contractor's failure to make an independent request for the infor-
mation: Morrison-Knudsen International v. State of Alaska (1974). 55
[Note: It may be reasonably surmised that the contractor had originally
claimed under a United States "changed conditions" clause (similar in effect
to the well-known ICE and FIDIC Clause 12 in the civil engineering indus-
try). It may also be surmised that the more careful contractor failed to obtain
the contract because he priced it more realistically, highlighting the essential
undesirability and adverse effects of such clauses, as to which see post, Chap-
ter 8].56
1·161 (3) A developer asked paving contractors to quote for supplying and laying
hot asphalt paving on a'sub-base in previously excavated streets which he had
carried out himself. The paving subsequently failed because the developer's
previous contractor had used glacial fill for the sub-base, which was liable to
excessive expansion and contraction. The contractors had inspected the site
before pricing the work, but claimed that there had been a duty by the devel-
oper to inform them of the nature of the fill used in the sub-base. Held, by the
Supreme Court of Alaska, there was, following the Morrison-Knudsen·case,
no duty of disclosure by a private owner in such circumstances, and a trial was
ordered to determine whether the contractors had been in breach of contract
in not realising and warning the owner that the fill which he had used was
unsuitable: Lewis v. Anchorage Asphalt Paving Co. (1975). 57
The special Court of Claims duty of disclosure in government contracts
referred to in the Morrison-Knudsen and Lewis cases, supra, applies
where the Government possesses vital information indispensable to satis-
,, 519 P. (2d) 834 {1974).
l 6 See post, Chap. 8, Section 1(2)(d) and see, for this view explained and developed, C.C.P.P.,
paras. 23-25 to 23-27, 27-34 to 27-37 and 28-14.
"[1975] P. (2d) 1188. For contractors' "duty to warn" cases, see post, Chap. 4, Section
1(2)(a), paras. 4· 100-4·104. For the absence of any owner responsibility for the ,Pe,sign, see
the cases post, Chap. 4, Section 1(2), and in particular Slowey v. Ladder (1900) 20.N.Z.L.R.
321.
SECT. 5] VOID AND VOIDA~LE CONTRACTS 83
factory performance of the contract, and which the contractor had no
means of ascertaining and would not assume in the light of the descrip-
tions and wording of the contract documents. 58
However, in a recent case in Ontario the Court of Appeal, while holding 1·161A
that public owners were not liable in contract to dredging contractors, who
had contracted in the expectation of using suction dredging but later
found that this would not be permitted by the environmental regulatory
authorities, so that they were obliged to use a conventional drag-line
method, nevertheless then proceeded to hold the owners vicariously
liable to the contractors for breach of what seems to have been an affirm-
ative duty in tort owed to the contractors by the owners' engineers to make
enquiries and warn the contractors of this possibility. 5Sa
In another unusual case which clearly does not depend on common law
principles, the Supreme Court of Canada has recently held a construction
owner under Quebec law liable in tort (deli ct) to a sub-contractor for fail-
ure to disclose the contents of a post-contract internal report.
ILLUSTRATION
Sub-contractors were engaged to carry out the excavation of an electricity 1•161.E
sub-station; and encountered difficult soil conditions some four months after
the main contract had been entered into. The owners then commissioned an
expert report which stated that the original design was impractical. The
report was not disclosed to the main or sub-contractors, but a number of
change orders were agreed to and paid for. However, the cost of the work was
higher than expected and the sub-contractor became bankrupt. The Bank as
his assignees originally sued the main contractor in contract, but subsequently
brought an action in delict against the owners. The trial judge found for the
sub-contractors, holding that knowledge of the report would probably have
enabled the sub-contractors to re-negotiate the entire contract, but the Court
of Appeal reversed his decision. Held, by the Supreme Court of Canada, that
under the civil law principles of good faith binding the parties to the main
contract, of which a third party such as a sub-contractor was also entitled to
avail himself, and also under the obligation to inform in Quebec law, there
was a duty in a large project where changes were anticipated from time to time
to inform the contractor of relevant information, and the trial judge's findings
and conclusion that the owners were liable for damages to the sub-contractor
should not be disturbed: Bank of Montreal v. Bail Ltee (1992).ssb
[Note: The obtaining of expert reports by contractors as well as owners is
not uncommon in disputes of this kind. Even on the basis of good faith prin-
ciples5&: and the duty to inform under Quebec law, itis difficult not to share the
doubts which appear to have been felt by the Quebec Court of Appeal as to
the grounds or evidence on which the trial judge was able to find that the
contractor or sub-contractor could have successfully "re-negotiated the con-
tract", having regard to the "inclusive price principle" and traditional com-
SB See post, Chap. 4, Section 2(8), para. 4·203.
~ Auto Concrete Curb Ltd. v. South National Conservation Authority {1992) 89 D.L.R. (4th)
393, illustrated and doubted infra, para. 1·306.
s,ib (1992) 93 D.L.R. 4th 490.
S& Not yet accepted by the common law, see ante, para. 1-197.
 84 GENERAL PRINCIPLES OF LAW [CHAP. I
pletion obligation of contractors in construction contracts,58 d which, it is
submitted, is not very different in civil law systems. However, it seems clear
that the judgement is based exclusively on the civil law of Quebec and has no
direct implications for common law jurisdictions.]
In addition to the Bank of Montreal ca~e, the Ontario Court of Appeal
has, as stated supra, held owners vicariously liable for breach of an alleged
duty in tort owed by their engineers to contractors tendering for a dredg-
ing contract to make enquiries and obtain and pass on information as to
restrictions which might be imposed by environmental regulatory author-
ities on the use of one particular type of dredging not called for by the
contract. 58" That case is doubted infra both in regard to the affirmative
duty said to be owed by the engineers, and the apparent concession by the
owners that they would be vicariously liable for such negligence, if
established. 581
(g) Fraudulent misrepresentation
1·162 A misrepresentation is fraudulent if the representer either knows it to
be untrue or is reckless as to whether it be. true or false. 59-60 Any other
misrepresentation is innocent. A misrepresentation is, moreover, inno-
cent no matter how negligently it is made. Negligence itself, however
gross, is not fraud, though it may be evidence from which the court will be
prepared to infer fraud in the form of recklessness. The difference
between one who makes a recklessly fraudulent misrepresentation and
one who makes a negligently innocent misrepresentation is that the for-
mer has no positive belief in the truth of his representation, whereas the
latter has. The distinction is clear in principle, and a party seeking to estab-
lish fraud undertakes a very heavy burden of proof.
1·163 A person who by his fraudulent misrepresentation causes another to
enter into a contract and thereby to suffer loss, commits the tort of deceit
and is liable to that other in damages for the loss he occasions. An action
for damages for fraudulent misrepresentation is not an action upon the
contract which it induces, but a right of action given by the general law of
tort arising out of the relationship of the parties, and entirely separate
from the remedy of rescission.
As has been stated above, a party who discovers the truth of a misrep-
resentation which has induced him to contract has an option either to
5
&1 As to which see post. Chap. 4, para. 4·036 et seq.
•,1<c Auto Concrete Curb Ltd. v. South National River Conservation Authority (1992) 89 D.L.R.
(4th) 393, illustrated and discussed infra, para.1·3068.
5ir See infra, para. 1·3068.
-'~-l>O Derry v. Peek {1889) 14 App.Cas. 337.
SECT. 5] VOID AND VOIDABLE CONTRA(TS 85
affirm the contract or, if the conditions as to the availability of rescission
are satisfied, to sue for rescission; but if by word or conduct he affirms the
contract, the election is final and there can be no subsequent claim for
rescission. Where, however, the misrepresentation is fraudulent, the affir-
mation which bars rescission does not in any way bar the action for dam-
ages for deceit. Moreover, rescission and damages for fraud are not
alternative but cumulative remedies, so that it is possible to seek both
rescission of a contract induced by a fraudulent misrepresentation and
damages in respect of the deceit. 61 (This now also seems to be possible in
the case of innocent representations made without reasonable grounds
under section 2(1) of the Act of 1967, but there may be some doubt about
the correct basis for assessing damages in such a case. 62)
A successful plaintiff in an action for deceit is entitled, subject to the 1·164
usual rules as to remoteness, to recover such financial loss as he has
incurred by acting upon the misrepresentation.63 Thus if a builder who is
induced by the building owner's fraudulent misrepresentation that the site
levels are as shown on the contract drawings, incurs increased costs in
constructing the building upon the actual levels, the additional cost will be
recoverable as damages.
It should perhaps be emphasised that the duty in fraud almost
invariably arises between the representer and the representee. Thus, a
builder who suffers damage due to a fraudulent representation by the
architect to the owner that the work has not been practically completed
has no oo.use of action because the representation was not intended to be
acted on by him (the builder).64
(h) Exclusion of liability for misrepresentation
It is the normal practice in the construction industries, in particular in 1·165
civil engineering contracts, for owners to supply tendering contractors
with as.much information about the site and subsoil derived from previous
investigations, borings and reports as is available at the time of tendering,
but to stipulate in the documentation that the contractor shall be deemed
to have satisfied himself as to all matters affecting his tender and that all
warranties and representations by the owner's advisers, officers or
employees are given without authority and that no responsibility is
accepted for any statements or representations made by them. Until the
Act of 1967, it was perfectly possible by such clauses to exclude the con-
tractor from any remedy for any such innocent misrepresentations, but in
the absence of specific wording, they would not usually be construed as
applying to a fraudulent misrepresentation.65 It was theoretically possible
'1 Attwood v. Small (1838) 6 Cl. & F. 232, at p. 444,per Lord Brougham; Newbiggingv. Adam
{1886) 34 Ch.D. 523, at p. 592,per Bowen L.J.
Ii! See the discussion supra. paras. 1·145-1447.
"' See Doyle v. Olby [1969] 2 Q.B. 158.
M Larkins v. Chelmer Holdings [1965] Qd.R. 68 Australia.
"' Pearson & Son Ltd. v. Dublin Corporation [1907] A.C. 351.
 86 GENERAL PRINCIPLES OF LAW [CHAP.1
to exclude remedies arising from fraudulent misrepresentations by
express provision in explicit terms, but for obvious reasons these were
rarely encountered in practice.66 Subject to the new 1967 and subsequent
English statutory requirements of reasonableness, however, exclusions
will usually be successful in their object in avoiding the owner's liability for
inaccurate information which is not fraudulent, and it has been suggested
supra,"fia that such exclusions will usually be regarded by the courts as
reasonable in a construction setting, and so not open to successful attack
under the English statutes.
ILLUSTRATIONS
1·166 (1) Contract plans showed a wall nine feet below ordnance datum. There
was a provision in the contract that the contractors must not rely upon any
representation made in the plans, but must ascertain the facts for themselves.
Held, on the facts, the representation was fraudulent, and the provision was
only intended to give protection against honest mistakes: Pearson & Son Ltd.
v. Dublin Corporation (1907).67
(2) A specification for waterworks in Quebec stated that the city did not
possess complete information as to the location or occurrence of various ex-
isting structures, and disclaimed responsibility for the accuracy or complete-
ness of the drawings. The tenderer was to visit the site and not make any claim
because of errors in the documents. In fact there were certain man-made
under-water obstructions not disclosed in the drawings and not actually
known to the responsible municipal officers, although there were documents
in the city archives showing the obstructions. Held, by ScottA.C.J., that there
had been no misrepresentation. The plans and specification were not mislead-
ing and the contract laid no duty on the city68 to give more information than it
did:Atlas Construction Co. Ltd. v. City of Montreal (1954),69
1·167 (3) Clause 3.1 of a railway-widening contract provided "It is hereby
declared and agreed by the Contractor that this agreement has been entered
into in its own knowledge respecting the nature and confirmation of the
ground ... , the location, character, quality and quantity of material to be
removed, the character of the equipment and the facilities needed, the gen-
eral and local conditions and all other matters which can in any way affect the
work, and the Contractor does not rely upon any information given or state-
ment made to him in relation to the work by the Company". After submitting
his tender, the contractor approached employees of the owner, whom he was
unable to identify, in the absence of the divisional engineer, and was told
there were no soil reports or cross-sections available. In response to a further
question by him he was told that a volume of 7,000 to 7,500 cubic yards of rock
~ Cf Tullis v.Jacson [1892] 3 Ch. 441,referred to post, Chap. 6, Section 5(3). See, however,
per Scrutton LJ. in Czamikow v. Roth Schmidt [1922] 2 K.B. 478, at p. 488.
66., See para. 1·139.
67
[1907] A.C. 351, illustrated more fully post, para. 3·077.
68
For the absence of any such general duty on the owner, see post, Chap. 4, Section 1(2),
2(3)(a) and (8).
61
[1954] 4 D.L.R. (2d) 124, Canada, distinguishing W. I. Bishop Ltd. v.J. Maclaren Co. [1937]
2 D.L.R. 625, Canada. See also Bottoms v. York Corporation,post, Chap. 4, paras. 4·046-
4-048, and compare the Dillingham Construction case, illustrated supra, para. 1-_1_~8. Con-
trast the U.S. government duty referred to in the Morrison-Knudsen case, see supra para.
J.160. ' discussed at length infra, para. 1·296.
SECT. 5] VOID AND VOIDABLE CONTRACTS 87
had been estimated. The contractor then entered into a target-cost-plus-
fixed-fee contract which contained an effective upper limit on the contract
sum. The contractor's tender letter (which became part of the contract) esti-
mated a construction time of 25 days "depending on block time to drill, blast
and excavate approx. 7,500 cubic yards of rock". No other document men-
tioned rock. Ultimately, just over 11,000 cubic yards of rock were removed.
The contractor claimed his additional costs and 20 per cent. profit, alleging:
(a) breach of a collateral warranty; and (b) a negligent misrepresentation in
tort. Held, by the Supreme Court of Canada (citing Lord Moulton in the Heil-
but Simons case),70 (a) a collateral warranty required proof of an intention to
contract, i.e. a warranty of the accuracy of the statement. Here there had at
best only been a representation and (distinguishing Essa Petroleum v. Mar-
don71) there was no evidence of any warranty being requested or given or of
the statement being made in order to induce the contractor to contract; (b) as
to negligent misrepresentation, the Hedley Byrne case itself had decided that
in the light of the disclaimer in that case no duty of care arose. In the light of
clause 3.1 of the contract there could be no duty of care in the present case:
Carman Construction Ltd. v. CPR (1982). 71
Two further examples in the Supreme Court of Canada of successful
exclusions of liability for inaccurate soil information supplied by the
owner are illustrated post Chapter 4. 72a More recently in 1993, the
Supreme Court held that typical contractual exclusions in a roadworks
contract successfully avoided any owner liability for errors in the draw-
ings, but not a duty in tort owed by the engineers to the tendering
contractors.72b
However, not all the wording traditionally used in many civil engineer- 1·168
ing contracts may be fully effective in excluding liability, since clearly such
provisions will on general principles be construed strictly against the party
putting them forward. The following cases can be usefully compared.
ILLUSTRATIONS
(1) A specification was made part of the contract documents in a civil engin-
eering open-cast mining contract. Under the heading "Responsibility to rest
with the Contractor", Clause 2 of the specification provided: "All infor-
mation, plans, etc. supplied for this specification have been prepared in good
faith and from infonnation presently available to the Principal. The Contract-
or must accept full responsibility for the use of such information and should
verify all information on the site ... ". The following clause of the specification
then provided information under a number of different headings. Clause 13
of the general conditions of contract provided in sub-clauses (a) and {b) for
the provision in good time during the work of prints and working
70 See infra, Section 8, paras. 1-212-1·213.
71
Illustrated supra, para. 1·154.
n [1982] 136 D.L.R. (3d) 1983.
12 • R. v. Paradis & Farley.Jnc. [1942] S.C.R. 10, Catre Industries Ltd. v. Alberta (1990) 63
D.L.R. (4th) 74, illustrated post, paras. 4-049-4·052.
72b Edgeworth Constn,ction Ltd. v. F. Lea & Associates [1993] 3 S.C.R. 206, illustrated and
 88 GENERAL PRINCIPLES OF LAW (CHAP.!
drawings. In sub-clause 13(c) under the heading "Inaccurate information sup-
plied by Principal", it provided: "The Principal shall pay for any alterations of
the work necessitated by inaccurate information supplied by him or by the
Engineer to the Contractor. This provision shall not apply to information ...
which is clearly stated to be tentative only." The contractor brought an action
for breach of warranty alleging that the information supplied with the specifi-
cation was not prepared in good faith from information at the time available
to the principal. Alternatively, he claimed under Clause 13(c). Held, unani-
mously by the High Court of Australia, (a) The first sentence of clause 2 of the
specification, despite its inclusion in a contract document, was_a mere rep-
resentation not intended to be promissory or contractual, and (b) that clause
13(c) of the general conditions related to information supplied after the date
of the making of the contract under that clause and not to information
supplied before the contract came into existence: George Wimpey & Co. v.
Territory Enterprises (1971). 73
1·169 (2) Clause 3(1) of the general conditions provided that the contractor
should be deemed to have informed himself as to the site and local conditions
affecting the carrying out of the contract. Under clause 4 of the special con-
ditions, the contractor acknowledged that he had satisfied himself as to the
nature and location of the work "including the physical conditions of the site,
the structure and condition of the ground, and any failure by the Contractor
to acquaint himself with the available information is not to relieve him from
responsibility for estimating properly any difficulty or cost of performing the
work, and the employer asssumes no responsibilities for any conclusions or
stipulations made by the Contractor on the basis of information made avail-
able by the employer". A document entitled "Preliminary information for ...
tenderers" expressly provided that the information in that document was not
part of the tender or contract documents and was not to be binding on either
the employer or the tenderers or the contractor. A similar exclusion was to be
found in another document entitled "Engineering Site Information" which
also was not to form part of the contract. The contractor alleged breach of a
duty in tort on the part of the employer to take reasonable care that the site
information was accurate, and in particular that there had been failure to
detect or warn him of the presence of cobbles in the clay sub-soil which were
not shown on the information. Held, by the High Court of Australia, on a
preliminary point, that none of the quoted provisions was so worded as to be
an effective disclaimer, if the duty of care indeed existed and the site infor-
mation was inaccurate due to negligence as alleged; Morrison-Knudsen Inter-
national v. Commonwealth (1972). 74
[Note: The above case, which was considered by Hardie J. in the
Dillingham Construction case,75 should not be interpreted as in any way sup-
porting the view that a duty existed. Its value is in showing that particular
words which are frequently found in civil engineering contracts and have
been assumed to exclude liability are not necessarily sufficiently precise to
achieve that purpose.]
1·170 In many construction contracts words will be used (as in part in the
above cases) to the effect that the contractor "is deemed to have inspected
the site", or to have "satisfied himself as to the state of the site and sub-soil
1
J 45 A.L.J.R. 38.
74 A.L.J.R. 265. Contrast, however, the Canadian Paradis & Farley and Catre lndf!S_friescase
supra.
1~ Illustrated supra, para. l ·158.
I
I
VOID AND VOIDABLE CONTRACTS 89
and all physical conditions affecting the work" or that he "acknowledges
and agrees" various matters. Such wording may be of considerable
importance in helping to indicate the comprehensive extent of the work
and of the various obligations in respect of which the contractor's prices
are to be inclusive, but in the context of misrepresentation, or of the oym-
er's obligations in relation to the site, may at best amount to an estoppel of
perhaps quite limited practical effect,76 and without more explicit wording
may not be interpreted as imposing obligations on the owner on the one
hand or as excluding liability for owner misrepresentations on the other.
It has been held that if one party seeks to incorporate into a contract 1·171
standard conditions which include clauses exempting him from what
would otherwise be his legal liabilities, and misrepresents the effect of
those conditions to the other party, he will not be entitled to rely upon
such exemptions. 17 "Any behaviour by words or conduct is sufficient to be
a misrepresentation if it is such as to mislead the other party about the
existence or extent of the exemption. If it conveys a false impression, that
is enough. " 78 This principle, if correct, may have an important application
in those contracts created by exchanges of letters, which have conditions
printed at the foot or on the back, but its application to more comprehen-
sive formal building contracts in perhaps doubtful.
(i) Exclusion and effect of the Misrepresentation Act 1967, s.3
Section 3 of the Misrepresentation Act 1967 originally deprLved clauses 1·172
of effect which excluded liability for misrepresentations if in the circum-
stances which had occurred it was unreasonable for a party to seek to rely on
the clause. This was conceptually a comparatively straight-forward test to
apply. However, Section 3 was amended by Section 8 of the Unfair Con-
tract Terms Act 1977, so that a more difficult and limited concept is now to
apply. The new section as amended reads as follows:
"If a contract contains a term which would exclude or restrict-
(a) any liability to which a party to a contract may be subject by reason of
any misrepresentation made by him before the contract was made; or
(b) any remedy available to another party to the contract by reason of
such misrepresentation,
that term shall be of no effect except insofar as it satisfies the requirement of
reasonableness as stated in Section 11(1) of the Unfair Contract Terms Act
1977; and it is for those claiming that the terms satisfies that requirement to
show that it does."
It should first be noted that both the old and new sections do not appear 1·173
to apply simply to clauses excluding or restricting liability for misrep-
resentation per se. They would appear to apply to exclusion clauses not
16
See Lowe v. Lombank Ltd. [1960] 1 W.L.R. 196 and Chitty op. cit. at para. 1031.
77
Curtis v. Chemical Cleaning Co. [1951] 1 K.B. 805.
1
~ Per Denning L.J., ibid. at p. 808.
 90 GENERAL PRINCIPLES OF LAW [CHAP.!
specifically directed to misrepresentation at all if in the event a misrep-
resentation turns out to be involved. Thus in the Howard Marine &
Dredging case79 the clause in question was concerned to remove certain
liabilities of the owner in regard to the suitability of the barges upon the
charterer taking delivery and accepting them (in other words, the char-
terer was expected to carry out his own survey). It was a mere accident that
the disputed element of unsuitability which happened to arise in that case
arose as a result of an earlier non-contractual misrepresentation. Indeed it
would seem that it might have been argued that, as a matter of construc-
tion, the clause was not intended to exclude matters of misrepresentation
at all.
1·174 The important conceptual change in the new wording arises because the
term in question must (by virtue of clause 11(1) of the 1977 Act) be fair
and reasonable at the time the contract is made, not at the time when
reliance is sought to be placed upon it. This might well, it is submitted,
have led to a different decision by the majority of the court of Appeal in
the Howard Marine case (who had considered the term to be unreason-
able although avoiding it on another ground). Indeed the new wording
would appear both to mean that a very wide term might be held unreason-
able, under the new wording, but a specific instance of reliance on the
same term would have been reasonable under the old wording. Con-
versely, a term might be reasonable under the new wording, but reliance
upon it in a particular situation might have been unreasonable under the
old wording. 00 However, it has been speculated that the court might
uphold an unreasonable term to the extent that it is reasonable.81 This
suggests that if a restricted version of the unreasonable term would have
been reasonable at the time of contracting, then provided the party put-
ting forward the term can come within the valid restricted part of the term
his reliance on the term would be upheld. If this is correct, it does not seem
very different from the older version of the Act.
1·175 Disregarding these rather semantic difficulties, there are others which
are inherent in any provision seeking to restrict the effect of an exclusion
clause expressly aimed at misrepresentation, which will not be present in
other types of exclusion clause aimed, for example, at liability for loss or
damage. An alleged exclusion clause may itself be an essential part of the
alleged misrepresentation, in the sense that it cuts down or even elimin-
ates the effect of the misrepresentation itself. A distinction may need to be
made, it is submitted, between disclaimers contemporaneous with or
forming part of the representation, thus in effect nullifying or restricting
the effect of the representation itself, and more general disclaimers of re-
sponsibilities for representations of any kind. A distinction may also neeQ
to be made between misrepresentations made with the subjective inten-
tion of inducing a party to contract, albeit accompanied by a disclaimer of
1
" Illustrated supra, paras. 1·136-1 ·137.
"" See Chitty op. cit. at para. 479.
Ki Loe. cir.
SECT. 5] VOID AND VOIDABLE CONTRACTS 91
legal responsibility. A further distinction may need to be made in regard
to provisions designed to limit the authority of agents or employees to
make representations.
Cases under section 3 of the Misrepresentation Act 1967 ( as opposed to 1·176
cases under the other sections of the Unfair Contract Terms Act 1977
dealing with exclusion clauses for other types of liability) have, perhaps
not surprisingly, been relatively rare. The Howard Marine case involved
the earlier version of section 3 and, apart from Lord Denning M.R. 's dis-
senting judgment, there is virtually no explanation in the majority judg-
ments of their reasons for holding the term in question to be
unreasonable. Such cases as have come forward have involved the
inherent conceptual difficulty already referred to, and have in a number of
situations held section 3 not to be applicable at all.
ILL UST RA TIO NS
(1) Particulars in a sale of property by auction stated "Neither the auction- 1·177
eers nor any person in the employment of the auctioneers has authority to
make or give any representation or warranty". The highest bidders relied on
misstatements about the local athority's development plans in a dispute with
the vendors. Held, by Brightman J., section 3 of the 1967 Act was irrelevant,
since the provision in the particulars was not an exemption clause, but a limi-
tation on the apparent authority of the auctioneers: Overbrooke Estates Ltd.
v. Glencombe Properties Ltd. (1974).82
(2) An invitation to tender for a development contained particulars as to
the dimensions of certain property and the amount of lettable office space.
The accompanying notice stated that tenderers should satisfy themselves as
to the correctness of the statements in the documents and were not to rely on
them. Held, by the Court of Appeal, this was a question of fact and could not
be decided from the documentation alone, and evidence would be needed.
The notice with the rest of the evidence about the surrounding circumstances
might negative any actual misrepresentation and mean the statements were
only of opinion or show that there was in fact no reliance by the representee.
On the other hand, a mere accompanying disclaimer would not by itself nul-
lify what might ordinarily be regarded in the light of all the circumstances as a
representation intended to be acted upon. If there was such a representation,
section 3 of the 1967 Act would become applicable: Cremdean Properties Ltd.
v. Nash (1977).&.1
(3) A house purchaser approached a local authority for a mortgage, and 1·178
agreed to pay the surveyor's valuation fee. There was in fact an express
exclusion of responsibility by the Council in respect of the value or condition
of the property, and applicants were advised to instruct their own architect or
surveyor. Serious defects were missed in the surveyor's report, which were
discovered later when the buyers wished to sell. The buyers sued in tort for
negligence on the Hedley Byrne principle, and contended that under section 2
of the Unfair Contract Terms Act 1977 the exception clause was unreason-
able. Held, by the House of Lords, overruling the Court of Appeal (who had
si [1974] 1 W.L.R. 1335.
~-' [1977] 244 E.G. 547.

92 GENERAL PRINCIPLES OF LAW [CttAP. l
held that the disclaimer was such as to negative liability for negligence under
the Hedley Byrne principle, so that there could be no exclusion of liability for
negligence such as to attract the operation of the Act), (a) that the Court of
Appeal's interpretation would have deprived the act of any practical effect
and that liability for a negligent survey, following Yianni v. Edwin Evans &
Sons/14 prima facie existed as between a surveyor employed by a lender and a
person whom he knew had agreed to pay his charges, and would in the great
majority of cases rely on his survey without paying for a second one; and (b)
that having regard to the general background in the housing market between
mortgagees and prospective purchasers of modest houses the exclusion was
unreasonable: Harris v. Wyre Forest D.C. (1989). 85
[Note: The House of Lords was careful to indicate in both this case and
Smith v. Bush that their decision applied only to defects reasonably discover-
able on a comparatively short valuation survey and did not impose a liability
to carry out a full structural survey.They also indicated that the result might
have been different in the case of more valuable houses.]
A further obscurity involving section 3 of the 1967 Act is its possible
application to an earlier representation which has subsequently become a
term of the contract, and where the contract proceeds at some other point
to restrict the liabilities or remedies otherwise available to enforce it. 86
SECTION 6. IMPLIED TERMS
(1) General Principles
1-179 The express terms in a contract are unlikely, except in the most meticu-
lously and comprehensively drafted contracts, to be the final measure of
the obligations of the parties, and even in traditional sophisticated con-
tracts it is remarkable how vitally important matters such as design
responsibility, the precise extent of the contractor's completion obligation
and the intended legal effect of the NE's approval, satisfaction or certifi-
cates are left for implication. It has already been seen that, where work is
carried out at the request of the building owner, and no price is mentioned
between the parties, then the law will imply a term that a reasonable price
should be paid for it. This, of course, is only likely to occur in an unusually
informal, and probably not very substantial, building contract. But many
other terms can be and are implied in all contracts, and an important part
of the specialised law of contract in any particular field consists of the
terms which the courts will usually imply, in the absence of express terms,
in contracts in that field.
1-180 The need for the implication of a term can arise in two principal ways. In
some relatively easy cases the parties may have reached complete agree-
"[1982] Q.B.438.
~1 [1990] 1 A.C. 831. See also Smith v. Eric S. Bush, a building society case decided by the
House of Lords at the same hearing and reported under the same reference. \<
Ho Chitty op. cit. at para. 479, p. 323.
:l
iJ SECT. 6] IMPLIED TERMS 93
1,
I ment but may not have taken the trouble to spell out all its terms in detail.
In another, often more difficult, class of case some event may occur which
the parties never foresaw at all, and it may then become necessary to imply
a term to deal with the eventuality if the contract is, in practical terms, to
work effectively. In England the former class of case is often said to be
I
I
governed by what is termed the "officious bystander" test, named after a
graphic illustrative aphorism in the Court of Appeal subsequently
approved in the House of Lords. 87 In these cases what has to be implied is
"so obvious that it goes without saying".ss
In the other more difficult class of case a term will only be implied if it is
essential to do so in order to give the contract what has been called "busi-
ness efficacy. "89 This means that the courts will not imply terms merely to
make the contract more reasonable in its consequences. They will only
imply a term if, without it, the contract would be commercially unwork-
able. Nor will the courts make a contract for the parties, so that if any
reasonable doubt exists as to the unexpressed intention of the parties on
an aspect of their bargain which is not wholly unimportant, no term relat-
ing to it will be implied, and if it is a matter essential to the business efficacy
of the contract, no binding contract can come into existence.90
It seems doubtful if this division into two classes of terms is in fact very 1-181
useful, and it may really represent little more than a judicial reaction to the
strength or weakness of the arguments being put forward in support of or
against the term. Both types of test depend in the last resort on the pre-
sumed intention of the parties to be deduced from the language they have
used, and from the nature of the transaction and the "matrix" or surround-
ing circumstances at the time of the contract.
Of recent years it has become common in the English courts to stress
another classification of implied terms, namely terms which are con-
sidered to be appropriate to particular classes of contract or of legal
relationships to be "implied in law" (as opposed to "ad hoc" terms
"implied in fact" based on the presumed intention of the parties to a par-
ticular transaction). 91 This is undoubtedly a valid and very important dis-
tinction. In the former case the implication of the term depends on wider
and more long-term questions of policy with which the parties may well
not concern themselves. A particularly good example in construction con-
tracts is the implied obligation of a contractor, in those cases where the
1
~ Shirlaw v. Southern Foundries (1926) Ltd. [1939] 2 K.B. 206, at p. 227; affd. [1940] A.C.
701,H.L.
111</bid.
>N See, e.g. The Moorcock (1889) 14 P.D. 64, at p. 68,per Bowen L.J.; Reigate v. Union Manu-
facturing Co. [1918} 1 K.B. 592, at p. 605, per Scrutton L.J. and see South Africa Mullin
(Pty.) Ltd. v. Benade Ltd. [1952] 1 S.A.L.R. 211, at pp. 214-15.
oci See supra, paras. 1·042-1 ·043 and the judgments in Nicolene Ltd. v. Simonds [1953] 1 Q.B.
543 and see for a particularly striking example, Trollope & Colts v. N. W. Metropolitan
Regional Hospital Board [1973] 1 W.L.R. 601, discussed infra, para.1·195.
1
" See, e.g. Listerv. Romford Ice and Coal Storage [1957] A.C. 555, at p. 594; Shell U.K. Ltd. v.
Lostock Garage Ltd. [1976] 1 W.L.R. 1187, at p.1196; Liverpool City Council v. Irwin
[1977] A.C. 239.
 94 GENERAL PRINCIPLES OF LAW [CHAP.1
owner has relied on him and not on his own advisers for the design of the
work or for the selection of materials, to produce a final result which, inde-
pendent of fault on the contractor's part, will be suitable for its required
purpose.92
1·182 Similarly, in contracts for the sale of houses "in the course of erection"
by the vendor, the same unconditional implied term of suitability (or
"habitability") will apply. 93 Had the parties been consulted at the time, it is
possible if not probable that the contractors would have contended
strongly for an implied term of due care only in design (as the producer-
dominated standard forms available in the United Kingdom currently
offer in the case of "design-and-build" contracts) in place of an unquali-
fied obligation of suitability, while many owners might well not under-
stand the vital importance in their own interest of the higher degree of
unqualified liability and the potentially disastrous consequences (leading
to under-design) of the lower degree of protection.94
On the other hand, the implication of a lesser term for due care only
owed by an A/E or other professional adviser to his client in regard to
design, as opposed to an absolute warranty independent of fault,95 will be
based on equally powerful policy considerations.
1· 183 Perhaps the most important case of recent years in England in the con-
text of design and quality of materials imposes an unconditional liability
on contractors for merchantability and freedom from concealed defects
caused by faults in manufacture and not inherent in the material as
described; but not one of suitability of purpose, if the materials or their
source of supply have been selected by the owner and not by the con-
tractor, so that there is no reliance upon the contractor for their suit-
ability.96 Here the expressed reason for the unqualified warranty of
merchantability or good quality is the need, as in the case of sale of goods,
to establish a chain of liability leading back to the original guilty manufac-
turers.97 All the above terms are, of course, assimilated to the implied obli-
gations imposed by the nineteenth century case law of sale of goods, which
culminated in 1893 in an effective restatement of the previous case-law by
the English Sale of Goods Act of that year (see now the Sale of Goods Act
1979 and the Supply of Goods and Services (Implied Terms) Act 1982,
Infra Chapter 4, Section 1(2)). These are all examples of terms implied in
I terms of a contract need to be carefully examined before a term can be
law, but later given statutory effect.
92 See post, Chap. 4, Section 1(2)(a).
'flSee Hancockv. B. W. Brazier (Anerley) Ltd. [1966] 2 All E.R. 1,per Diplock L.J.; ibid. at
p. 901, C.A. See post, Chap. 4, paras. 4· 120--4· 123.
94 A difficulty apparently shared by one Lord Justice in the Court of Appeal as late as 1986---
see per Neill LJ. in George Hawkinsv. Chrysler (U.K.) Ltd. (1986) 38BLR36, atp. 55. For
the reasons explained in detail see C.C.P.P., 23-08, 24--04, and 25--01 to 25-03.
95 George Hawkins v. Chrysler U.K. (1986) 38 BLR 36, C.A., distinguishing Greaves & Co.
(Contractors) Ltd. v. Biiynham Meikle & Partners [1975} 1 W.L.R. 1095, and see post,
paras. 2·083-2·087.
96 Young & Marten v. 'McManus Childs [1969] A.C. 454 and see post, Chap. 4,,Section 1(2),
paras. 4·117 et seq. ·,>
91 See per Lord Upjohn in the Young & Marten case, quoted post, Chap. 4,paras. 4· 106-4·107.
IMPLIED TERMS 95
There is in fact a very large jurisprudence on implied terms in all com- 1·184
moo law countries, usually expressed in very similar language. The necess-
ary qualifications for a term to be implied have been well summarised in
the High Court of Australia:
"(1) It must be reasonable and equitable;
(2) It must be necessary to give business efficacy to the contract, so that
no term will be implied if the contract is effective without it;
(3) It must be so obvious that it 'goes without saying';
(4) It must be capable of clear expression;
(5) It must not contradict any express term of the contract."911
·This statement of principle refers, of course, to terms implied "in fact" on
an ad hoc basis, and not to terms implied "in law".
Again in South Africa the leading case on the subject follows the same
general line as the United Kingdom authorities. 99 Similarly in the United
States, Cardozo J.'s famous seminal judgment on the subject also follows
the same principles. 1
Nevertheless, it must be said that, by comparison with a study of 1·185
decided cases, these theoretical expositions of the principles governing
the implication of terms to be found in the case law in all jurisdictions can
only be of limited value when considering ad hoc "business efficacy" prob-
lems arising from individual contracts and situations. In the construction
field, the English courts in particular seem to have been reluctant of recent
years to assist in resolving the numerous practical difficulties and anoma-
lies created by the often difficult and obscure draftsmanship of the United
Kingdom standard forms ( and their frequent failure to deal with matters
of everyday importance), whether by a pragmatic and flexible use of
implied terms or by employing a less "literalist" 2 approach to the
interpretation of these contracts.
Accordingly, all the circumstances and background and all the express
implied, and it follows that every case must be determined in the light of its
own particular facts and language. Decided cases can only be a guide, and
not the final arbiter, as to the terms ,to be implied, other than the special
terms "implied by law" designed to apply to broad classes of transaction
and relationships, which then effectively become a form of substantive
law.
98
B.P. Refinery (Western Port) Pty. Ltd. v. Hastings Shire Council (1978) 52 A.L.J.R. 20, at
p.26.
99
Mullin (Pty.) Ltd.~- Denade Ltd. [1952] 1 S.A.L.R. 211,atpp. 214-215;citingEnglishcases
and Scrutton L.J. m Reigate v. Union Manufacturing Co. [1918] 1 K.B. 592, at p. 605.
1
Utica City Bank v. Gunn (1928) 118 N.E. 607.
2
The term is that of Lord Diplock; see, e.g. Antaios Cia Naviera S.A. v. Salen Rederierna
A.B. (1985) A.C. 191, at p. 201.
 96 GENERAL PRINCIPLES OF LAW [CHAP.1
(2) Application to Building and Engineering Contracts
1·186 With the above warning in mind, some of the more important terms usu-
ally implied in building contracts may be mentioned. In the first place, in
traditional construction projects administered by the owner's A/E, it is
clear that over a comparatively long period of time there will need to be a
high degree of co-operation between the A/E and the contractor, for ex-
ample, in regard to the giving and requesting of necessary working draw-
ings and information, the operation of contractual machinery for
extensions of time, the services of notices and counter-notices requiring
action by the other party, co-ordinating of nominated sub-contractors or
suppliers, co-ordinating the work of other contractors directly employed
by the owner, making available access or sufficient possession of the site as
and when required, and so on.
This particular background to construction contracts gives unusual
practical importance to two correlative and generalised implied terms.
One, sometimes called the prevention principle, is to the effect that nei-
ther party shall do anything to hinder the other from performing the con-
tract. The other is an implied positive obligation to do anything which may
be necessary to enable the other to perform his obligations.3
"There is an implied contract by each party that he will not do anything to
prevent the other party from performing a contract or to delay him in per-
forming it. I agree that generally such a term is by law imported into every
contract. "4
1·187 This principle is sometimes referred to by saying that a party cannot take
advantage of his own wrong in enforcing a contract. "It is a principle very
well established at common law that no person can take advantage of the
non-fulfillment of a condition the performance of which has been hin-
dered by himself" .5 Again, so far as a positive duty is concerned:
"Where in a written contract it appears that both parties have agreed that
something should be done which cannot effectively be done unless both con-
cur in doing it, the construction of the contract is that each agrees to do all
that is necessary to be done on his part for the carrying out of that thing
though there may be no express words to that effect. "6
"I can think of no term that can properly be implied other than one based on
the necessity for co-operation ... The law can enforce co-operation only in a
limited degree-to the extent that it is necessary to make the contract
workable. "7
3
For a discussion of the principle in the context of the architect's duty to supply necessary
information to the builder during construction see per Vinelott J. in London Borough of
Merton v. Leach (1985) 32 BLR 51, at pp. 73--82.
4
Per Vaughan Williams L.J. in Barque Quilpe Ltd. v. Brown [1904] 2 K.B. 264, at p. 274.
'Per Blackburn J. in Roberts v. Bury Commissioners (1870) L.R. 5 C.P. 310, at p. 326. See
also per Kelly C.B. at p. 329.
~ Per Lord Blackburn in Mackay v. Dick (1881) 6 A.C. 251, at p. 263. ~·.
1
Per Devlin J. in Mona Oil Equipment & Supply Co. Ltd. v. Rhodesia Railwa{iLtd. [1949]
2 All E.R. 1014, at p. 1018.
SECT. 6] IMPLIED TERMS 97
Thus a clause entitling a purchaser to rescind if unable to obtain finance
will be subject to an implied term that the purchaser will do everything
necessary to obtain satisfactory finance. 8
This principle not only supports the implication of appropriate terms, 1·188
but has also been used by the courts in the interpretation of contracts.
Thus where a prospective building lessee undertook to complete a devel-
opment by a certain date prior to the granting of the lease, it was provided
that if for any reason due to his wilful default the development then
remained incomplete, the lease should forthwith be completed between
the parties. There was also a due diligence undertaking by the lessee.
There was little progress on the development and the landlords deter-
mined the agreement for breach of the due diligence obligation. The les-
see pleaded that even if he was in wilful default he was nevertheless
entitled to the grant of a lease under the terms of the clause. It was held
that as a rule of construction there was a presumption against a party in
default being able to take advantage of his own wrong, and it was the land-
lord only, and not the tenant, who could take advantage of the clause. 9
Applying these principles to construction contracts, there is not only a
negative implied term that an owner will not interfere with or obstruct an
NE in certifying, but it has been held in Australia that there is a positive
obligation to take steps to see that he performs his duty as a certifier where
he is failing to do so. 10 Again, there will usually be an implied obligation to
appoint a new A/E if the first dies or retires before the contract is com-
plete, it is submitted. 11
In considering the implied obligations of the parties, it will often be of 1·189
crucial importance to decide whether an implied obligation is absolute
and unqualified, or whether it is of a more qualified "best endeavours"
nature. One of the more recent seminal English House of Lords cases on
implied terms, which was not a construction case, illustrates this point
exactly.
ILLUSTRATION
Council tenants in a high-rise building occupied the flats under a simple
written list of tenant's obligations, with no undertakings given by the land-
lords. The lifts were constantly vandalised, leaving the stairs unlit and render-
ing disposal of rubbish arrangements inoperative. Ninth floor tenants
withheld rent claiming breach of an implied term of the tenancy contract. The
council argued against any obligation at all. Held, by the House of Lords,
since lift accesS was essential, an obligation to take reasonable care to main-
"Me_ehan v. Jones (1982) 149 C.L.R. 571, H.Ct., Australia.
• Alghlissein Establishmentv. Eton College [1988] 1 W.L.R. 587, H.L.
"'Perini Corporation v. Commonwealth [1969] 2 N.S.W.R. 536, explaining Panamena
Europea Navigacion (Compania Limitada) v. Frederick Leyland & Co. Ltd. [1947] A.C.
428. See post, Chap. 6, Section 5(4).
" See, e.g. Croudace v. Lambeth Borough Council (1986) 33 BLR 25 and see also post, Chap.
4, Section 2(5).
 98 GENERAL PRINCIPLES OF LAW [CHAP.!
tain the common parts in a proper state of repair should be implied, but that
on the facts that term had not been broken. It was unnecessary to imply an
absolute obligation on landlords to maintain the services independent of
fault: Liverpool City Council v. lrwin (1977). 12
Thus there will be an implied term in construction contracts that other
contractors of the owner will not impede the contractor, and this term will
in Commonwealth countries usually be unqualified and independent of
fault. 13 (This is one of the areas where, in federal government jurisidic-
tions, United States law has appeared to differ in imposing only a due care
or best endeavours obligation on the owner in regard to co-ordinating his
other contractors. 14 Again, in the United Kingdom an injunction success-
fully obtained by a third person against the contractor as a result of a
defect in the owner's title to the land will breach an unqualified obligation,
but in the case of a third party wrongfully obtaining an ex parte injunction
or trespassing, for example, the owner's implied obligation will only be
one of due care. 15 There may, however, be intermediate categories of third
party interference where the responsibility between owner and contractor
may be unclear and formulation of an implied term not easy. 16 Thus in
Australia a third party obtained an injunction preventing 24-hour working
in a tunnelling contract in a built-up area, provoking a controversial
decision in the High Court of Australia which negatived any implied obli-
gation of the owner but nevertheless found that the contract had been
frustrated. 17
1·190 The principle has been invoked in a construction contract, in what
seems a doubtful decision of an Official Referee in England, in order to
place a building owner under an implied obligation to order a variation, in
a case where the design and certain materials selected by specialist sub-
contractors for aluminium windows had permitted rainwater penetration
during construction, which in turn was preventing completion of the
remaining work. 18 That case was, however, distinguished and not followed
in 1991 by Judge Forbes Q.C. on the ground that the contract before him
was expressly of a lump sum and "design-and-build" character, so leaving
no room for the implication of such a term. 19
The preceding discussion may have served to show the overwhelming
practical importance in construction contracts of implied terms, one or
'' [1977] A.C. 239.
iJ See post, Chap. 4, Section 2(2)(c)(i).
"See U.S. v. Foley 329 U.S. 64 (1946) and the other U.S. Supreme Court Cases of Crook v.
U.S. 270 U.S. 4 (1926) and U.S. v. Rice 317 U.S. 61 (1942), referred to in C.C.P.P., paras.
27-56.
,, See post, Chap. 4, Section 2(3)(c)(i), para. 4·157.
16 See C.C.P.P., paras. 27-56 to 27-f:,6 for a full discussion on this difficult subject.
17 Codelfa Construction v. State Rail Authority of New South Wales (1982) 56 A.L.J.R. 459,
illustrated and discussed post, Chap. 4, Section 2(3)(c)(v), paras. 4·166 and 4·260.
•~ Holland Hannen & Cubitts (Northern) Ltd. ·v. Welsh Health Technical Services
Organisation (1981) 18 BLR 80, per Judge Newey Q.C., doubted past; Chap. 4,
Section 1(2)(a)(i). para. 4·095. Y,·
1~ Davy Offshore Ltd. v. Emerald Field Contracting Ltd. (1991) 55 BLR 1.
SECT. 6] IMPLIED TERMS 99
other category of which will almost invariably need to be invoked in the
great majority of construction disputes (largely, it must be said, because of
failures of the traditional draftsmanship of the standard forms to spell out
the principal obligations of the parties more clearly in positive terms).
Some of the more important terms usually implied in construction con-
tracts may be mentioned. It has already been noted that a range of implied
obligations as to design or quality will apply to such contracts, which are
closely allied to their counterparts in the law of sale of goods. Thus there
will usually be implied terms that materials and workmanship shall be of a
proper standard or quality, and this even where the owner has not relied
on the contractor but has selected a named product with only one
manufacturer.20 ·
Where the employer does hot employ an architect or other adviser, so 1·191
that he is relying on the skill and judgment of the contractor, and the latter
provides the design or specification, there is an implied term not only that
the work will be carried out in a proper and workmanlike manner and with
proper materials, but also that the work, when completed, will be suitable
for its required purpose (for instance, in the case of a dwelling-house, fit
for human habitation). 21
But the latter part of the term fitness or suitability will not be implied if
what the contractor undertakes is to build a house in accordance with the
owner's plans and specification, a fortiori if also to the satisfaction of the
owner's architect or engineer ( although there may be a duty to warn of any
deficiences in the design of which he is or should be aware). In the case of a
house bought by a purchaser, the maxim caveat emptor applies, and no
undertaking as to its qualithy or suitability will be implied on the part of
the vendor. But in the case of a sale of a house still in the course of erec-
tion, if the vendor is undertaking to complete it for the purchaser accord-
ing to the vendor's plans or specification, the same term as in the case of a
house built tO the contractor's design will be implied. 22
On the other hand, where (as almost invariably is the case) the contract
is an entire contract in the legal sense,23 so that the contractor not only
undertakes to carry out but also to complete the work for a price in accord-
ance with the owner's designs or specification, there is no room for any
implied undertaking by the owner that completion in accordance with the
design or specification is possible or practicable. Accordingly the con-
tractor will have to pay damages if he cannot complete, and will be unable
to recover extra payment for any additional or unexpected work necess-
ary to achieve completion.24 Similarly, where available information as to
expected soil conditions has been supplied by the owner, as is very com-
2
" See post, Chap. 4, Section 1(2)(b).
11 See post, Chap. 4, Section 1(2)(a).
12
See post, Chap. 4, Section 1(2)(a), and see per Lord Denning M.R. in Hancock v. Brazier
(Anerley) Ltd. [1966] 1 W.L.R.1317.
1
1. See post, Chap. 4, Section 1(1)(b).
24
See post, Chap. 4, Section l(l)(b).
 100 GENERAL PRINCIPLES OF LAW (CHAP. I
man, implied terms that the information was "reasonably accurate or at
least not erroneous or misleading", and that the design was "reasonably
constructible within the time specified", were rightly rejected by the
Alberta Court of Appeal as being inconsistent with contractual dis-
claimers of responsibility and requirements that the contractor was to
make his own investigations and satisfy himself as to the conditions affect-
ing the works. 24"
1·192 Where a building owner's architect is given power under the contract to
decide matters between the contractor and owner in his capacity as a certi-
fier under the contract, there is an implied term that the owner will not
interfere with the free and independent exercise of that function by his
architect, (and also, see supra, that he sees that the architect duly carries
out any contractual obligation to perform his certifying function). 25
In general, there is no implied right to receive payment on account, or
by instalments, of the price before completion (one difficulty would be to
know what instalments and what periods to include in such an implied
term) where a contractor (as is usually the case) on the true construction
of his agreement undertakes to carry out and complete a defined work,
and it will make no difference that the contract may contain provisions for
adjusting the price or varying the work. 26
If the contract date for completion has passed, an implied obligation to
complete within a reasonable time will be substituted. In addition, an obli-
gation to carry out the work with reasonable diligence and due expedition,
throughout the period of construction, will also need to be implied, con-
sistent with the contract period (if any). 27
1·193 Again, drawings and information to enable the work to be carried out
must be made available by the architect within a reasonable time, but no
more precise definition of this most important implied obligation which
may be generally applied can probably be given, and the obligation needs
to be assessed in any particular case in the light of a number of possibly
relevant considerations. u
In addition, a sufficient degree of clear access to and undisturbed pos-
session of the site must be afforded by the owner including on any adjoin-
ing land of the owner. 29 Architects or engineers in private practice have no
general ostensible authority to bind their employers in contract,30 and no
implied authority under a building contract, whether before or during
their administration of the contract, to vary the work in any way. 31 Even
under their express authority, in the vast majority of cases at the present
day, architects have no authority to commit the owner to pay for com-
pliance with their instructions, if on a true view of the contract the work in
24
•Catre Industries Ltd. v. Alberta (1990) 63 D.L.R. (4th) 74, Alberta C.A., illustrated post,
Chap. 4, para. 4·052.
~ See post, Chap. 6, Section 5( 4).
26
See post, Chap. 4, Section l(l)(a)(iii), para. 4·023.
i, See post, Chap. 4, Section 1(3); Chap. 9, Section 7.
211
See post, Chap. 2, Section 6(2)(c) and Chap. 4, Section 2(4).
i<i See post, Chap. 4, Section 2(3).
:,11 See post, Chap. 2, Section 4(3).
>1 See also post, Chap. 7, Section 1.
SECT. 6] IMPLIED TERMS IOI
question, whatever the architect may have thought, is included in the con-
tractor's price and not a variation. 32
These are but a small number of the propositions in relation to building
and engineering contracts which are founded on the principles of the
implication of terms. It goes without saying that they are valid only in the
absence of express provision to the contrary.
It may also be of interest to draw attention to a few examples of cases in 1·194
the construction field where the English courts have refused to imply a
term on the ground of absence of business efficacy or, as a result of adopt-
ing a "literalist" approach which, despite sometimes effusive prot-
estations to the contrary,32a seems to be an increasing tendency of recent
years, on the ground that the wording was clear, however unreasonable, or
because an implied term could not be precisely formulated. Thus in one
case the English building standard form made a final certificate conclusive
evidence as to the quality of the work, "in any proceedings" unless notice
of arbitration was given by the owner prior to issue of the certificate. The
House of Lords held that the words applied to proceedings commenced
before as well as after the certificate was issued.33 Many observers might
think that, within the rules as to implied terms and on the b3sis of the
obvious commercial objective of the provision, the words meant sub-
sequent proceedings, arrived at by the "goes without saying" or "officious
bystander" tests, or alternatively that as a simple matter of interpretation
of the contract the House of Lords, as between two possible constructions
could hardly choose the most unreasonable one, not only contrary to the
intention of the parties, but inevitably productive of the most extraordi-
nary procedural difficulties and anomalies. Again, in the Codelfa case
which has been previously mentioned, the tunnelling contractor had
inquired of a public owner whether there would be any interference by the
public with his proposed intention of seven-day, three-shift working
through a built-up area. The authority assured him that under their con-
stituent legislation the authority was entitled to immunity for nuisance.
Members of the public in fact successfully obtained injunctions, on the
perhaps surprising ground that the statute conferred immunity on the
authority themselves but not on contractors they might choose to employ.
The High Court of Australia, in a controversial decision, rejected an
implied term accepting responsibility for such third party interference,
though they did find that the contract had been frustrated. 34
Again, in a particularly striking case, a contract provided for three 1·195
phases of construction, with named starting and completion dates for
each, and with the starting dates of the two later phases clearly physically
and technically dependent on completion of the preceding stage. There
were the usual provisions for extension of time, but the parties forgot to
3
"' See post, Chap. 7, Section 1. 2.o See infra, para. 1·217.
33
Hosier & Dickinson Ltd. v. P. & M. Kaye Ltd. [1970J 1 W.L.R. 1611,criticisedpost, Chap. 6.
34
Codelfa Construction v. State Rail Authority of New South Wales (1981) 149 C.L.R. 327,
which considers the Australian and other authorities on implied terms in detail and is
illustrated and discussed post, Chap. 4, Sections 2(2)(c) and 3(3).
 102 GENERAL PRINCIPLES OF LAW (CHAP. I
deal with the need to alter the starting and completion dates of the later
phases should extensions be in the event granted or delays occur in the
previous phases. The contractor sought an opportunistic financial advan-
tage from this by objecting to nominations of sub-contractors for the later
stages which did not comply with the unaltered and now in practical terms
impossible starting and completion dates for those.phases. The House of
Lords, while admitting that the contract as it stood could not represent the
parties' intention, refused any implied term on the ground that there were
at least three possible ways of formulating such a term and it was not poss-
ible to choose between them. 35
1·196 It should be pointed out that there is a very close connection between
the rules for the implication of terms and the rules for interpreting
ambiguous or unclear provisions in contracts: "The implication of a term
is an exercise in interpretation, though not an orthodox exercise. "36 One
judge or tribunal may purport to arrive at a conclusion as a matter of con-
struction of the existing wording of the contract, while another may reach
the same result by the implication of a term. A more general example of
this is to be found in the law of frustration of contracts, where historically
frustration has variously been attributed to the implication of a term on
the one hand, or the true construction of the contract on the other.37 Thus
the evidentiary rules about the admissibility of extrinsic evidence to
resolve such difficulties tend to be the same both in regard to implication
of terms and interpretation of contractual provisions. The principles of
interpretation of contracts are discussed infra, Section 9.
(3) Implied Covenant for Good Faith and Fair Dealing
1·197 This doctrine, based on implied covenant, has its origins in Roman law,
and has been nominally adopted in nearly all American State jurisdic-
tions, but does not appear to have been accepted in English law as yet.3s
"Broadly speaking, that covenant requires that neither party do anything
which will deprive the other party of the benefits of the agreement. " 39 The
rule extends to conduct such as that of a powerful defendant pursl.iing a
contractual defence in bad faith against a plaintiff of limited means, or
attempting to secure decisions of regulatory bodies which would exclude
further performance by itself,40 and was no doubt a partial response to
35
Trollope & Col/sv. North Western Metropolitan Regional Hospital Board [1973] 1 W.L.R.
601, illustrated post, Chap 10, Section 3(7).
36
Per Mason J. in the High Court of Australia in Codelfa Construction Ltd. v. State Rail
Authority of New South W~les (1981) 149 C.L.R. 327, at p. 345.
37
See post, Chap. 4, Section 3(3).
JM See per Vinelott J. in London Borough of Merton v. Leach (1985) 32 Build LR 51, at p. 80,
and see Steyn J.'s lecture "The R6le of Good Faith and Fair Dealing in Contract Law",
Oxford University May 16, 1991, discussed by Priestley J.A. in Renard Constructions
(M.E.) Pty. Ltd. v. Minister of Public Works (1992) 26N.S.W.L.R. 234illustrated and con-
sidered post, Chap. 12, Section 1(5) and (6), para. 12·025. ,·
3
• Seaman's Direct Buying Service v. Standard Oil of California 686 P. (3d) 1158'{1984).
40
See Seaman's case, supra.
SECT. 6] IMPLIED TERMS 103
the advantage enjoyed by substantial defendants in United States courts
where successful plaintiffs would not be able to recover their legal costs
from the defendant. Classically the earlier applications of the doctrine
arose from the tactics of insurance companies in unreasonably delaying or
resisting settlement of justified claims.41
The doctrine was applied originally in contract only, but was extended
to cases of tort in 1958 in California, so as to enable punitive damages to be
recovered, and by 1984 in a number of other States. 42 However, it has since
been restricted to contract in California in all but insurance cases. 43 It has
provoked a very considerable academic literature in the United States.44
These examples of the doctrine would appear to some extent to overlap
with situations which might be covered by the relatively new concept of
economic duress which has been, nominally at least, accepted by English
law as in principle rendering a contract voidable or money paid
recoverable. 45
It is also, however, clear that in some of its applications the doctrine may
overlap or be largely indistinguishable from an implication of reasonable-
ness, particularly when interpreting contractual enforcement provisions,46
or from a recently suggested approach of fairness if particular contractual
terms are to be binding.47 It also overlaps closely in its operation with
express stipulations between contracting parties for differences to be set-
tled ex aequo et bona or by "amiables compositeurs", as recommended or
permittecf by the UNCITRAL model law of arbitration, in those countries
which have adopted it.
Good faith and fair dealing "in the performance or enforcement" of 1·198
every contract governed by the United States Uniform Commercial Code,
which latter first emerged in 1951 in the United States, was enjoined by
section 1-203 of the Code, and has now been widely adopted in those
nominal terms by nearly all the American State jurisdictions. In the orig-
inal Uniform Code it was defined as "honesty in fact in the conduct of
transactions concerned" by section 1-201 of the Code, perhaps a restric-
tive definition, 48 but by the United States Restatement (Second) of Con-
tracts in 1981 the proposition was stated without any such potential
41
See, e.g. the seminal cases of Communale v. Traders & General Insurance 328 P. (2d) 198
(1958); Crisciv. Security Insurance 426 P. (2d) 173 (1967); and Egan v. Mutual of Omaha
620 P. (2d) 1411. See also Paul Hardeman v. Arkansas Power380 F. Supp. 298 (1974).
42
See Seaman's case, supra.
•i Foley v. lnteractive Data Corp. 254 Cal. Rep. 211 (1988).
"'"'. See, e.g. Summers, (1968) 54 Virginia L.R. 195 for a classical statement of the earlier pos-
ition; Burton, (1980) 94 Harvard L.R. 369 (contract and tort), and in (1981) 67 Iowa L.R. 1;
Kornblum, (1981) 30 Def. L.J. 411; Lowderback & Jurika, (1982) U.S.F. L.R. 187 (tort);
and Diamond, 64 Marq. 425 (tort). See also Farnsworth, (1963) 30 University of Chicago
Law Review 666.
45
See Chitty, op. cit. at para. 481, and the cases discussed in paras. 486-487, the latter suggest-
ing such duress as the better explanation of D. & C. Builders Ltd. v. Rees, illustrated supra,
Section 2(8)(b), para. 1·075, and see infra, Section 13, Economic Duress, para. 1·390.
6
i As in Renard Constructions Ltd v. Minister of Public Works (1992) 26 N.S.W.L.R. 234, see
post, para. 12·025.
7
i See per Bingham LJ. in Interfoto Picture Library Ltd. v. Stiletto Visual Programmes Ltd.
[1989] 1 Q.B. 433, at p. 455.
4
~ See Summers op. cit. supra.
 104 GENERAL PRINCIPLES OF LAW [CHAP.!
qualification: "Every contract imposes on each party a duty of good faith
and fair dealing in its performance and its enforcement. " 4~ The doctrine is
also required to be applied in its own interpretation by Article 7(1) of the
United Nations Convention on International Contracts for the Sale of
Goods.
One difficulty about the good faith concept, despite its widespread if not
enthusiastic formal acceptance or adoption by United States jurisdictions
and by international institutions, is the absence of any clear and accepted
assessment or statement expressing in positive terms what the doctrine
actually is. Summers, in an attempt to do so in 1968, which was then widely
accepted as authoritative, felt forced to concede that in the cases the
expression had merely been used judicially to identify a number of
unrelated types of conduct incurring judicial disapproval and defined as
bad faith. 50
1·199 In regard to enforcement of contractual provisions, the doctrine would
seem to have as its two nearest English equivalents the prevention prin-
ciples1 and the equitable doctrine of relief against forfeiture. This latter is
discussed post, Chapter 12,52 where despite recent formulations of that
principle in relatively liberal terms in the House of Lords, its practical
extension (in what might be described as opportunistic contractual deter-
minations) to commercial fields outside conveyancing and landlord and
tenant law has so far been almost non-existent.
Discussion of the doctrine of good faith and fair dealing cannot end
without reference to the recent wide-ranging review of the doctrine and of
its recent history and of the authorities and sources in the United States
and Commonwealth, and also internationally, by Priestley J.A. in the
Court of Appeal of New South Wales. 53
SECTION 7. CUSTOM AND TRADE USAGE
(1) Generally
1·200 It is possible for trade customs of a particular trade or locality, more cor-
rectly in law called trade or mercantile usages, to form part of the terms of
a contract, although not expressly incorporated in the written or oral
agreement of the parties. They may further show that the words of a con-
tract are used in a special or different sense from their ordinary meaning,
or may attach incidents or obligations to the contract where it is silent. The
incorporation of trade usages is, however, subject to certain conditions
•9s.205.
~0 See this noted by Priestley J.A. in the Renard Constructions case, supra, (1992) 26
N.S.W.L.R. 263 et seq., illustrated and discussed post, Chap. 12, Section 1(5) and (6), para.
12·025.
~ 1 Discussed supra, paras. l ·186--1 ·187.
2
~ Section 1(5). . ,· ;'
>.J In the Renard Constructions case, supra, at pp. 263--8. See also the case 11Iustrated and
discussed post, Chap. 12, Section 1(5) and (6), para.12·025.
SE=. 7] CUSTOM AND TRADE USAGE 105
which render such incorporation much rarer than laymen engaged in the
trade frequently suppose or would wish.
A trade usage consists of a course of dealing or line or conduct generally
adopted by persons engaged in a particular trade-dealing or conduct
which has become so notorious that where persons contract in that trade
and locality, they are assumed in law to have intended to be bound by such
dealing or conduct, except in so far as they have by the terms of their
contract expressly or impliedly excluded it. To be a valid trade usage,
capable of forming part of the bargain between the parties, a usage must
satisfy four conditions.
First, it must be notorious, that is to say, so well known in the trade that
persons who make contracts of a kind to be effected by such usage must be
taken to have intended that such usage should form part of their con-
tracts.54 Notoriety is a matter of evidence.
Secondly, the usage must be certain: it must have the same degree of 1·201
certainty as any other contractual term. The issue of certainty is an issue of
law. Thus, for example, it would be of no avail to prove a widely recog-
nised practice in the building trade for the building owner to retain a pro-
portion of the contract price for a period after completion, if it were not
also possible to prove a certain proportion and a certain period of equally
wide recognition. 55
Thirdly, the usage must be reasonable: what is reasonable is a question
of law. A usage cannot be reasonable unless it is fair and proper and such
as honest and right-minded men would adopt. 56 A usage which is of gen-
eral convenience to all parties engaged in the trade will not usually be
regarded as unreasonable. 57
Fourthly, the usage must not be contrary to law: a usage which sanc-
tioned conduct which was illegal or even contravening the intention or
policy of a statute would be void. 58
(2) Incorporation of Usage
If a usage satisfies the above conditions, then the express terms of a con- 1·202
tract in the trade to which the usage applies are to be regarded as express-
ing what is peculiar to the bargain between the parties, while the usage
supplies what is usual and unexpressed. The usage is just as much a part of
the bargain between the parties as the express agreement:
"The custom, when proved, is to be considered as part of the agreement: and
if the agreement be in writing, though the custom is not written, it is to be
s• The usage must also be general, and not confined to a particular market or locality: Re
Goetz, exp. the Trustee [1898} l Q.B. 787.
ss Devonald v. Rosser & Sons [1906] 2 K.B., 728, at p. 743.
56
See TancredArrol & Co. v. Steel Co. of Scotland (1890) 15 App.Cas. 125, at pp. 136--137,
per Lord Halsbury.
57
Ibid.
ss Daun v. City of London Brewery (1869) LR. 8 Eq. 155, at p. 161.
 106 GENERAL PRINCIPLES OF LAW [CHAP.1
treated exactly as if that unwritten Customary clause had been written out at
length."59
It is, however, always possible for the parties by the terms of their contract
to exclude the operation of a trade usage, either expressly or impliedly:
"An alleged custom can only be incorporated into a contract if there is noth-
ing in the express or necessarily implied terms of the contract to prevent such
inclusion and, further, a custom will onl)' be imported into a contract where it
can be so imported Consistently with the tenor of the document as a whole. "60
A usage or custom needs to be distinguished from a previous course of
dealing between the parties from which a term can always be implied into
a later similar transaction between the same parties. In the case of a cus-
tom a party choosing to deal in that market may be bound notwithstanding
his ignorance of the custom, whereas notice of a previous course of dealing
will be needed if a party is to be bound by it. But one or two previous
dealings will not usually suffice, and some frequency and regularity will be
required. 61 Nor will a previous course of dealing suffice to import a term if,
while aware in general terms of some limitation of risk imposed by the
other party, there was no knowledge of its details sufficient to imply
acceptance.62
1·203 It is important to distinguish between trade usages and those provisions
which are common to the standard forms of contract so often used in the
building industry. There is, of course, no general custom in the building
industry for standard forms of contract to be used, nor do the specific pro-
visions of such standard forms, whether as to retention funds, interim pay-
ment, fluctuations, variations or other matters, afford any evidence of
trade usage. The widespread use of standard forms of contract merely
shows that a large number of builders and building owners prefer or find it
convenient to contract in the same terms. Indeed, an agreement requiring
the members of the Building Trade Employers' Federation (that is, main
contractors) not to tender for contracts of over £8,000 without using a
form of contract employing bills of quantities has been held contrary to
the public interest under the Restrictive Trade Practices Act 1956,63 so
that reliance upon the standard forms as evidence of custom would appear
to be doubly misguided. Moreover the United Kingdom standard forms
are themselves subject to fairly frequent revision, and are in many respects
open to criticism on grounds of unreasonableness and obscurity.64
s~ Per Lord Blackburn in Tuckerv. Linger (1883) 8 App.Cas. 508, at p. 511.
'"' Per Jenkins L.J. in London Export Corporation Ltd. v. Jubilee Coffee Roasting Co. Ltd.
[1958] 1 W.L.R. 661. at p. 675.
•• Hollier v. Rambler Motors [1972] 2 Q.B. 71, at p. 76, per Salmon L.J., cited by Lord
DenningM.R. in British Crane Hire Corp.-Ltd. v. Ipswich Plant Hire Ltd. [1975] Q.B. 303,
at p. 310.
62
McCutcheon v. David MacBrayne Ltd. [1964] 1 W.L.R. 125.
"-' Re Birmingham Association of B. T.E. 's Agreement [1963] 1 W.L.R. 484. :·.
64
See post, Chap. 2, paras. 2· 169-2·181, and see also C.C.P.P., Chaps. 29 and 30 fOi' omissions
of the forms to afford adequate protection of the reasonable interests of owners.
SECT. 7] CUSTOM AND TRADE USAGE 107
Trade usage is a variable thing in the sense that a trade usage, once
recognised by law, does not necessarily remain a trade usage for ever
thereafter. Since it must be established that it is notorious, if a trade prac-
tice falls into disuse, it loses its notoriety and ceases to be a valid usage.
The illustrations quoted below are not therefore authority that the prac-
tices there recognised as trade usages are still trade usages at the present
day.Just as trade_ usages may lapse, new practices may become valid trade
usages. For example, it may be that the incid~nts of the "P-C sum" or
"provisional surri" expressions are now sufficiently well-known for at least
some meaning and effect to be given to them in a contract,65 although the
detailed incidents of contract provisions which employ those terms can in
fact vary considerably.66
(3) Admissibility of Evidence of Trade Usage
It is a general principle of English law that oral evidence is not admissible 1·204
to contradict, vary, add to or subtract from the terms of any written docu-
ment,.including a written contract. To this principle there are numbers of
exceptions, one of which is that extrinsic evidence is admissible to estab-
lish a custom or trade usage to be annexed to the written contract, but as
has been nOted above, such usage must be consistent with the terms and
tenor of the written contract.67
ILLUSTRATIONS
(1) The plaintiff, a quantity surveyor, was employed by an architect to pre-
pare bills of quantities on which builders were to tender. The specification on
which the builder tendered provided: "To provide copies of quantities and
plans 25 guineas to be paid to the surveyor out of the first certificate." The
defendant's tender was accepted, but he failed to pay the plaintiff out of the
moneys received under the first certificate. It was established by evidence that
there was a recognised practice that in the event of a tender being accepted
the successful builder was liable for the quantity surveyor's fees, but if no
tender was accepted then the building owner was liable. Held, that the usage
was reasonable and valid and that the plaintiff was entitled to recover his fees
from the builder: North v. Bassett (1892).61!
(2) The plaintiff employed the defendant, an architect, to design alterations 1·205
for certain houses and supervise the work. This the defendant did for an
"-
1
See, e.g. the remarks of Stephen J. as to the meaning of "PC sums" in the High Court of
Australia in Tuta Products v. Hutcherson (1972) 46 A.L.J.R. 119,post, Chap. 13, Section
3(3), paras. 13·089-13·093.
6
' See post, paras. 3·020-3·021 and Chap.13, Section3(3) paras.13·089-13·093. In Schofield v.
Scarborough Corporation (1958) 172 E.G. 809, the court of Appeal appear to have been
ready in principle to imply a term in an incomplete contract for a part of the work to be
priced as a "PC sum", but the report is not at all easy to follow.
07
Hutton v. Warren (1836) 1 M. & W. 466, 475; Humphrey v. Dale (1875) 7 Ex.B. 66.
r.M [1892] 1 Q.B. 333. The usage probably does not exist at the present day. See post, Chap. 2,
paras. 2·283-2·284, for a discussion of this topic.
 108 GENERAL PRINCIPLES OF LAW [CHAP.1
agreed remuneration of 5 per cent. on the contract price of the work, and the
defendant was paid on completion of the work. The defendant then refused to
hand over the plans of the alterations, claiming that, by usage, the property in
the plans remained vested in the architect. Held, that the usage, if it existed,
was unreasonable and therefore void: Gibbon v. Pease (1905). 69
(3) A specialist tiling contractor, following a meeting with a timber flooring
Contractor and the owner, suggested plywood on top of sanded laminated
wood as a suitable surface for his tiling during a later discussion, and the floor-
ing contractor duly provided that floor. There was no supervising architect.
Neither the flooring nor tiling contractors warned the owner that some system
of waterproofing would be needed before laying the tiles. The tiler, when
suing the owner after laying tiles without the waterproofing, which resulted in
defective work, sought to lead evidence that there was a usage in the trade in
Vancouver to the effect that each contractor relied upon the efficacy of the
work of other contractors. Held, by the British Columbia Court of Appeal,
that such a usage in so far as it related to the facts before the Court was not
reasonable: Sanson Floor Company v. Forst's Ltd. (1942). 70 '
(4) In a case where an architect had work done on his own house by a build-
er in excess of the licensed amount, it was admitted to be the universal prac-
tice for architects to do everything necessary for the purpose of obtaining a
building licence for the work, and in the absence of negligence by the builder
he was held entitled to recover on a valid collateral promise to obtain the
licence where his action for the balance due would have been defeated by a
plea of illegality: Strongman v. Sincock (1955). 71
1·206 (5) An arbitration in accordance with trade rules provided for a right of
appeal from the decision of the umpire to a board of appeal. The rules pro-
vided that the umpire should not be a member of the board of appeal. In
accordance with their practice of some 50 years the board, having heard the
appeal, invited the umpire to remain behind with them whilst they considered
their decision, despite the protest of all of the parties to the reference. Held,
that the practice was repugnant to the provisions of the rules, and as such was
not a trade usage but merely a long-established irregularity, and that the
board's award should be set aside: London Export Corporation Ltd. v.
Jubilee Coffee Roasting Co. Ltd. (1958). 72
(6) Under the then RIBA standard form of contract a builder expressly
undertook to comply with the by-laws. Held, by the Court of Appeal, that he
was liable to the owner for the cost of bringing the work done into conformity
with by-law requirements, notwithstanding the custom that the architect was
responsible for seeing to this: Townsend (Builders) Ltd. v. Cinema News
(1959)."
[Note: The subject of liability for by-law compliance is not a black and
white one, or very precisely covered by the current United Kingdom legis-
lation. Undoubtedly there are some areas where contractor responsibility, as
opposed to that of the architect, will be high, as, e.g. where excavation reveals
unexpected ground conditions or obstructions affecting foundations design
or drainage. In addition, under nearly all standard forms in the United King-
dom the contractor undertakes expressly to comply with by-law require-
•• [1905] 1 K.B. 810. See post, Chap. 2, para. 2·272.
10 [1942] 1 W.W.R. 553, at p. 560.
71
[1955] 2 Q.B. 525. Illustrated more fully post, Chap. 4, Section 3(6), paras. 4-_28,0-4·282.
12 [1958] 1 W.L.R. 661. -~;.
n [1959] 1 W.L.R. 119. Illustrated more fully post, Chap 4, Section 3(6), paras. 4·280-4·282.
SECT. 7] CUSTOM AND TRADE USAGE 109
ments, though usually with compensation provided for, subject to notice
being given. 74]
(7) Plant hire contractors had, exceptionally, undertaken some recla- 1·207
mation work and, lacking an available crane, hired one with its driver from
another plant hire contractor to do work in marshy ground. Conditions 6 and
8 of the plant owner's conditions, which were similar to those used by the hirer
himself when letting out cranes, and which were variants of the Contractors'
Plant Association form, governed the parties' responsibilities in bad ground
and for the actions of the owner's driver. The crane became bogged down on
two occasions, on the first due to the driver's failure to obey the hirer's
instructions, but on the second without negligence on the driver's part. The
order had been accepted at short notice without reference to any conditions.
Held, by the Court of Appeal, there had been no sufficient previous course of
dealing (two transactions in the preceding year), but both parties were in the
same trade and knew that finns in the trade habitually imposed such con-
ditions and the substance of those conditions. Per Lord Denning M.R., the
parties' conduct showed a common understanding that the working was to be
on the tenns of plant owners' usual conditions, which entitled the plant own-
ers to compensation for the second accident, but not for the first: British
Crane Hire v. Ipswich Plant Hire (1975).75
Examples of mercantile or trade usages sufficient to attach incidents
and obligations to a contract are likely to be rare in the case of construc-
tion contracts proper, as opposed to some of their associated sub-supply
and other contracts, but the principle can often be of assistance in admit-
ting evidence to show that names or expressions used in the contract docu-
mentation have a special meaning in the industry. Thus evidence was
admitted to show that the words in a sub-contract incorporating "the
appropriate form for Nominated Sub-Contractors RIBA 1965 Edition"
would be understood in the trade as referring to the NFBTE/FASS 1963
"Green Form" sub-contract.76
SECTION 8. COLLATERAL AGREEMENTS
It has already been seen that a contract may be partly oral and partly in 1·208
writing, or that it may be concluded by separate documents or statements
or conduct indicating offer, possibly one or more counter-offers, and
finally acceptance, from which it follows that not all the terms of a contract
need necessarily be found in any one document or statement. Again, the
course of negotiations may produce agreement on successive terms until
ultimately a point of time is reached at which the contract is finally
74
For bye-law liabilities of the parties, see post, Chap. 2, paras. 2·146-2·147 and Chap. 4,
Section 3(6).
75 [1975] Q.B. 303.
1
• Modern Building Wales Ltd. v. Limmer & Trinidad Co. Ltd. [1975] 1 W.L.R.1281:see also
Brightside Kilpatrick Engineering Services v. Mitchell Construction (1973) Ltd. [1975]
2 Lloyd's Rep. 493, both illustrated post, Chap. 13, Section 4(3)(b ), para. 13· 105.
 110 GENERAL PRINCIPLES OF LAW [CHAP. I
concluded. Such an agreement ·may be concluded notwithstanding that
the parties' intention from the beginning was to enter into a formal con-
tract, but that in the event no such document was ever signed at an.n It is,
therefore, perfectly possible, at some time prior to the final conclusion of
the contract, to agree on some of its terms either orally or in other written
docwnents or letters, and these other agreements will form part of and
supplement the remainder of the contract documen(s.
In the case of construction contracts, less formally concluded sub-
contracts and sub-supply contracts will frequently be contained in a con-
secutive series of separate documents or verbal exchanges up to the time
of full agreement being reached. - existence of an animus contrahendi on the part of all the parties to them must
1·209 More formal construction contracts, however, including nearly all the
standard forms, are usually intended to result, as in many other areas of
contract, in a finalised contract documentation to be executed by the par-
ties. Some standard forms, which usually take the form of printed con-
ditions of the contract, specifically provide for a later more formal
contract.78 While in other areas of contract this may be a simple document
( as, for example, an agreement for a lease or for the sale of land), the size
and complexity of the technical docwnentation in a construction contract
usually means that some master document will formally list or identify for
incorporation as contract documents the contract conditions themselves,
drawings, specifications, schedules of rates or prices and perhaps bills of
quantities, together with any other documents desired for incorporation,
such as exchanges of letters on particular points, site reports and so on.
From the point of view of the rules relating to collateral contracts, there is
no difference in principle between a single document in the former cate-
gory or a group of documents linked by some form of master document in
the latter. Each purports on its face to be a complete and comprehensive
contract documentation of what has been agreed between the parties.
1·210 Where the parties have signed what purports to be a complete contract
document, the perhaps excessive preoccupation of English law With the
written or printed word raises a very strong presumption that this is
intended to supersede any previous agreements during the negotiating
period:
"It appears to me that the result is that this case is an illustration of a broad
principle of law which is perfectly well known and is constantly acted upon,
namely, that where a preliminary contract of any description, whether verbal
or written, is intended to be superseded by and is in fact superseded by one of
a superior character, then the later contract-the superior contract-pre-
vails, and the stipulations in the earlier one can no longer be relied upon. "79
1·211 A party putting forward an earlier collateral agreement therefore under-
takes a heavy burden of proof, since the courts, certainly in the ·past,
11
See, e.g. Trollope & Colts Ltd. v. Atomic Power Constructions Ltd. [1963] 1 W.L.R. 333,
post, Chap. 3, paras. 3·057-3·059.
7
s See Clause 9 of the ICE and FIDIC contract conditions, and, e.g. the form ot;,igreement
provided with those forms. ,,.
19
Per Wills J. in Greswolde-Williams v. Barneby (1901) 83 L.T. 708, at p. 711.
SECT. 8] COLLATERAL AGREEMENTS 111
have tended to presume (in spite, it must be said, of a disappointing tend-
ency to the contrary in real life) that the parties will normally take the
more logical course of amending their main agreement rather than rely on
relatively less formal collateral agreements. Thus it has been said:
"But such collateral contracts must from their very nature be rare ... the
more natural and usual way of carrying this out would be by so modifying the
main contract and not by executing a concurrent and collateral contract.
Such collateral contracts, the sole effect of which is to vary or add to the terms
of the principal contract, are therefore viewed with suspicion by the law.
They must be proved strictly. Not only the terms of such contracts but the
be clearly shown. Any laxity on these points would enable parties to escape
from the full performance of the obligations of contracts unquestionably
entered into by them and more especially would have the effect of lessening
the authority of written contracts by making it possible to vary them by sug-
gesting the existence of verbal collateral agreements relating to the same
subject matter."80
Where an alleged collateral agreement is inconsistent with or varies or 1·212
Contradicts a later more formal and apparently complete agreement, this
presumption hardens into a rule of evidence which actually prevents evi-
dence being given of the earlier agreement, and therefore deprives it of
any effect. 81 In such a case, provided the very stringent requirements can
be satisfied, rectification of the contract will be the only remedy available
to the person seeking to set up the previously agreed term. 82
However, the modern tendency in the English courts would appear to
be more liberal. Thus of the leading case of Heilbut, Symons & Co. v.
Buckleton83 Lord Denning M.R. had said:
"I must say that much of what was said in that case is entirely out of date. We
now have the Misrepresentation Act ... This Act does not apply here ... but
even in respect of promises as to the future we have a different approach
nowadays to collateral contracts. When a person gives a promise or an assur-
ance to another, intending that he should rely on it by entering into a con-
tract and he does act on it by entering into the contract, we hold that it is
binding ... ". 84
The crucial element in deciding whether a collateral contract exists is 1·213
undoubtedly whether an intention to contract-the animus contrahendi
referred to by Fletcher Moulton L.J. in the passage quoted above from the
Heilbut Symons case-can be inferred from the statement or document in
question viewed in the light of the background of the transaction. Experi-
80
Per Lord Moulton in Heilbut Symons & Co. v: Buckleton [1913] A.C. 30, at p. 47.
81
Shore v. Wilson (1842) 9 Cl. and Fin 355.
82
See ante, paras. 1·109 et seq. Cf. Bootv. L.C.C., illustrated supra, Section 5, para. 1·115.
ijJQuoted supra.
84
1. Evans & Son (Portsmouth) Ltd. v. Andrea Merzario Ltd. [1976] 1 W.L.R. 1078, at
p. 1081, citing Dick Be~tley Productions Ltd. v. Harold Smith (Motors) Ltd. [1965]
1 W.L.R. 623, at p. 627 and see also per Lord Denning M.R. in Howard v. Ogden Marine
[1978] Q.B. 574, at p. 590.
 112 GENERAL PRINCIPLES OF LAW [CHAP. I
enced judges can and do differ on this, and the distinction can be a fine
one.
ILLUSTRATION
Impor.ters agreed with forwarding agents for machinery previously shipped
by them 1n crates stowed below decks to be shipped in containers. In a conver-
~ation t~eir manager was given an oral assurance that their future shipments
10 containers would also be carried under deck, but this was not stated in the
printed conditions !hey ultimately signed, which gave the forwarding agents
complete freedom tn regard to method of transportation and made them lia-
ble only for wilful default while goods were in their custody. Held, by the
Court of Appeal, over-ruling Kerr J., that the assurance was an enforceable
contractual promise and the oral promise overrode the printed conditions: J.
Evans & Son (Portsmouth) Ltd. v. Andrea Merzario Ltd. (1975).ss
1·214 Earlier in this chapter there have already been cited a number of exam-
ples, particularly in the context of the law of misrepresentation, where the
courts have accepted or rejected documents or statements as not having
contractual force. Examples which were, however, rejected as contractual
were an oral statement of barge tonnage capacity made by prospective
charterers' marine superintendent away from his own offices6; a statement
that an alarm system would continue working even after the wires had
been cut87; a statement by suppliers in response to a query that they were
satisfied that a mast would not oscillate dangerously88; and a statement
that quantities of rock in a target-cost contract had been estimated at a
certain figure. 89 Examples of oral statements which were however
accorded contractual force, as in the Evans case, supra, we;e a verbai
assurance of an estimated annual consumption of petrol given to the pro-
spective purchaser of a garage site by an oil company's area representa-
tive90; an assurance that he would be responsible for obtaining a building
licence given by an owner-architect to a builder91 ; and a statement to a
prospective purchaser that a vehicle had only done 20,000 miles since the
car had been refitted. 92
Contractors frequently seek to qualify their tenders or negotiate some
mitigation or alteration of the contract conditions, but the contract docu-
ments are often nevertheless signed without alteration. It goes without
saying that in this rather different situation, where inducement to contract
is not a factor, positive agreement-not mere requests, statements or con-
115
[1976] 1 W.L.R. 1078.
116
Howard v. Ogden Marine [1978} Q.B. 574, illustrated supra, para. 1·136.
87
Davis v. Afa-Minerva (1973) 9 BLR 102, illustrated supra, para. 1·142.
!18 /BA v. EM/ (1980) 14 BLR 1, H.L., overruling the Court of Appeal on this point, illustrated
supra, para.1·142.
ll'I Carman Construction v. CPR (1982) 136 D.L.R. (3d) 1983, illustrated supra, para. 1·167.
90
Esso Petroleum v. Mardon [1976] Q.B. 801, illustrated supra, para. 1·154. :· c'
91
Strongman (1945) Ltd. v. Sincock [1955] Z Q.B. 525, illustrated supra, para. 1'205.
91
Dick Bentley Productions Ltd. v. Harold Smith (Motor) Ltd. [1965] 1 W.L.R. 623.
SECT. 8] COLLATERAL AGREEMENTS 113
tentions which are ignored93-must be shown in order to overcome the
presumption that the later document supersedes earlier discussions, nego-
tiations or agreements.
SECTION 9. INTERPRETATION
(1) General Rules
The principles of interpretation and construction of contracts are often 1·215
easier to state than to apply, and have been the subject of a very consider-
able jurisprudence, which can only be briefly referred to in this chapter.
The cardinal principle in all cases is that the courts are. concerned to
ascertain only the objective intention of the contract as evidenced by the
words used, and not the subjective intentions of the two parties, even in a
case where their subjective intentions are the same-in that event the
appropriate remedy, if the wording is wrong, will be that of rectification
. where that can be applied94 or, in a case where the subjective intention of
one is known to the other, where evidence showing this will nevertheless
be excluded95 ( although in such a case the contract may sometimes be
avoided).
The principle has perhaps been most succinctly stated as follows: "The
judicial task is not to discover the actual intentions of each party, it is to
decide what each was reasonably entitled to conclude from the attitude of
the other."96
It is partly for this reason that the courts have been reluctant to accord 1·216
contractual force to collateral statements or documents where an appar-
ently complete contract document exists,97 and why the general rule is that
extrinsic evidence will not be admitted to contradict or vary the clear
terms of an apparent agreement. Similarly, evidence of prior negotiations
will not be accepted as explaining the meaning of ambiguous wording.
Thus where an agreement conferring a valuable option to acquire shares
was made dependent upon the level of "profits" of the company confer-
ring the option, and the dispute was whether the word "profits" meant the
profits of the parent company alone or the consolidated profits of the
group, evidence of what had been said in the course of prior negotiations
was rejected by the House of Lords.98
Thus it is not unusual in a case of disputed interpretation to find a party
contending for his own interpretation as a matter of the true construction
of the words used or, in the alternative, claiming rectification of the con-
9J See, e.g. Royston Urban District Council v. Royston Builders Ltd. (1961) 177 E.G. 589,
illustrated on this point,post, Chap. 3, para. 3·052; Boot & Sons v. City of London Corp.
1069, ante, para. 1·115.
94
See supra, Section 5(3).
95
See for a useful example the case of Henry Boot v. City of London Corp., supra, Section
5(3), para. 1·115.
'Iii Gloag on Contract (2nd ed.), p. 7, cited by Lord Reid in Mccutcheon v. David MacBrayne
Ltd. [1964] 1 W.L. R125, at p. 128.
97
See Supra, Section 8, para. 1·210--1·213.
98
Prenn v. Simmonds [1971] 1 W.L.R.1381.
 114 GENERAL PRINCIPLES OF LAW [CHAP. 1
tract, which will call for close examination of the preceding negotiations to
see whether the clear prior agreement necessary to support rectification
exists. 99
However while in cases of doubt as to the meaning prior negotiations
cannot be looked at, the general background and surrounding circum-
stances of the-contract can be taken into co~sideration:
"In my opinion, then, evidence of negotiations, or of the parties' intentions
... ought not to be received, and evidence should be restricted to evidence of
the factual background known to the parties at or before the date of the con-
tract, including evidence of the 'genesis' and objectively the 'aim' of the
transaction. " 1
"In a commercial contract it is certainly right that the Court should know the
commercial purpose of the contract and this in turn pre-supposes knowled~e
of the genesis of the transaction, the background, the context, the market 1n
which the parties are operating"ta
1·217 In principle, therefore, the general background and objectives of a con-
struction contract can be ascertained or explained in evidence to assist in
its interpretation. In addition, there is the rule of evidence that the whole
of a contract should be examined before construing an individual part of
it:
"Looking at the whole of the instrument and seeing what one must regard ...
as its main purpose, one must reject words, indeed whole provisions, if they
are inconsistent with what one assumes to be the main purpose of the
contract. " 2
The same principle was similarly expressed in an old case:
"The common and universal principle ought to be applied, namely that an
agreement ought to receive that construction which its language will admit,
and which will best effectuate the intention of the parties, to be collected
from the whole of the agreement, and that greater regard is to be had to the
clear intention of the parties than to any particular words which they may
have used in the expression of their intent. "3
ILLUSTRATION
Sub-clause 1(2) made the contractor responsible for the design as we!l as
the construction of the works. By sub-clause 1(4) the contractor was requtred
to rectify at his own cost any mis-calculations, errors or faults notwithstanding
previous examination of the drawings by the architect, and ~y sub-clause 1(6)
he was required to guarantee the work and make good at his own cost defec-
tive work due to any fault in the design. By sub-clause 1(5) he was "held
responsible for all works designed by him and such design shall be deemed to
comply with all statutory requirements to the satisfaction of the Borough
Engineer and with all local by-laws". It was also pr?vid~~ that, should any
alteration be required in order to secure such comphance, 1t was to be at the
99 Prenn v. Simmonds, supra, is a classical exampl_e of this.
I Per Lord Wilberforce in Prenn v. Simmonds [197111 W.L.R. 1381, at p. 1385, citing, at
p. 1384E-F, Cardozo J.'s seminal "genesis and aim of the transaction" wording in Utica
City National Bank v. Gunn (1918) 118 N.E. 607.
1, Per Lord Wilberforce in Reardon Smith Line Ltd. v. Hansen-Tangen [1976} l W.L.R. 889,
995/6.
Glynn v. Margetson & Co. [1893] A.C. 351, at p. 357,per Lord Halsbury.
i
3 Ford v. Beech (1848) 11 Q.B. 852, at p. 866.
SECT. 9] INTERPRETATION 115
contractor's cost. Part of the building progressively collapsed following a gas
explosion, and the owners sued (inter alia) for the cost of strengthening that
and other buildings. The contractor contended that if there had been
breaches of the by-laws the owners had by sub-clause 1(5) accepted that the
design should be deemed to comply with all statutory requirements and local
by-laws. Held, by the Coi.irt of Appeal, the parties could not have intended
that the contractor was deemed to have complied with the by-laws even if he
had not done so. The deeming provision in sub-clause 1(5) could not be con-
strued so as to make sense. It followed that it could be disregarded: London
Borough of Newham v. TWA Ltd. (1981). 4
A similar principle, said to operate in the case of commercial contracts,
may be described as the "business commonsense" principle:
"If detailed semantic and syntactical analysis of words in a commercial con-
tract is going to lead to a conclusion that flouts business commonsense, it
must be made to yield to business commonsense. "5
It will be noted that many of the above principles conform closely to those
governing the implication of terms in Section 6, supra, and indeed in many
cases a court may state that it reaches its final decision as a matter of the
true construction of the contract rather than by implication of a term, or
vice versa: "the implication of a term is an exercise in interpretation,
though not an orthodox exercise. "6
Despite the rhetoric in some of the above passages, however, English 1·218
commercial judges are possibly the strictest construers of commercial
documents in any legal system. Moreover, in common law systems there
are considerable problems of both evidence and advocacy if Cardozo J.'s
"genesis and aim of the transaction" are to be satisfactorily explained and
established before a court, particularly where the transactions are ones
with which the court is not familiar and of which it lacks judicial knowl-
edge. This is particularly true of construction contracts, and the difficulty
is compounded by the excessively obscure and often old-fashioned and
legalistic language, probably originally conceived by nineteenth century
draftsmen more familiar with leases, in which construction contract forms,
and in particular the United Kingdom standard forms, have been tra-
ditionally drafted. 7 In reality this language has served as a cloak for gener-
ations of indifferent draftsmen, themselves lacking experience of the
underlying problems of construction projects when taking instructions
from their clients, so that the underlying fundamental obligations, as well
as the most everyday problems arising from such projects, are simply not
dealt with at all, or, worse still more recently, left deliberately obscure and
unchanged as a result of commercial pressures operating within the spon-
soring bodies. By contrast industry pressures can also subject the forms to
frequent accretions and changes of detail, often inexpertly carried out:
4
19 BLR 99, at p. 118.
> Antaios Compania Naviera S.A. v. Salen Rederierna A.B. [1985] A.C. 191, at p. 201D,per
Lord Diplock.
~ Per Mason 1. in Code/fa Construction v. State Railway Authority (1981) 149 C.L.R. 327, at
p.345.
t 7
See, for the origins of the standard forms, C.C.P.P., paras. 27-09 to 27-14.
'
it
 116 GENERAL PRINCIPLES OF LAW [CHAP. l
" ... I do not suggest that this clause is a masterpiece of clarity and drafts-
manship, for it plainly is not. This is not unusual when one is dealing with
standard forms of contract, or indeed almost with any printed contract what-
ever. They are apt to be somewhat like Topsy and they just grow without
anybody thinking very much what is happening during the course of
growth".8
Thus, Menzies J. speaking of a widely used Australian public authority
contract, described it as:
" ... perhaps the most wordy, obscure and oppressive contract that I have
come across ... It was probably compiled a long time ago by putting together,
with some incongruity, provisions from other contracts ... [Clause 32] takes
some seven hundred words to achieve the result which requires any dispute
to be referred to and decided finally by the Chief Engineer. "8•
1·219 It has to be said that even modem standard forms, or modern amend-
ments to earlier forms, are replete with obscure and unconsidered drafts-
manship, often leaving, whether deliberately or not, immediately obvious
questions unanswered. Examples might include the new ICE fifth edition
provision for interest to be payable on certificates9; a new right to exten-
sion of time in the RIBA/JCT forms for failure to give possession, appar-
ently failing to deal with possession of the site itself1°; the long-standing
provisions in both the ICE and RIBA/JCT forms prohibiting "assignment
of the contract" without consent 11 ; a new and complicated redefinition, the
purpose of which is left to speculation, of the provisions relating to the
architect's satisfaction introduced into the RIBA/JCT contracts in 197712 ;
and a new apparent finality accorded in that regard to the architect's final
certificate,13 with an initial and, it is submitted, incorrect interpretation of
the latter by the courts in 1992.14 These examples are quite apart from the
well-known major gaps in RIBA/JCT standard form draftsmanship, such
as the silence and unknown intentions of the RIBA/JCT pre-1980 con-
tracts in regard to the consequences of nominated sub-contractor repudi-
ations,15 or as to the allocation of responsibilities for nominated sub-
contractor design16 or as to the availability of set-off to owners resisting
payment of sums due under interim certificates, 17 or as to extensions of
K Per Parker L.J. in Mander Raikes & Marshall (a firm) v. Severn-Trent Water Authority
(1980) 16 BLR 34, at p. 43.
8' Egan v. South Australia Railway Commissioner (1972) 130 C.L.R. 500, illustrated and
further quoted post, Chap. 6, para. 6· 137.
9 See Clause 60(6), leading to the recent judicial conflict discussed post, Chap. 8, Section
1(5)(e).
1°Clause 25.4.12, 1980 Forms, discussed post, Chap. 10, Section 3(1).
11 Clause 3 of the ICE conditions and Clauses 17 and 19 of the RIBA/JCT 1963 and 1980
contracts. See post, Chap. 14, Section 6, and the differences of opinion in the Court of
Appeal and House of Lords in the Linden Gardens case there illustrated and discussed.
12 Clauses 1(1) and 2.1 respectively of the 1977 and 1980 RIBA/JCT forms.
13 Ibid. Clauses 30(7)(a)(i) and 30.9.1.1, discussed in C.C.P.P., para. 30--25.
1• Colbart Ltd. v. Kumar (Male) (1992) 8 Const.LI 268, doubted by the editor in (1993)
9 Const.Li 7, and see post, Chap. 6, Section 6(6).
15 See post, Chap. 13, Section 3(2).
10 See post, Chap. 4, Section 1(2)(a)(iv), para. 4·108.
17 See post, Chap. 6, Section 6(7)(c).
SECT. 9] INTERPRETATION 117
time for variations ordered after the contractor is in delay. 18 In addition,
there are the cases where, presumably under combined producer and pro-
fessional influence, the scope of contractors' financial claims for
additional payment have obviously been deliberately left quite undefined
and subject to the widest possible discretion by, ultimately, a court or arbi-
trator.19 A further area where careless draftsmanship has gravely dam-
aged the interest of owners lies in the failure to provide practical and
necessary remedies where defects are discovered during construction.20
All these factors make construction contracts eminently suitable for a 1·22(]
liberal "business commonsense" or "genesis and aim" interpretative
approach; but it has to be said that whereas that approach was often a
char.acteristic of the nineteenth and early twentieth century judges,21 mod-
ern Judges, and in particular the higher judiciary, have in recent years,
perhaps aware of the difficulties caused by lack of knowledge of the back-
ground and the excessive complication and difficulty of the draftsmanship
of the contracts, and in some cases at least expressing an exaggerated
respect for the quality of the draftsmanship, have tended to fall back on a
policy of "literalist construction". 22 This has produced, in a noticeable
number of cases, results at serious odds with the aim or purpose of the
transaction viewed as a whole. Examples of this literal or semantic
approach to interpretation include owners being held bound to nominate
new sub-contractors in place of repudiating sub-contractors under the
RIBA/JCT forms of contract23 ; and the subsequent "legal impasse" held
to arise in such situations24 ; final certificates under the same standard
forms held binding in regard to legal proceedings for defective work com-
menced before the certificate25; no extension of time for the late start of a
lat~r phase due to a delay in completing an earlier phase of the contractu;
savings for contractor default in a contractor's determination clause based
on delay to the works not to include nominated sub-contractors'
defaults21 ; "negligence of contractor his servants or agents and of any sub-
is See post, Chap. 10, Section 3(5), and the recent case of Balfour Beatty Building Ltd. v.
Chestermount Properties Ltd. (1993) 62 BLR 1.
19
See particularly the ICE standard forms, such as Clauses 13(3), 55(2) and 56(2) of the ICE
fifth edition, and see also Clauses 52.2 and 52.3 of the FIOIC 1987 fourth edition.
20
See post, Chap. 5, Section 2(2)(b) and (c); and see C.C.P.P., para. 23-29. Very recently
however, improved by the RIBA/JCT in 1990---see the Clause 8 amendment. '
I
21
See, e.g. Hampton v. Glamorgan County Council [1917} A.C. 13,post, Chap.13, Section
2(2), para. 13·037; Brodie v. Cardiff Corporation [1919] A.C. 337, post, Chap. 7, Section
I 2(~)(d), para. 7·068, discussed in this context in C.C.P.P., paras. 17-21 to 17-22, and the
[ attitude of the Court of Appeal in Neale v. Richardson [1938] 1 AllE.R 753,post, Chap. 6,
l Section 4(3), discussed in C.C.P.P., paras. 17-23 to 17-24.
22
The phrase is Lord Diplock's see Miramar Maritime Corp. v. Ho/born Oil Trading Ltd.
I
t
24
[1.984] A.C. 676, at p. 686A, and his dictum in The Antaios, supra, para. 1·217.
2.1 Biekerton v. North-West Metropolitan Hospital Board [1970] 1 W.L.R. 607, H.L. post,
Chap. 13, Section 3(2), paras. 13·072-13·073.
Biltonv. GLC[1982] 1 W.L.R. 794,H.L.,analysed and criticised in C.C.P.P., Chaps.21 and
22.
r 2!i Hosier & Dickinson v. Kaye [1970] 1 W.L.R.1611, H.L., analysed and criticised in C.C.P.P.,
paras. 17-29 to 17-30.
I 2ti Trol!ope & Coils v. North-West Metropolitan Hospital Board [1973} l W.L.R. 601.
n Jarvis Ltd. v. Rockdale Housing Association (1986) 36 BLR 48, C.A., analysed and criti-
I
cised in (1987) 3 Const.L.R. 274.
 118 GENERAL PRINCIPLES OF LAW [CHAP.1
contractor" not to include sub-sub-contractors28; "other cause beyond the
contractor's control" in a compensation clause held to include specialist
sub-contractor's defective work29; interim certificate held to be a con-
dition precedent to contractor's right to sue30; increases in bonus payments
under a Joint Council recommended scheme not "payable in accordance
with the rules of the industry Joint Council" so as to qualify under a fluctu-
ations clause31 ; variation valuation provisions of modified FIDIC contract
to apply to differing quantities on simple remeasurement where no vari-
ations ordered32; and "determination" of a contract not to include the for-
feiture and expulsion of the contractor under Clause 63 of the ICE
conditions. 33
It is also noteworthy that two of the more recent cases above, in the
Privy Council and, Court of Appeal respectively, gave as a partial justifica-
tion for their decisions in the one case views of the technical pricing back-
ground, and in the other a chronology and explanation of the
development of the RIBA/JCT contractual provision concerned, which
with respect simply did not accord with the facts and must have come as a
surprise to the more experienced official referee judiciary in the United
Kingdom. 34
1·221 It should also be appreciated that many "one-off" contract documents
including what are often called "special conditions", and specifications,
bills of quantities, amendments to printed forms or even fully-drafted con-
tracts will have been prepared either by non-lawyers with little experience
of draftsmanship or by lawyers with limited experience and knowledge in
the construction field. Thus in an article "Aspects of Construction Indus-
try Contracts and Disputes" standard form and other construction con-
tract documents were justifiably described by a Supreme Court judge of
New South Wales, with considerable construction dispute experience, as
"unduly prolix, repetitive, and often unclear in their meaning. Many of the
special conditions and specifications are not models of clear thinking or
reasonable draftsmanship" .35
It is respectfully submitted that in construing construction contracts
generally, not excluding the conditions of contract in the standard forms, a
"business commonsense" approach is fully justified, and the aim and pur-
pose of the transaction and the "Topsy principle" should both be borne
firmly in mind, with no great confidence placed in the experience or com-
28
City of Manchesterv. Fram Gerrard (1974) 6 BLR 70,per Kerr J.
29
Scott Lithgow Ltd. v. Secretary of State for Defence (1989) 45 BLR 1, H.L., doubted and
criticised by the author in (1991) 7 Const.L.J. 3.
30
Lubenham Fidelities v. South Pembrokeshire District Council (1986) 33 BLR 39, post,
Chap. 6, Section 6(7), para. 6·193, analysed and criticised in (1987) 3 Const.L.J. 172.
31
William Sindall v. North-We.st Thames Regional Health Authority [1977] I.C.R. 294, H.L.
31
Mitsui Corporation v.A.-G. ofHong Kong(1986) 33 BLR 1, P.C., analysed and criticised in
(1987) 3 Const.L.J. 3.
"Dyer Ltd. v. Simon Build Partnership (1982) 23 BLR 23, illustrated post, Chap. 12, Section
1(3), para. 12·009.
>4 See for these points (1987) 3 Const.L.J. 3, at pp. 11-14 and (1987) 3 Const.L.J. 274, at
pp. 282-283. See also the editor's comments on the Dawnay, Crouch and Trafa_lgar House
cases in [1994] 10 Const. L.J. On Demand Per Incuriam. ,,.
JS Per Smart J., (1989) 5 B.C.L. 7, referred to in (1991) 10 A.C.L.R. 50.
SECT. 9] INTERPRETATION 119
petence or accuracy of the draftsmanship, or on fine distinctions in the
wording in different parts of the contracts based upon that assumption. 36
(2) More Specific Rules
(a) Subsequent conduct
It has already been seen that prior negotiations or conduct cannot in 1·222
general be used to vary or contradict the terms of an apparently concluded
contract. It is now established that a contract cannot be.construed by ref-
erence to the subsequent conduct of the parties. Thus, in a case where the
Court of Appeal had held that the surrounding facts of a contract at the
time it was made pointed to Scottish law as the proper Jaw of the contract,
but that use of an English RIBA form in the contract, coupled with sub-
sequent conduct in asking for an arbitrator to be appointed by the Presi-
dent of the RIBA, pointed to an opposite conclusion, the House of Lords
held that subsequent conduct could not be looked at for the purpose of
construing the original contract, though the appeal was allowed on other
grounds. 37
(b) Deletions
The frequent use of complicated printed standard conditions and other 1·223
documents in construction contracts makes it a common occurrence that
parts of those documents may be deleted by the parties. It would seem that
there was a conflict of authority as to whether the parts deleted can he
examined in order to ascertain the meaning in a doubtful case, although a
House of Lords' case in 1975 did appear, but without reference to or dis-
cussion of the authorities, to permit this.3s
However, the Court of Appeal in 1991 considered the authorities with
~ome care, and preferred to follow Viscount Sumner's view as expressed
1n Sassoon v. International Banking Corporation 39 and to disregard the
existence of deletions altogether in deciding a matter of interpretation,
although Beldam L.J. considered that if there was an exception it could
only be where a genuine ambiguity would otherwise exist. In that case the
deletion of a provision requiring retention moneys to be paid into a separ-
ate bank account was disregarded in a case where the owner's interest in
36
See. the discussions of th: Rock~le and Mitsui cases in (1987) 3 Const.L.J. 3, supra, for
typ1.cal examples of the difficulties created by poor construction contract draftsmanship.
37
Whitworth Street Estates (Manchester) Ltd. v.James Miller&Partners Ltd. [1970] A.C.583,
post, Chap. 18, Section 2(5)(b), para. 18·084, later approved and applied by the House of
Lords in Wickman Machine Tool Sales Ltd. v. Schuler A.G. [1974] A.C. 235, illustrated
post, Chap. 4, Section 3, para. 4·211.
38
Mottram Cons~ltants Ltd; v. Bernard Sunley & Sons Ltd. [1975} 2 Lloyd's Rep. 197, at
p. 209, and cf m Australia Rozelle Childcare Centre v. Update Constructions (1988) 17
A.C.L.R. 31: see al~o Louis Dreyfus Cie v. Parnaso Cia Naviera S.A. [1959] I Q.B. 498, at
pp. 512-513, per D1plock J., but see the cases collected in Chitty op. cit. at para. 782, n.38.
39
[1927] A.C. 711, at p. 721.
 120 GENERAL PRINCIPLES OF LAW [CHAP. I
the moneys was expressly declared to be as trustee for the main contractor
and any nominated sub-contractor, and the main contractor subsequently
requested that this should be done. 40 In a very recent case, however, the
Court of Appeal took into account that words present in a standard form
of sub-contract were not present in an otherwise identically worded pro-
vision in the sub-contract before them. 40a
(c) Contra preferentem rule
1·224 This rule of interpretation suggests that in cases of doubt an ambiguous
provision will be construed against the party who has prepared and put
forward the statement or document in question. Most of the documents in
a sophisticated contract going out to tender will have been prepared by or
on behalf of the owner or his advisers. However, since any United King-
dom standard form conditions which have been used in the documen-
tation would have been negotiated at arm's length between committees of
the sponsoring professionals' and contractors' representatives (with own-
ers' representatives either absent or under-represented and with contract-
ors' representatives almost invariably powerfully represented) it has
already been submitted that the rule is inappropriate for standard form
conditions of contract4 1 (as opposed to any technical or other "one-off'
documents which may have been prepared on the owner's behalf, or third
party documents such as insurance policies).41a In the U.S., and now
Canada, a similar rule is applied to commercial contracts of guarantee
against the bondsman or surety,41 h and see also in England the recent
Mercers' case.4tc
(d) Priority of documents
(i) General rule
1·225 It is an obvious rule of practice and common sense that "one-off" docu-
ments or statements by the parties directed to the specific transaction
between them and which form part of the contract should prevail over
more general printed documents which, while part of the same contract,
have not been prepared for the specific transaction in question, since the
former will clearly reflect more closely the true intentions of the parties:
"Where general words are used in a printed fonn which are obviously
intended to apply, so far as they are applicable to the circumstances of a par-
ticular contract, which particular contract is to be embodied in or introduced
into that printed form, I think you are justified in looking at the main object
and intent of the contract and in limiting the general words used, having in
view that object and intent. "42
4
u Wates Construction (London) Ltd. v. Franthom Property Ltd. (1991) 53 BLR 23.
"''' Team Services PLCv. Kier Management and Design Ltd. (1993) 63BLR 76, C.A. (See the
useful discussion of the authorities in the BLR commentary at pp. 78-81).
4
See ante, "Definitions and Background", paras.1·001-1·010, and the authorities there
!
cited.
• • Hitchens (Hatfield) Ltd. v. Prudential Assurance (1991) 60 BLR 55. ,·
1
<lb See post, Chap. 17, paras. 17·032 and 17·039-17·040. •10 See post, para. 17:013.
•i Glynn v. Margetson [1893] A.C. 351. at p. 355,per Lord Herschell.
SECT. 9] INTERPRETATION 121
So typed-in or written inserts, or indeed any other specially prepared
document, will take precedence over standard printed conditions. 43
(ii) Express provisions for priority
Unfortunately, some construction contracts, and in particular some 1·226
United Kingdom standard forms, attempt to accord express priority to
one class of documents over another. Sometimes there is no objection to
this, as for example where priorities are accorded to "particular con-
ditions" over "general conditions" in many international and other civil
engineering contracts (where the particular conditions are, of course,
more closely directed to the project in hand), or as between different
classes of drawings, or as between specification and drawings or between
drawings and bills of quantities. But many standard form provisions
expressly purport to give the sponsoring body's printed standard con-
ditions priority over all the other more particular "one-off" contract docu-
ments. The alleged desirability of the standardisation of tendering
procedures recommended by the Banwell Report in the United Kingdom
is usually cited by the vested interests responsible for the forms in support
of this policy. It cannot be over-emphasised that such a practice is a
straightforward recipe for injustice which can benefit no-one, and which
on analysis can only assist unmeritorious arguments which seek to avoid
the reality of what has been agreed.
A serious example of this in the United Kingdom is to be found in
Clauses 12(1) and 2.2.1 of the 1963 and 1980 RIBA/JCT contract forms
respectively. These forms accord express priority to the contract con-
ditions over the bills of quantities (which in those forms will also include
the specification) or, in the lump sum version of those forms, over the
specification and drawings.
ILLUSTRATION
Bills of quantities in a contract for an extension to an existing factory which 1·227
was to continue in operation contained detailed "one-of" paragraphs c and d
enabling the owner to instal plant during the building of the extension, and
also for its occupation and use by the owner if progress weuld not be impeded,
in both cases with provision for additional payments to the contractor for any
extra insurance which might be required under the tenns of the contract.
Clause 16 of the conditions, on the other hand, contained the standard form
code for occupation of part of the works with the contractor's consent, and
provisions for proportionate reductions in the contractor's insurance pay-
ments and retention and liquidated damages. The owner entered and
installed plant under the provisions in the bills, and later a fire damaged the
"'"' Sutro v. Heilbut Symons [1917] 2 K.B. 348, at p. 361,per Scrutton L.J. and see also per Lord
Denning M.R. in J. Evans & Son (Portsmouth) Ltd. v. Andrea Merzario Ltd. [1976]
1 W.L.R. 1078, at pp. 1081H-1082B, as also in the earlier case of Mendelssohn v. Normand
Ltd. [1970} 1 Q.B. 177, at p. 184 there referred to.
 122 GENERAL PRINCIPLES OF LAW [CHAP.!
occupied parts and their contents. The contractor (or his insurers) contended
that by reason of clause 16 the risk of the occupied parts had passed to the
owner and that the owner could not rely on the provisions in the bills by virtue
of clause 12(1) (to the effect that nothing in the bills "shall override modify or
affect in any way the application or interpretation of ... these ... Con-
ditions"). Held, by the Court of Appeal, upholding Mocatta J., the contract-
or's claim must fail. Per Lord Denning M.R., following Sutro v. Heilbut
Symons, the provisions specifically drafted and inserted in the bills should
take first place over clause 16, but even without regard to those provisions, the
procedure and consequences required by clause 16, which had been carried
out in another part of the project, had not been followed, so that there had
been no handing over of possession within the meaning of clause 16. Per
Edmund Davies and Stephenson L.JJ., there was a difference in the pos-
session contemplated by clause 16 and that permitted by the bills, and the
contractors had failed to establish the possession with consent envisaged by
clause 16. Per Edmund Davies L.J., paragraphs C and Din the bills could be
looked at, not to interpret the contract but to explain acts which might other-
wise be regarded as taking possession on a different basis. Per Stephenson
L.J., it was doubtful if paragraphs C and D could be examined in this way
without affecting the application or interpretation of clause 16, but even with-
out those paragraphs it was still just possible to construe clause 16 as requiring
something more formal than what was done in the disputed area. Clause 12 of
the RIBA contract needed reconsideration, at least by building owners:
English Industrial Estates Corp. v. George Wimpey & Co. Ltd. (1972). 44
1·228 The above case is a classical example of the potential injustice and diffi-
culties created by a provision of this type. With respect to Stephenson L.J.,
contractors as well as owners would do well to reconsider clause 12, since
"one-off'' documents excluded by its operation might be as likely to
benefit the contractor as the owner. In spite of Lord Denning M.R. 's
understandable rejection of the clause, which comes close to a public
policy objection, on the ground that such a clause can only serve to
promote injustice, its enforceability in principle appears to have been
accepted by Mocatta J. and by Edmund Davies and Stephenson L.JJ. 45 It
has troubled the courts on a number of occasions.46 By contrast, the ICE
civil engineering forms and the Singapore private sector building standard
form provide expressly for interpretation of the contract documents taken
as a whole with no special priority other than that accorded by law.47
(3) "Discrepancy and Divergence" Provisions
1·229 Construction contracts, containing as they frequently do miscellaneous
and massive complicated documents of varying origin, and often prepared
44
{1973] 1 Lloyd's Rep.118.
•.• See also per Lord Hodson in Gold v. Patman & Fotheringham {1958] 1 W.L.R. 697, at
p. 701 and in North-West Metropolitan Health Board v. T. A. Bickerton & Son Ltd. (1970]
1 W.L.R. 607, at p. 6170.
6
' It "astonished" Judge Fay Q.C. in Henry Boot v. Central Lancashire New Town District
Council (1980) 15 BLR 1, atpp. 19-20. See also Moody v. Ellis (1983) 26BLR39, at p. 49,
C.A., overruling Judge Fay; and see Gleesons v. Hillingdon (1970) 215 E.G. 165_. ,
"See ICE and FIDIC conditions, Clause 5, and see the SJ.A. contract, Arts. -6·and 7;
C.C.P.P., pp. 550-551.
SECT. 9] INTERPRETATION 123
at different times and at short notice during the tender period, can easily
produce discrepancies and inconsistencies. These can be in the technical
documents, for example, a different diameter of pipe shown on the draw-
ings from that described in the specification or bills. They may also,
although more rarely, relate to questions of contractual responsibility.
These discrepancies may be capable of resolution by applying the rules for
interpreting contracts, including the remedy of rectification and the al-
ready mentioned rules of priority of documents, and indeed in the great
majority of cases this will be so. Much less frequently, there may, however,
be an irreconcilable conflict. In principle such a conflict, if of sufficient
importance and if discovered at an early stage before work has com-
menced, could invalidate the contract itself, although in practice the
express powers of the architect to give instructions varying the work, if the
discrepancy relates to the work description, will frequently avoid out-and-
out confrontation in the early stages of the project, and the carrying out of
substantial work before the discrepancy is noticed will progressively
increase the difficulty of setting the contract aside.
United Kingdom standard forms often deal expressly with this possi- 1·230
bility through "discrepancy and divergence" clauses. 48 These provisions
are almost invariably ineptly drafted, since they do not attempt to dis-
tinguish between reconcilable and irreconcilable discrepancies, and while
conferring a power to give instructions (which may or may not be
expressed to be limited to the work to be carried out rather than to matters
of interpretation or contractual responsibility) and a consequential
entitlement to compensation (in the case of the ICE conditions based
upon a criterion of reasonable foreseeability) 49 they give no indication of
the principles to be applied, and in addition do not appear to realise that a
discrepancy's resolution may benefit a contractor financially as often as it
may damage him. An example of a discrepancy clause which attempts to
deal clearly with these various points is to be found in the Singapore pri-
vate sector SIA contract.5°Contracts may also contain clauses, usually in
the context of re-measurement, dealing with mistakes made in Bills of
Quantities or by the contracto! when pricing the bills. These are con-
sidered post, Chapter 8.SOa
(4) Exemption Clauses
The interpretation of exemption clauses has given rise to a very substan- 1·231
tial jurisprudence of considerable complication. Such clauses are usually
defined as clauses which remove or limit or reduce the liability of a party
for what would otherwise be his substantive obligation under a contract.
Clauses removing liability for misrepresentation have already been dis-
48
See Clauses 1(1) and 1.3 respectively of the 1963 and 1980 RIB A/JCT standard forms, and
Clauses 5 and 13(3) of the IC.E and FIDIC fonns.
49
See Clause 13(3) of the ICE and FIDIC conditions.
so See Clause 14, C.C.P.P., p. 571. so. See post, para. 8.047.
 /'-
124 GENERAL PRINCIPLES OF LAW [CttAP.1
51
cussed. Such clauses may operate so as to remove or restrict the substan-
tive responsibility of a party, or to reduce or restrict the procedural or
other remedies, including damages, available to the other party.
All such clauses are construed strictly against the party relying upon
them, and great judicial ingenuity has been deployed in the past in assist-
ing innocent parties to avoid their effect. In the construction industry,
traditional exclusion clauses are a commonplace of their associated sub-
supply contracts, but in construction contracts proper straightforward
exclusion clauses are less usual, and usually take more subtle forms, such
as clauses conferring a right to extension of time or financial compen-
sation, or even a right to determine the contract, for matters which would
otherwise be in the contractor's area of responsibility. 52 Another very
important class is that of final or other certificate clauses having the effect
of prematurely ending the liability of the contractor for defective work,53
or imposing time bars against bringing arbitration. 54 It must be said at once
that a tendency of the Courts to construe such clauses strictly has not been
apparent in the case of construction contracts. 55
The interval since the last edition of Hudson has also seen the rise and
fall of what became known as the "fundamental breach" doctrine for in-
validating straightforward traditional exemption clauses-at its peak the
theory being that breach of certain terms in a contract could be regarded
as fundamental, so that effect would not be given to an otherwise appli-
cable exemption clause in the event of such a breach,56 particularly if the
contract had been rescinded by the innocent party. 57 For all practical pur-
poses, however, these increasingly artificial doctrines appear to have been
effectively abandoned, 58 and it is clear that contract provisions, including
exemption clauses, can survive even a rescission by the innocent party,
depending on the true construction of the contract.59
1·232 The leading case of Photo Production Ltd. v. Securicor Transport Ltd.
appears to indicate an important retreat from the earlier judicial enthusi-
asm and ingenuity in avoiding the effect of apparently applicable exemp-
tion clauses, then at a high point in the evolution of the fundamental
breach doctrine.
s1 See supra, Section 5(4)(h) and (i).
52 See in the case of the RIBA/JCT contracts C.C.P.P., Chaps. 29 and 30, and see also, for
determination cases,Johnlarvis Ltd. v. Rockdale Housing Association (1986) 36 BLR48,
analysed and criticised in (1987) 3 Const.L.J. 274, and the earlier House of Lords decision
in Gloucestershire County Councilv. Richardson [1969] 1 A.C. 480,post, Chap. 4, Section
1(2)(b), para. 4·122.
s:J See post, Chap. 6, Section 6(6).
s4 See post, Chap. 18, Section 2(4)(d).
s! See, for a particularly remarkable example, Hosier & Dickinson Ltd. v. P. & M. Kaye Ltd.
[1972] 1 W.L.R. 146, analysed in detail in C.C.P.P., para. 17-28 to 17-31; and forth~ IC?!
FIDIC Clause 66/67 time bar provision, see C.C.P.P., Chap. 18, and the extraordmanly
strict commercial court time bar cases there noted in C.C.P.P., para. 18-18.
i6 Suisse Atlantique Societe d'Armement Maritime S.A. v. NV Rotterdamische Kolen Centrale
[1967] 1 A.C. 361.
57 Harbutt's "Plasticine" Ltd. v. Wayne Tank and Pump Co. Ltd. [1970] 1 Q.B. 4:1,7, C.A.
ss Photo Production Ltd. v. Securicor Transport Ltd. [1980] A.C. 827. -,:.
59 For rescission see post, Chap. 4, Section 3(1).
SECT. 9] INTERPRETATION 125
ILLUSTRATION
Security specialists contracted to provide a night patrol service for a fac-
tory. One of their employees, during the course of a visit, lit a small fire which
got out of control and inflicted serious damage. By their standard printed
conditions the security firm had provided that "under no circumstances shall
the company be responsible for any injurious act or default by any employee
of the company unless such act or default could have been foreseen and
avoided by the exercise of due diligence on the part of the company as his
employer". Held, by the House of Lords, overruling the Court of Appeal, that
the fundamental breach doctrine was not good law, and parties bargaining on
equal terms should be free to apportion the risks as they thought fit. Per Lord
Wilberforce, the firm ·had agreed to provide a periodical visit for a very mod-
est charge, and did not even agree to provide equipment. The value of the
plaintiff's factory and the efficiency of their fire precautions were known only
to them, so that no-one would consider it unreasonable that the risk assumed
by the firm should be a modest one: Photo Production Ltd. v. Securicor
Transport Ltd. (1980).60
This new attitude appears to be based on commercial considerations, in 1·233
particular in cases where insurance is available to the plaintiff to cover the
area of exempted risk, and also on the new availability of the Unfair Con-
tract Terms Act 1977 in England.61 Pointing out that the Act had been
passed in 1977 since the Suisse At/antique case,62 which had evolved the
doctrine, Lord Wilberforce said:
"After this Act, in commercial matters generally, when the parties are not of
unequal bargaining power, and when risks are normally borne by insurance,
not only is the case for judicial intervention undemonstrated, but there is
everything to be said, and this seems to have been Parliament's intention, for
leaving the parties free to apportion the risks as they think fit and for respect-
ing their decisions. " 63
In the same case Lord Diplock said:
"The reports are full of cases in which what would appear to be very strange
constructions have been placed upon exclusion clauses ... any need for this
kind of judicial distortion of the England language has been banished by Par-
liament's having made these kind of contracts subject to the Unfair Contract
Terms Act 1977. In commercial contracts negotiated between businessmen
capable of looking after their own interests and of deciding how risks
inherent in the performance of various kinds of contract can be most econ-
omically borne (generally by insurance), it is in my view wrong to place a
strained construction upon words in an exclusion clause which are clear and
fairly susceptible of one meaning only ... ".64
60
[1980] A.C. 827.
61
For this see infra, Subsection (7).
"[1967] 1 A.C 361.
63
[1980] A.C. 827, at p. 843.
64
Ibid. at p. 851.
 126 GENERAL.PRINCIPLES OF LAW [CHAP.1
(5) Indemnity Clauses
1·234 One type of clause to be found in construction contracts, however, should
be mentioned in this context. Indemnity clauses are present in nearly all
sophisticated construction contracts, their main purpose being to distrib-
ute, as between owner and contractor, the ultimate liability for third party
claims brought against either of the two contracting parties by reason of
the carrying out of·the works.65
In so far as an indemnity clause requires an indemnitor to indemnify the
indemnitee against the indemnitor's breaches of contract, of for matters in
his own area of responsibility or risk, the indemnity is merely a remedy
additional to the indemnitee 's existing remedies for breach of contract
(but often well justified as a matter of policy, since it may carry consider-
able limitation advantages 66 or a greater measure of damage).
1·235 To the extent, however, that an indemnity clause may tequire the
indemnitor to indemnify in respect of matters in the indemnitee's area of
contractual responsibility, including the indemnitee's or his agents' negli-
gence, it can be seen that such a clause operates even more powerfully
than a simple exemption clause, since it requires positive compensation,
and not a mere negative protection against suit, to be conferred on the
indemnitee in the event of his own or his servants' or agents' default or
breach of contract. As such, therefore, indemnity clauses of this kind will
attract the full rigour of the strict construction accorded to simple exemp-
tion clauses. The most important consequence of this may be described as
the Alderslade principle, namely that an indemnity clause will norm~ly be
construed as applying only to areas of either neutral or indemnitor
responsibility, so that if general words of indemnity are used to cover a
particular situation, they will not be construed so as to cover loss caused by
the negligence or other default of the indemnitee or his agents, unless
there is no other basis than negligence (as, for example, strict liability or
some special liability in contract) upon which the indemnitee could poss-
ibly become liable in the circumstances envisaged by the clause.67 This
principle has been applied so strictly by the courts that it has defeated an
indemnitee who had been held 20 per cent. responsible for an accident
suffered by a third party from recovering from his 80 per cent. responsible
indemnitor .68 It has also been used to defeat an owner/indemnitee seeking
to enforce the indemnity clause in the RIB AlJCT standard forms against a
contractor/indemnitor in a case where the only negligence asserted
against the owner was the failure of his architect to detect and prevent the
contractor's breach of contract which gave rise to the third party claim, (in
the particular case a failure of the contractor adequately to protect the
site). 69 (It is interesting to note that in the same case the owner did finally
~ See post, Chap. 15, Section 2.
66
County & District Properties v. C. Jenner & Son Ltd. [1976] 2 Lloyd's Rep. 728, discussed
post, Chap. 4, paras. 4·289-4·290.
67
Aldersfade v. Hendon Laundry [1945] K.B. 189.
611 Walters v. Whensoe Ltd. (1960) 6 BLR 23, C.A.
M> AMF International Ltd. v. Magnet Bowling Ltd. [1968] 1 W.L.R. 1028.
SECT. 9] INTERPRETATION 127
recover his whole loss from the contractor as damages for breach of con-
tract.) Careful drafting is needed to avoid such very artificial results, 70 and
it may be noted that in California the courts evolved an elegant and sen-
sible "active" and "passive" negligence distinction (although unfortu-
nately this has not been widely followed in other States) so as to maintain
the enforceability of generally expressed indemnity clauses where the
negligence is only "passive", in conformity with what must be, it is submit-
ted, the true intentions of the parties.71 Indemnity clauses are comprehen-
sively considered, together with the related subject of insurance, in
Chapter 15 post.
(6) Other Clauses
It is thought that force majeure clauses excusing performance will be 1·236
treated as exemption clauses and so be subject to strict interpretation.72
Other clauses in construction contracts receiving strict construction for
similar reasons are those referring expressly to "direct loss or expense" or
"consequential loss or expense", in cases where it is sought to rely on the
wording to limit the damage recoverable. 73
One further type of clause, it would seem originating in the United
States, is a type of general exculpatory clause, sometimes known as a
"boiler-plate" clause, which takes the form of providing that the written
agreement is to be exclusive and contains all the terms and obligations of
the parties, and that no warranty, implied term, representation or collat-
eral agreement which has not been expressly reduced into writing in the
agreement is to have effect.
One reason for the introduction of ~uch provisions in the United States 1·237
may have been the wish to remove interpretation of the agreement from
jury jurisdiction. In other contexts, their use may be commercially under-
standable and not unreasonable in some cases where a party in a position
to control the terms of the agreement has no r,~ason to anticipate any need
for remedies by himself against the other party once the transaction has
been concluded, for example, a vendor of property, but sees potential con-
tinuing liabilities on his own part which he wishes to limit or exclude.
ILLUSTRATIONS
A contract for the sale by a developer of condominium units in Ontario
provided: "There is no representation or warranty or collateral agreement
affecting this agreement or the Unit except as set forth in writing." Unit
111
See, e.g. Clause 18(3) of the Singapore SIA contract, C.C.P.P., p. 574.
71
See, e.g. Rossmoor Sanitation v. Pylon Insurance (1975) 532 p. (2d) 97, discussed by Sweet,
Legal Aspects ofArchitecture, Engineering and the Construction Process (2nd ed.), pp. 774
et seq. and more shortly in his 3rd edition, p. 844.
12
See Chitty op. cit. at para. 876 and post, Chap. 4, Section-3(4).
73 See post, Chap. 8, Section 2(4).
 128 GENERAL PRINCIPLES OF LAW [CHAP.1
owners sought to sue the developers for deterioration of concrete caused by
the fumes of vehicles in basement car parks. Held, by Read J., that the pro-
vision had the effect of excluding the implied terms as to quality and suit-
ability of workmanship and materials: York Condominium Corporation v.
Rose Park Wellesley Investments (1985). 74
There is little jurisprudence on this subject in England. There may poss-
ibly be public policy considerations in some cases if an implied term
sought to be excluded in this way is one of law, though such exclusions
have been widely accepted in sale of goods cases in the past. The use of
such provisions in a construction contract, which appears to be an
increasingly popular practice with modem legal advisers and draughts-
men, in fact seems inappropriate, if not double-edg~d, sine~ both parties
to a normal construction project may well find themselves disadvantaged
in the more common types of construction dispute if deprived of the use of
implied terms, however comprehensively the contract may be thought to
have been drafted.
(7) The Unfair Contract Terms Act 1977
1·238 This Act has been deliberately cast as a purely domestic Act, with the
express intention not to apply it in international contexts, even if English
law is the proper law of the contract. Furthermore, numerous categories
of contract are excluded from its operation by Schedule I, though con-
struction contracts and associated contracts, such as professional A/E's
contracts of employment and sub-contracts, are not among them. The on-
ly excluded category which might call for consideration in a construction
context would appear to be insurance contracts. However, as will be seen,
there must be a real doubt whether many construction contracts will qual-
ify as a party's "written standard terms of business" so as to come within
the terms of the Act.
Despite its name, the Act is, with one perhaps important exception (see
(c), infra), not concerned with imposing tests of reasonableness on con-
tractual terms themselves-as, for example, if an entirely unreasonable
allocation of risk as between the parties is made by a particular contract,
or if highly desirable remedies, from the point of view of one party or the
other, are not provided for by the contract-both features, as it happens,
of many United Kingdom standard forms. The Act is, with this· one ex~p-
tion, concerned only with imposing a test of reasonableness on notices or
contractual clauses which, in one way or another, have the effect of
excluding or restricting liabilities of identified kinds.
1·239 The Act applies to two classes of persons, namely persons dealing as
"consumers" as defined in the Act, or persons who deal with another party
"On the other's written standard terms of business", and where in either
case the liability sought to be excluded is a "business liabili!)'.~' (see sec-
74 O.R. (2d) 455.
SECT. 9] INTERPRETATION 129
lions 3(1) and 1(3) of the Act). "Business"' is nowhere defined in the Act
(no doubt deliberately so as to allow case law to develop). Apart from
"persons dealing as consumers" (where the contract may be informal),
therefore, the broad intention of the Act is that it should apply to "written
standard terms of business" contracts and not, apparently, to purely "one-
off" written business contracts.
With these important limitations in mind, the Act imposes a test of
reasonableness on:
(a) exclusions or restrictions by notice or contract term on a business
liability for "negligence" (defined as breach of a duty of care
whether in contract or tort or under the Occupier's Liability Act
1957): see sections 2 and 1(3);
(b) exclusions or restrictions on a business liability for any breach of
contract see section 3(2)(a);
(c) contract terms permitting a business party to "render a contractual
performance substantially different from th"at which was reason-
ably expected of him" or "to render no performance at all": see
section (3)(2)(b);
(d) exclusions or restrictions on sellers' or owners' obligations under
the Sale of Goods and Supply of Goods and Services legislation: see
sections 6(3) and 7(3); and
(e) exclusions of liability for misrepresentation. The Act for this pur-
pose amends section 3 of the Act of 1967: see section 8. This has
been considered at some length separately supra.75
The terms "exclude or restrict" in the Act are expressly extended by it 1·240
to include provisions making enforcement of a liability more onerous (e.g.
time limits for claims or onerous notice provisions, etc.) or restricting or
removing.particular remedies, or imposing some form of prejudice on per-
sons seeking to enforce the liability: see section 13(1). In otherwise quali-
fying construction contracts these extensions might be very important,
applying to a final certificate clause which has the effect of removing any
further liability for defective work, for example, or clauses which directly
or indirectly impose a time limit for litigation or arbitration.
Toe Act also contains more specific provisions relating to indemnity
clauses and limitation of damage clauses (the former, hOwever, only
applying in the case of consumer contracts): see sections 4 and 11(4)
respectively
There have not at the time of writing been many examples of the Act in
operation in the construction field. In a ship repairing case Staughton J.
considered that, while a condition excluding economic loss would be fair
and reasonable, a term depriving a ship owner of any remedy unless the
ship was returned to the repairer's yard would be unreasonable.76 Again,
s Section 5(4)(i), para. 1-172 et seq.
7
76Stag Line Ltd. v. Tyne Shiprepair Group Ltd. [1984] 1 Lloyd's Rep. 211.
 130 GENERAL PRINCIPLES OF LAW [CHAP.!
an exclusion clause in a contract for the supply of plastic-coated pipes liln-
iting liability to the cost of repair and replacement only, but excluding all
liability in the absence of notification within three months, has been held
to be unreasonable.7'
1·241 Again, clause 8 in a plant-hirer's conditions of trading in Contractors'
Plant Association form, which provided that the owner's driver should be
deemed for all purposes to be the servant of the hirer, was held by the
Court of Appeal not to satisfy the Act's requirements of reasonableness
under section 2(2) if, on its tr.ue construction, it had the effect of indemni-
fying the .plant owner in respect of damage caused negligently to the
hirer's building by the owner's driver. 78 On the other hand, in a case where
the same clause was relied on by a plant owner claiming contribution from
the hirer where the owner had been successfully sued by a third party for
personal injuries caused by the negligence of his driver, section 2 of the
Act was held by the Court of Appeal to have no application, with his claim
for an indemnity consequently upheld, since section 2 of the Act was on its
true construction concerned only to invalidate claims by the persons
directly damaged as a result of negligence, and not with arrangements
made between a wrongdoer and third persons as to the sharing of the bur-
den of paying compensation to the victim of negligence.79 The Act has also
invalidated an exclusion of liability in favour of a mortgagee's surveyor's
valuation report as against the mortgagor. 80
The Act is extremely complicated and has many doubtful and difficult
areas, for example, the precise meaning to be given to the "substantially
different performance" and "no performance" provisions in ( c), supra, or
to the important extending powers of section 13(1). There must also be
difficulties, it is submitted, about the crucial words "written standard
terms of business" (upon which of course the applicability of section 3 of
the Act will depend in any given case). Thus in the context of full-scale
construction contracts, where the contract conditions are usually only a
part of a remaining "one-off" contract documentation, and which are
theoretically chosen and put forward by owners in the first place but which
may contain unreasonable exclusions in favour of contractors by virtue of
incorporated standard form wording, there may be arguments that the
Acts should not apply.81 In addition the standard provisions in construc-
tion contracts may in individual cases be altered by the parties, and in any
event the standard conditions of contract will frequently emanate from
sources other than the parties themselves. 82 In addition, the contracts used
by a party in a particular industry may vary from time to time depending
n Per Judge Newey Q.C. in Rees Hough Ltd. v. Red/and Reinforced Plastics Ltd. (1984) 27
BLR 136.
1a Phillips Products v. Hyland (1984) [1987] 1 W.L.R. 659.
79
Thompson v. T. Lohan (Plant Hire) Ltd. [1987) 1 W.L.R. 649. . . 67 See these particular provisions analysed in C.C.P.P., para. 30-25, and see the closely
so See Harris v. Wyre Forest District Council [1990] 1 A.C. 831, illustrated supra, Section
5(4)(i), parn,. 1.165-1-166.
Bi See the further discussion on this infra, para. 1·243-1 ·245. ,·
ai As to the standard form difficulty, this does not appear to have troubled.'the Court of
Appeal in Phillips Products v. Hyland [1987] 1 W.L.R. 659.
SECT. 9] INTERPRETATION 131
upon the negotiating strength of bis customers and so be said not to be his
"standard" tenns.s 3 Another doubt must also exist as to whether a private
owller having his own home built under an informal or otherwise non-
qualifying construction contract could claim to be "dealing as a con-
sumer".84 Section 12 of the Act does not seem to have bad construction
contracts in mind: see in particular section 12(1)(c), and its limited refer-
ence to the goods passing under a section 7 contract, (that is, a contract for
supply of goods and services).
As stated, the Act does-not contain any provision enabling an unreason- 1·242
able policy or term to be subjected to review as such, and, as in the case of
section 3 of the Misrepresentation Act 1967, there may be borderline
cases where what may appear to be an exclusion of liability is in reality a
provision defining distribution of risk or the precise nature of the other
party's obligation.as
However, within the terms of the Act, assuming that it does apply, the
"no damage" clauses, occasionally encountered in Australia and New
Zealand, not uncommon in Canada, and very common in the United
States (owner-caused delays to entitle the contractor to extension of time
but no monetary compensation), would appear to be unquestionable can-
didates for review under section 3 of the 1977 Act, it is submitted.86 A
further strong candidate would be any surviving final certificate clauses in
the United Kingdom standard forms, which eliminate liability for post-
completion defective work-principally those in the 1963 and 1980 RIBA/
JCT contracts,87 and the even more draconian exclusion of liability for
defective work under the "tests on completion" clauses in the English
Electrical and Mechanical standard forms (liability restricted to two years
after acceptance, and then only for "gross negligence").88 A further candi-
date might be the contractor's determination clause under the RIB A/JCT
contracts, where a number of matters otherwise the responsibility of the
contractor nevertheless entitle him to determine the contract against the
owner with the same remedies as those for repudiation of the contract:
such clauses might rank as exclusion clauses by virtue of the extending
powers under section 13(1) of the Act, it is submitted.89
The following case is an example of an attempt to invoke the Act against 1·243
an exclusion of liability in a construction management contract which was
unsuccessful on substantive grounds, but contains interesting obser-
vations on the two very. important alternative requirements in the Act of
83
See as to this Chitty op. cit. at para. 419.
84
See Rasbora Ltd. v.J.C.L. Marine Ltd. [1977] 1 Lloyd's Rep. 645, where a boat builder was
involved.
ss See the Thompson case, supra.
86
For these clauses, see post, Chap. 8, Section 2(4)(b ).
similar provision found to be unreasonable in Howard Marine v. Ogden [1978) Q.B. 574,
illustrated supra, paras. 1·136.
BB See C.C.P.P., para. 24-07 (8) for this limitation in the FIDIC/EME counter-part.
m See Clauses 26(1)(c) and 28.1.3 of the 1963 aild 1980 RIBA/JCT contracts, discussed in
C.C.P.P., paras. 29-20 and 30-24.
 /'·.
132 GENERAL PRINCIPLES OF LAW [CHAP.!
"dealing as a consumer and not in the course of business" (by the party
attacking the provision) under sections 3(1) and 12(!)(a) of the Act or, in
non-consumer cases, that the term under attack should form part of the
"written standard terms of business" of the party seeking to uphold the
term, also under section 3(1).
ILLUSTRATION
In a management contract made with a hotel owning company the man-
agers were to contract with "works contractors" on behalf of and in the name
of the owners, and their obligations expressly included due care in co-ordinat-
ing and supervising the quality of the "works contractors"' work. However,
by clause 17 the manager's liabilities to the owners were limited, in so far as
they might be caused by breaches of contract by the works contractors, to
such sums as might be recovered in the owner's name from the works con-
tractors. The hotel compa~y had a policy of systematic refurbishment of its
hotels, with intermediate work carried out by its own small maintenance
team. The management contractors had carried out some 19 contracts in two
years, of which nine were modelled on the same form containing clause 17 and
drafted by their own representative, although some terms were omitted or
extended or altered in individual cases. It was objected by the managers that
the hotel owners had not contracted as consumers but in the course of busi-
ness; also that the contract had not been on the managers' "written standard
terms"; and that in any event the exclusion was reasonable. Held, by Judge
Stannard, Q.C., (a) that there was a sufficient degree of regularity in the own-
er's refurbishment programmes to show that these formed part of their busi-
ness as hotel owners, so that they were not "dealing as a consumer"; but (b)
the fact that in a number of cases the management contractors had contracted
upon other parties' terms with no comparable provision to clause 17 did not
prevent them regarding the form used on this occasion from being their own
standard terms of business, so that the Act did apply; however, clause 17,
which, in the case of some only of their responsibilities, made the owners'
rights against their managers dependent on the solvency of the works con-
tractors, was arrived at at arm's length by parties with equal bargaining power
and, applying the criteria of the Act under section 11, was not unreasonable:
Chester Grosvenor Hotel Co. Ltd. v. Alfred McAlpine Management Ltd.
(1991). 00
1·244 [Note: While of limited interest in regard to the principal substantive find-
ing of reasonableness, this case contains a full examination of the current
authorities on the two important "dealing as a consumer" and "written stan-
dard terms of business" requirements of the Act. In regard to the later
requirement Judge Stannard said: "However, it does not follow that because
terms are not employed invariably, or without material variation, they cannot
be standard terms. If this were not so the statute would be emasculated, since
it could be excluded by showing that, although the same terms had been
employed without modification on a multitude of occasions, and were
employed on the occasion in question, previously on one or more isolated
occasions they had been modified or not employed at all. In my judgment the
question is one of fact and degree. What are alleged to be standard terms may
be used so infrequently in comparison with other terms that they cannot
realistically be regarded as standard, or on any particular occasion may be so
90
56 BLR 122. See also McCrone v. Boots Farm Sales Ltd. (1981) S.L.T.103.
SECT. 9] INTERPRETATION 133
added to or mutilated that they must be regarded as having lost their essential
identity What is required for terms to be standard is that they should be
regarded by the party which advances them as its standard terms and that it
should habitually contract in those terms. If it contracts also in other terms, it
must be determined in any given case, and as a matter of fact, whether this has
occurred so frequently that the terms in question cannot be regarded as stan-
dard, and if on any ocasion a party has substantially modified its prepared
terms, it is a question of fact whether those terms had been so altered that they
must be regarded as not having been employed on that occasioned".91 How-
ever, in regard to the question of reasonableness, it should perhaps be pointed
out that the true effect of clause 17, while expressed in superficially reason-
able terms, was nevertheless essentially cosmetic, eliminating altogether all
financial responsibility in respect of defective work.]
Mention has been made of a possible difficulty, in the case of the English 1·245
standard forms of construction contract, of establishing them as rep-
resenting a contractor's "terms of business", as a consequence of their
allegedly negotiated character and of their often being put forward by
owners on the advice of their advisers at the tender stage. Whilst this may
have considerable force in the case of local authorities using the forms, by
reason of their representation, however ineffective in practice, on some of
the bodies responsible for some of the forms, 92 it would be unfortunate, to
say the least, and robbing the Act of nearly all practical application in the
construction field, if these producer and industry-dominated contracts,
containing notoriously damaging provisions and obvious failures to pro-
tect the owner's reaonable interest, which no competent owner's adviser
could be expected to recommend and no properly informed owner to
accept,93 should be regarded as having been negotiated and approved on
behalf of business and private owners alike simply by virtue of the pres-
ence of the professional element in the sponsoring bodies, with their own
vested interest in contracts producing low tendered prices but substantial
post-contract increases of price. It also disregards the powerful and sus-
tained internal and external campaigns on the contracting side of the in-
dustry for the continued use of the unchanged forms on all occasions. This
remains, however, a difficult question, and it is a criticism of the Act, as of
much other English legislation, that the protection of the owner's interest
in the construction industry does not seem to have attracted the attention
of parliament, or of the draughtsman. 94
SECTION 10. £STOPPEL AND WAIVER
(1) Estoppel
Estoppel by representation is a rule of law which prevents a plaintiff from 1·246
alleging a fact necessary to his claim if he has previously, by word or con-
91
Ibid. at p. i.33.
92
SeeC.C.P.P.,para. 29-03, and seesupra,paras.1 ·009 and l ·224in the context of the "contra
proferentem" rule.
93
See post, Chap. 2, Section 6(2)G).
94
-See the perceptive comments of the B.L.R. commentators in the Chester Grosvenor case,
(1991) 56 B.L.R. 115, at pp. 120-121, illustrated supra, para. 1·243.
 134 GENERAL PRINCIPLES OF LAW [CHAP.1
duct, represented the contrary to the defendant. It is therefore a defence
to a claim (or counterclaim), not a cause of action (though the rule
may also prevent a defendant raising a defence otherwise available to
him).
" ... The rule of estoppel or bar ... is capable of extremely simple statement.
Where A. has by his words or conduct justified B. in believing that a certain
state of facts exists, and B. has acted on such belief to his prejudice, A. is not
permitted to affirm against B. that a different state of facts existed at the same
time." 95
It would seem, however, that this traditional distinction between com-
mon law estoppel and the "equitable estoppel'' which protects plaintiffs
suffering detriment in reliance upon representations made as to the future
may now be in question, particularly in Australia.96
1·247 To be successful, the party raising the estoppel must be able to show
that he has acted upon the representation to his detriment, thus importing
the element of consideration. In addition, the representation must be
positive and clear, and intended to be acted upon. It is a rule that can be
invoked less often than many laymen (and indeed legal pleaders) would
appear to suppose, usually because the element of detriment cannot be
established. 97
ILLUSTRATIONS
(1) A contractor alleged that during negotiations it had been agreed that
increases in the cost of all materials, and not merely those in the basic price
list, should be payable under the fluctuations clause. The owners relied on the
contract as signed, which said that only increases in listed materials were pay-
able. The contractor relied on the fact that during the currency of the contract
the owners had paid the sums claimed by the contractor on interim certificates
for increases in unlisted materials. Held, by Ashworth J ., that the owners were
not estopped by reason of their making the payments from later contending
that the sums had not been due: Royston Urban District Council v. Royston
Builders Ltd. (1961).98
(2) A city council's engineer's representative accepted sub-standard hard-
core beneath blocks of dwellings being constructed by a contractor, and 11
out of 17 blocks were certified as complete. At this stage the representative
was replaced and the new representative, who was more exacting than his
predecessor, refused to certify completion of the remaining six notwithstand-
95 MacLaine v. Gatty [1921] 1 A.C. 376, at p. 386,per Lord Birkenhead.
% See Waltons Stoves (Interstate) v. Maher (1988) 164 C.L.R. 387 and Commonwealth v.
Verwayen (1990) 64 A.L.J.R. 540, noted respectively in (1988) 104 L.Q.R. 362 and (1991)
107 L.Q.R. 221. ,· '
<n See, e.g. Purity Dairy v. Collinson (1966) 57 W.W.R. 737, Canada.
~ 177 E.G. 589,per Ashworth J.
8 4
SEcr.10] £STOPPEL AND WAIVER 135
ing that they were completed to the same standard as those previously certi-
fied and that the hardcore for them had been laid during the time of his
predecessor. Held, by the Privy Council, that while on the true construction of
the contract the council could not complain of the certified blocks, they were
not estopped from contending that the uncertified blocks did not conform
with the contract, and damages could be recovered, subject only to their being
limited, under the duty to mitigate damage, to the cost of rectification had the
hardcore been condemned at the time of laying: Ata Ul Haq v. City
Council of Nairobi (1959). 99
(3) In a design-and-build contract for a steel roof deck and frame, there was 1·248
to be no change in the specification without the written authority of the
owner. Later the owner's project manager verbally agreed to a reduction in
loadings in order to reduce cost. Held, by the Court of Appeal of New Brun-
swick, the owner was estopped from complaining of the change:Acme Invest-
ments v. York Structural Steel [19.74]. 1
[Note: The contractor was still held liable, however, for breach of a term
that the work would comply with the by-laws, notwithstanding approval of
the final design.by the architect: see post, Chapter 4. See also the closely simi-
lar cases illustrated under "Waiver", infra.]
(4) By clause 6 of a building contract the contractor was obliged to carry out
any variations required by the statutory authorities, and, subject to written
notice giving the reason and applying for instructions, was entitled to any loss
or expense due to compliance whether or not instructions were received from
the owner. The builder pointed .out the work required to the owner's agent
and asked him to inform the owner, and the agent agreed that the work would
have to be paid for. The agent did not inform the owner. Held, by the New
South Wales Court of Appeal, the owner was estopped from alleging lack of
written notification: Update Construction Ltd. v. Rozelle Child Care Centre
(1990).'
Contractors have persistently sought to contend that an owner is 1·249
estopped from claiming damages for defective work on the ground that
the work was previously seen, or that the defects could have been
detected, by the architect or clerk of works, or on the ground that earlier
rights under the contract (for example, to condemn work while under con-
struction, or when certifying practical completion, or when carrying out
satisfactory reinstatement of defects at the end of the defects liability pe-
riod) have not been exercised. There is no substance in any of these con-
tentions, unless perhaps in a very -special case the architect's attention is
specifically drawn to a suspected defect for a ruling and he acts or gives
instructions in such a way that the contractor suffers a real detriment.3 The
only way in which the owner will usually lose his right to complain is if
there is some certificate which, by the terms of the contract, is conclusive
as to the quality or sufficiency of the work. 4
9ll1959, P.C. Appeal No. 48, now reported in 1985 in 28 BLR 129. This case must be regarded
as doubtful authority on the duty to mitigate, however: see infra, and the East Ham case
there noted.
1
9 N.B.R. (2d) 699. Illustrated more fully post, Chap. 4, Section 1(2)(a), para. 4·091.
2
9 A.C.LR. 66, illustrated more fully infra, Section 11, para. 1·269.
3
See post, Chap. 5, Section 1(6) and the passages from the speeches in East Ham Borough
Council v. Sunley there cited.
See post, Chap. 6, and see also post, Chap. 5, Section 1(4) and (5),
 136 GENERAL PRINCIPLES OF LAW [CHAP.1
Thus where an owner accepted and occupied a building knowing it con-
tained defects, and agreed to payment of retention by his bankers, he was
not estopped from suing for the defects. 5
(2) Estoppel Per Rem Judicatam
1·250 There is much confusing and possibly over-complex authority on this sub-
ject, but it would seem that the res judicata rule ("estoppel per rem judicat-
am" or "cause of action estoppel") is distinguished in some of the cases
from what is called "issue estoppel" (or "estoppel by record"). 6 Issue
estoppel is apparently a rule whereby a prior judicial ( or arbitral) determi-
nation, which as a part of its reasoning involves an issue of fact or law,
disposes once and for all of that issue, so that it cannot afterwards be raised
between the same parties, and is more closely akin to an ordinary estop-
pel, whereas estoppel per rem judicatam is said to be a possibly broader
rule of public policy, to the effect that where there has already been a
judgment ( or award) no further proceedings can be thereafter brought
between the same parties on the same cause of action. 7 Issue estoppel has
given rise to a case law of extreme difficulty.8
1·251 It should be appreciated that this wider principle does not merely apply
to specific rulings in an earlier judgment or award. Thus the principle has
been stated that:
"the Court requires the parties ... to bring forward their whole case, and will
not ... permit the same parties to open the same subject of litigation in
respect of matter which might have been brought forward as part of the sub-
ject in context, but which was not brought forward, only because they have,
from negligence, inadvertence, or even accident, omitted part of their case.
The plea of res judicata applies, except in special cases, not only to points
upon which the Court was actually required by the parties to form an opinion
and pronounce a judgment, but to every point which properly belonged to
the subject of litigation, and which the parties, exercising reasonable dili-
gence, might have brought forward at the time. " 9
As will be seen, this principle certainly does not appear to have been
applied in the case of defendants in legal proceedings, ( as opposed to
5 Lamberto v. Spry (unreported, October 6, 1977, Sup.Ct., W.A.). See also post, Chap. 5,
Section 1(1), (2) and (3), where the subject is further discussed in the context of theories of
acceptance of work.
6 Jackson v. Goldsmith (1950) 81 C.L.R. 446, at pp. 466-469,per Fullagar J., H.Ct., Aust.;
Carl Zeiss Stiftung v. Rayner & Keeler Ltd. (No. 2) [1967) 1 A.C. 853; Port of Melbourne
Authority v. Anshun (1981) 147 C.L.R. 589, at p. 597, and see Commonwealth v.Jennings
Construction Ltd. (1985) 4 A.C.L.R. 19, Sup.Ct., Viet.
7 See the Jackson and Anshun cases in the High Court of Australia, supra.
8 Most text books abstain from discussion and refer in this context to Spencer Bower &
Turner on ResJudicata (2nd ed.), pp. 372 et seq. \'.
9 Hendersonv. Henderson (1843) 3Hare 100,atp. 114,perWigram V.-C., conSidered in the
Anshun and Jennings Construction cases, supra, n.3.
SEcr.10] ESTOPPEL AND W AIYER 137
plaintiffs) who abstain from raising at that time matters of set-off or
counterclaim which they choose to raise in later proceedings.
Whatever the true basis of the principle, there seems no doubt that the
rules, whether of res judicata or issue estoppel, apply equally to arbi-
trations as they do to litigation. 10 Thus an award in an arbitration for
breach of an implied term of due care barred the bringing of a subsequent
action in negligence. 11
It is clear that in actions based on contract there may arguably be differ- 1·252
ent causes of action where there are separate promises in the same con-
tract, or separate breaches of the same promise. Less easy may be cases
where judgment or award has been obtained for one class of damage and
later a different type of damage is claimed. Even here, in an early and
leading case it was held that injury to a man's person and injury to his cab
arising from the same accident constituted different causes of action,
where at the time of the first action the plaintiff had apparently not
appreciated the extent and gravity of his injuries and so had abstained
from suing in respect of them. 12
It is clear, particularly in the field of construction contracts, with numer-
ous different obligations in a complex project undertaken over a period of
time and with the inevitable covering up and concealment which is a fea-
ture of the work in such contracts, that the suggested principle in Hen-
derson v. Henderson, 13 if it is correct, can inflict what appears to be
unjustified and illogical hardship:
"When that rule is applied to damages which are patent, it is a good rule; but
where damages are afterwards developed, it is not a rule to be commended
... I could not assent to its being pushed to the length to which it has some-
times been carried ... " 14
"I must confess that I would be very reluctant to extend the doctrine of
Conquer v. Boot into fields to which I am not constrained to extend it." 15
The difficulties are illustrated by the following cases. It will be seen that
the case of Conquerv. Boot has occasioned particular difficulty in the field
of construction contracts.
ILLUSTRATIONS
(1) A shipbuilder sued for the balance of the price and the owner success- 1·253
fully set up a failure to comply with the specification in diminution of the
price. Later the owner sued for special damage arising from the loss of use of
10
Fidelitas Shipping Co. Ltd. v. VO. Exportchleb [1966] 1 Q.B. 630, at p. 642,per Diplock
L.J.; Telfair Shipping Corporation v. lnersea Carriers S.A. [1983) 2 Lloyd's Rep. 351, at
p. 353,per Lloyd J.
11
Wolfv. Collis Removal Service [1948] 1 K.B. 11.
i i Brunsden v. Humphrey (1884) 14 Q.B.D. 141.
13
Cited supra and see also Conquer v. Boot, illustrated infra.
14
Per Brett M.R. in Brunsden v. Humphrey (1884) 14 Q.B.D. 141, at p.145.
15
Per Forbes J. in Purser (Hillingdon) Ltd. v. Jackson [1977] Q.B. 166, at p. 174E.
 138 GENERAL PRINCIPLES OF LAW [CHAP.1
the ship while under repair. Held, by Parke B., that there was no estoppel:
Mandel v. Steel (1841). 16
(2) A builder brought an action for the contract price and recovered the
whole amount. Subsequently the owner brought an action alleging badly
done work. Held, by the Court of Queen's Bench, he was not estopped. Per
Hannen J ., it would be unreasonable to fix the time at which the money value
of the default should be ascertained dependent on the accident when the
party in the wrong chose to issue his writ for the price. Moreover, since
Mondel v. Steel showed that consequential damage might be the subject of a
separate action by a defendant, to insist upon an immediate decision on dim~
inution of value would require two separate litigations instead of one: Davis v.
Hedges (1871). 17
(3) An owner sued in the County Court for a number of defects, alleging
bad workmanship. Later he brought further proceedings in the same court for
different defects, not apparent on the previous occasion, and now alleging
faulty materials. Held, by the Court of Appeal, the damages must be assessed
once and for all for the same cause of action, and the owner must fail: Conquer
v. Boot (1928). 18
(4) An owner referred a dispute about ceiling defects to arbitration and
obtained an award. He had previously been informed by his surveyor that
there was also a problem with the roof, and, although mentioned in corre-
spondence, this was not included in the arbitrator's terms of reference. Later
he sought a second arbitration to deal with the roof. Held, by Forbes J., apply-
ing Brian Smith (1928) Ltd. v. WheatsheafMills, 19 therulein Conquerv. Boot
did not apply in the case of an earlier arbitration unless the later disputed
matter had been included in the terms of reference of the earlier arbitration:
Purser (Hillingdon) Ltd. v. Jackson (1977). 20
1·254 (5) Owners referred a dispute with charterers to arbitration in regard to a
number of end-of-charter matters such as off-hire, slow steaming, state of
vessel on re-delivery, and disbursements. Shortly after this reference, claims
were initiated in the Iraqi courts against the owners by owners of cargo which
had been damaged due to bad stowage on the part of the charterers. These
claims were finally determined by the Iraqi courts long after the arbitrators'
final award, and the owners then referred their claim for an indemnity from
the charterers to arbitration. Held, by Lloyd J ., that the claim for indemnity in
respect of cargo damage was a separate cause of action from the matters
which were dealt with by the arbitrators: Telfair Shipping Corp. v. Inersea
Carriers (1983). 21
It is submitted that, in so far as it might have been based on new defects
of a different kind as opposed to further damage arising from the pre-
viously litigated defects, the decision of the Court of Appeal in Conquer v.
Boot supra. was wrong in principle. In the absence of sufficiently
detailed contractual descriptions of individual items of work in respect of
16
SM. & W. 858.See also Riggev. Burbridge (1846) 15 L.J. Ex. 309, illustratedpost,Chap. 5,
para. 5·008.
17
L.R. 6 Q.B. 687. See further.per Hannen J.,post, Chap. 5, para. 5·007.
1s [1928) 2 K.B. 336.
19 [1939) 2 K.B. 302.
"(1977] Q.B. 166.
21 (1983) 2 Lloyd's Rep. 351.
SEcr.10] EsTOPPEL AND W AIYER 139
which to plead non-conformity, a pleader would necessarily have to put
his case on the basis of some more generalised implied term of good qual-
ity, whether of workmanship or materials. But in principle each such case
of defective work or materials would constitute a different cause of action,
and it would be mistaken to regard defects of different kinds in differing
locations in respect of work carried out at differing times as constituting
one cause of action, merely by virtue of the same generalised implied term
being pleaded in support of some or all of the individual breaches, it is
submitted. The decision also appears to be difficult to reconcile with the
considerable tactical latitude previously permitted to defendants sued for
the price and to owners faced with defective work, for the practical and
understandable reasons stated by Hannen J. when explaining the Mondel
v. Steel and Davis v. Hedges decisions. Nevertheless, Conquerv. Boot has
recently been followed in a well-researched judgment of Giles J. in New
South Wales, which examines all the English and Australian authorities. 22
(3) Waiver and Equitable Estoppel
Waiver may arise where a party to a contract represents to the other 1·255
expressly or by conduct that he will forego or dispense with a right which
he enjoys under the contract or at law, and the other party alters his pos-
ition as a result. Equitable estoppel may arise if some other statement of
intention is made on which the representee alters his position, if equity
regards it as unconscionable to allow him to disregard his promise. It
seems doubtful if there is any important distinction between the two
concepts.23
ILLUSTRATION
A quantity surveyor was engaged to prepare a specification of war damage
repairs and to supervise the work. After preparing the specification, but
before work started, he became a director of the builders. He informed the
owners, who allowed him to continue and supervise on their behalf. Held, by
the Court of Appeal, although he had committed a fundamental breach war-
ranting instant dismissal, the breach had been waived by his employers and he
was entitled to payment of his fees in full: Hall v. Wembley Electrical
Appliances (1947). 24
It follows from the absence of consideration that a party will not usually 1·256
be held permanently to his promise or waiver should he decide sub-
sequently to withdraw it. From a practical point of view in building cases,
22
Onerati v. Phillips Constructions Pty. Ltd. (unreported, May 12, 1989, Sup.Ct., N.S. W.).
u See the recent Waltons Stores and Verwayen cases in 1988 and 1990 respectively in the High
Court of Australia and the two notes in L.Q.R. referred to in n.96, supra.
24
[1947) 2 All E.R. 630. See for a further example Re Elliott, post.Chap. 6, Section 5(2),
para. 6·101.
 140 GENERAL PRINCIPLES OF LAW [CHAP. l
this may involve the important equitable rule in Hughes v. Metropolitan
Rly,25 perhaps most clearly enunciated by Bowen L.J. in Birmingham and
District Land Co. v. L.N. WR., 26 that a voluntaryconcessionorwaivercan-
not be withdrawn so as to render the other party liable for the past acts or
omissions done or made on the faith of the waiver, and that time should, if
the facts warrant it, be allowed to enable a party once more called upon to
fulfil the contract to place himself in the same position as before. Usually
this will mean that reasonable notice should be given,27 but express notice
is not strictly necessary and any act showing clearly that the concession is
withdrawn will be sufficient,28 provided that time is available to the other
party to restore his position if that is necessary. Only if restoration of the
position becomes impossible will the promise become permanently final
and binding.29
Thus equitable estoppel is limited by the concept of conferring the
"minimum equity to do justice to the plaintiff".30 Again, representations
may be by conduct as well as by statements. In some cases, however,
"minimum equity" may prove to be very substantial.
ILLUSTRATIONS
1·257 (1) A plaintiff had access atone point only from his land to a road owned by
the defendants, and then a right of way along that road. Wishing to sell a part
of his land, he requested access into the road at a second point and a similar
right of way, and explained this at a site meeting with a representative of the
defendants, where the location of the second point was agreed. Subsequently
the defendants fenced the road, but erected gates at the two agreed points on
the road, and the plaintiff sold part of his land together with the first access
and right of way. However, the defendants then removed the gate and fenced
in the road at the second point, depriving his retained land of all access. Held,
by the Court of Appeal, the defendants, knowing of the plaintiff's intentions,
had led him to believe he would be granted a right of access, and by erecting
gates had encouraged him to act to his detriment, thereby creating an equity
in his favour, which would be satisfied by granting him a right of access at the
second point and a right of way. In view of the sterilisation of his land for a
considerable period, the rights should be granted without payment; Crabbe v.
Arun District Council (1976). 31
1·258 (2) Contractors entered into a contract under the RIBNJCT conditions,
work commencing in January 1972 and, after certain delays between then and
October 1973 for which the council was ultimately held responsible under
z, (1877) 2 App. Cas. 439, at p. 448.
26
(1888) 40 Ch.D. at p. 268, 286.
27
See Charles Rickards Ltd. v. Oppenham [1950] 1 K.B. 616.
2
s See Tool Metal Manufacturing Co. Ltd. v, Tungsten Electric Co. Ltd. [1955] 1 W.L.R. 761,
where mere delivery of a counterclaim in legal proceedings was held sufficient.
29
Ajayiv. R.T. Briscoe(Nigeria) Ltd. [1964) 1 W.L.R.1326. See also Ives Investmentsv. High
[1967] 2Q.B. 379; Watsonv. CanadaPennanent Trnst(1972)27D.L.R. 735,and Tdepferv.
Warinco A.G. [1978] 2 Lloyd's Rep. 569, at p. 576. _.
30
PerScarman L.J. in Crabbe v. Arun District Council [1976] Ch. 179, at p. 198."'.
JI [1976] Ch.179.
SEcr.10] ESTOPPEL AND WAIVER 141
Clauses 11(6) and 24 for direct loss and expense, the works were completed in
July 1974. In July 1973 and later in December 1973 the contractors had in
general terms indicated a claim under those clauses, but had not made a writ-
ten application with details of the loss and expense as required by the clauses.
Due to the very high rate of inflation in 1973 and 1974 due to the Arab oil
embargo the contractors and the council agreed to pursue negotiations for an
ex gratia settlement in accordance with government recommendations, since
there was no fluctuations clause in the contract, or alternatively to convert the
contract from a fixed price basis to a fluctuations basis. As a result the con-
tractors' contractual claim for loss and expense was "shelved". The negotia-
tions proceeded very slowly, and in December 1976 the contractors wrote
requesting clarification of the council's position and referred to their own·
position being aggravated by interest charges on their outstanding contrac-
tual claim, and the clerk to the council replied in January 1977 stating that the
council had yet to receive a formal claim under the terms of the contract.
Negotiations for the new contract ended unsuccessfully in February 1977, and
the council resolved to process the contractual claim, which was finally
delivered with the necessary details in June 1978, following which the archi-
tect in 1979 finally certified sums in respect of the loss and expense in a sum of
£156,000. The contractors claimed interest on this sum by way of financing
charges from practical completion until September 1979. The council con-
tended that the appropriate written applications had not been made within a
reasonable time as required by the contract, and also that interest for the
period after practical completion was not a "direct loss". Held, by the Court of
Appeal, applying Hughes v. Metropolitan Railway, the council were estopped
from enforcing their legal right to have a written notice by reason of the nego-
tiations which had taken place; that the delay which occurred during the pe-
riod of negotiation was attributable to an independent cause so that financing
charges during that period {from practical completion until February 1977)
were not recoverable under Clause 11(6) or 24(1 ); but that, applying the prin-
ciples established in F.G. Minterv. Welsh Health Technical Services Organis-
ation32 the contractors were entitled to financing charges in respect of the
period between February 1977 and August 1979 when the architect gave his
certificate and the final account was paid: Rees & Kirby v. Swansea City Coun-
cil (1985)."
One common situation in which the principles of waiver are likely to be 1·259
of importance in building and engineering contracts occurs when rights of
rescission or termination arising upon some non-continuing breach or
event are not exercised reasonably promptly by the owner, and the builder
alters his position by continuing with the work and the right may accord-
ingly be lost.34 More usual will be cases of non-compliance with formal
req_uirements in the contract, such as writing.
ILLUSTRATIONS
(1) A contract prohibited payment for extras unless the architect had given
an order in writing. The owner discussed additions with the clerk of works and
architect and asked for them to be ordered, and was later present when they
32
(1979) 11 BLR 1.
JJ30 BLR 1. See further on interest past, Chap. 8, Section 1(5)(d).
"'See post. Chap. 4, Section 3(1)(c) and Chap. 12, Section 1(7).
 142 GENERAL PRINCIPLES OF LAW [CHAP.1
were ordered verbally. Following a dispute as to damages for delay in com-
pletion, the owner made a part payment against the balance shown in the final
certificate which made no distinction between work done with or without an
order in writing. Held, by the Supreme Court of New Zealand, that the owner
had waived compliance with the contractual requirement: Meyer v. Gilman
(1899).~
(2) A sub·contract was expressly made subject to the approval of the city
council, and was only indirectly, and then only partly, covered by a sub-
sequent approval of the main contract. In a dispute between main and sub-
contractor, rectification was claimed by the sub-contractor so as to incorpor-
ate the main contract fluctuations clause. The main contractor objected that
there was no finally concluded contract capable of being rectified. Held, by
the High Court of Australia, that since the sub-contract had been fully carried
out and executed without protest, the requirement of approval had been
waived: M.R. Hornibrook v. Eric Newham (1971). 36
SECTION 11. QUASI-CONTRACTUAL LIABILITY
(1) Quasi-contract Generally
1·260 Quasi-contract (or restitution, which itis now increasingly called) is a term
used by lawyers to denote a miscellaneous series of situations in which a .
plaintiff can sue a defendant for the return of money paid, or for payment,
although no contract between the parties exists. The essence of all such
claims is the restoration of some benefit conferred on the defendant by the
plaintiff which it would be unjust to allow him to retain, or to retain with-
out payment-unjust enrichment as it is now described.
It is not proposed to attempt a complete statement of this subject, but
merely to indicate very shortly certain types of quasi-contractual liability
which may arise in the practical context of building and engineering
contracts.
(2) Money Had and Received
1·261 One broad category of quasi-contractual claims relates to the recovery
back of money paid to or on behalf of or received by the defendant;
"money had and received". There are a number of such claims. First,
money paid under a mistake of fact can be recovered under this heading.37
This applies to nearly all cases of overpayment (except for the now
increasingly restricted cases of payment not recoverable because made
under a mistake of law, often closely related topaymentsmade to compro-
mise a claim).38 So, in a case where a building owner's interim payments
(or indeed final payment) exceed the value of the work done, the excess
can usually be recovered in quasi-contract, whether or not the contract
lS 18 N.Z.L.R. 129.
~• 45 A.L.J.R. 523.
37
See Chitty op. cit. at para. 1949.
38
See ibid. at paras. 1956 et seq., and see supra, Sections 2(8)(b) and (c).
SECT.11] QUASI-CONTRACTUAL LIABILITY 143
contains any provision for repayment, since the money was paid under a
mistake as to the value of the work done. 38a (Contractual provisions may,
however, render a final certificate, for instance, conclusive as to the value
of work done, and this may defeat the remedy.) 39 Unlike mistake which
avoids a contract,40 a mistake of this kind can be a unilateral mistake
unknown to the other party, and it would seem to be on principle sufficient
if the mistake related to some matter which, if true, would render the mis-
taken party liable to make the payment.41
Secondly, money received by the defendant to the plaintiff's use can be 1·262
recovered. Building contracts not infrequently contain provisions that
include in the sums payable by the owner to the builder under the terms of
the contract money intended for onward transmission to a third person. A
very common example is payment for nominated sub-contractors or sup-
pliers of the builder. In the case of this latter example, the sub-contractor
or supplier will be able to sue the builder on the sub-contract, and need not
rely upon this particular head of quasi-contract. But in some cases there is
no contractual connection between the builder aiid the person entitled to
the money. Thus the pre-1963 standard RIBA forms of contract contained
optional clauses for payment of the quantity surveyor by the contractor. In
such a case, a builder who has actually received sums representing the
quantity surveyor's fees will be liable to the quantity surveyor in
quasi-contract. 42
Thirdly, money paid by the plaintiff to the defendant's use under some
form of statutory or commercial exigency or restraint will be recoverable,
as where either an owner or contractor pays some statutory or other
charge for which the other is strictly liable, or makes some emergency
payment on his behalf. Thus, a contractor who suffered an increase in tax
which he was unable to claim under the contract, but which the owner
was able to reclaim from the tax authorities, was able to recover in quasi-
contract for that reason. 42a
Other important categories of quasi-contractual restitution will include
the recovery of moneys paid under some, but not all, categories of void
contract, or on a consideration which has wholly failed. 42h
(3) Quantum Meruit
In t~e case of construction contracts, however, the most important quasi- 1·263
contractual remedy is likely to be that of quantum meruit. This is not, of
J!lo For a striking example where a contract was rescinded by the owner at a time when the
contractor had been overpaid, see Ferguson v. Sohl (1992) 62 BLR 94, C.A. illustrated
post, Chap. 4, para. 4·231.
~9 See post, Chap. 6.
40 See supra, Section 5(2).
41
For a full discussion of the principles, see Robert Goff J.'s seminal judgment in Barclay's
Bank Ltd. v. W.J. Simms Ltd. [1980] Q.B. 677.
42
See, e.g. the County Court case of Paynev. Wheeldon (1954) 104 L.J. 844.
4
2>James Moore & Sons Ltd. v. University of Ottawa (1974) 49 D.L.R. (3d) 656.
4
2t> Relied on, perhaps doubtfully, by the Court of Appeal in the Ferguson case supra.
 144 GENERAL PRINCIPLES OF LAW (CHAP.1
course, a case of return of money paid, but of recovering the value of work
done or services performed, and will arise in circumstances where a
benefit has been conferred on the defendant which justice requires should
be reimbursed to the plaintiff. It is important to realise that the "quantum
meruit" expression is frequently employed in two quite different legal
contexts. On the one hand, it may be used where a true contractual situ-
ation exists, in the sense of a request to do work accompanied by an inten-
tion to pay for it, and so supported by consideration, but where the price
may not have been fixed at all, or with sufficient precision, by the contract,
so that a promise to pay a reasonable price or remuneration requires to be
implied to give practical effect to the parties intentions. This is merely an
application of the rules as to implied terms previously discussed in this
chapter, and is not a case of quasi-contract. 43
1·264 On the other hand, the expression may be used where no agreement
exists, or subsequently comes into existence, but it would be unconscion-
able to allow one party to benefit from the work done or services rendered
by the other. This is the true quasi-contractual quantum meruitnow under
discussion. The confusion between the two concepts has not been less-
ened by the language used in many past judgments,44 which after discuss-
ing situations where the courts' .findings of fact show clearly that there was
total disagreement on liability, and so no possible contract, have con-
cluded by stating that in such circumstances a promise ( or contract) to pay
a reasonable remuneration or price should be implied. 45 More recent
cases, however, indicate a re-appraisal of the true basis of liability in these
cases as depending on quasi-contract or restitution, and not on an
"implied promise" in any consensual sense. 46 The distinction is of great
practical importance, since the principle of restoration of benefit which is
at the heart of true quasi-contract means that the resulting obligation of
the defendant is not to pay a reasonable price or remuneration based on
cost incurred by the plaintiff, but to reimburse him for the value of the
advantage, if any, received by the defendant as a result of the work done or
services performed. While, depending on the facts, the value of the work
to the defendant may in many cases be equivalent to a reasonable com-
pensatory price or remuneration for the plaintiff, it may on the facts of
some cases be less, and sometimes nil.47
43
See the cases on implied terms supra, paras. 1·046---1·047.
44
See, for a classical example, Molloy v. Liebe (1910) 102 L.T. 616, illustrated post, Chap. 7,
Section 2(4)(d), para. 7·068, where an owner refused to countersign an order in writing,
asserting that he was not liable, and the Privy Council upheld an award on the basis of"an
implied promise to pay". See, for a comparatively recent example, Barry J. 's judgment in
William Lacey (Hounslow) Ltd. v. Davis {1957] 1 W.L.R. 932, illustrated infra.
4!i See Peter Kiewit & Sons v. Eakins Constructions Ltd. (1960) 22 D.L.R. 465, post, para.
4·218.
' See the Rozelle case, illustrated infra.
6 tract bas~d on a real promise to pay, in many subsequent cases it has been
' See, e.g. per Robert Goff J. discussing the effect of the express requirement of compen-
7 founded on quasi-contract, similar in some ways to money had and received.
sation for benefit received under the English Frustrated Contracts Act 1943 in a case where
a frustrating event has destroyed the work; BP Exploration Co. (Libya) Ltd. v._Hunt (No.
2) {1979] 1 W.L.R. 783, at pp. 801G-802F; afrd. by the House of Lords {1983l2A.C. 352;
and see the Seksaria case, illustrated infra. See alsO Parsons v. O'Shea illustrated post,
Chap. 4, para. 4·255.
SEcr.11] QUASI-CONTRACTUAL LIABILITY 145
ILLUSTRATIONS
(1) A contractor was asked to assist house owners to obtain Federal Hous- 1·265
ing Authority financial guarantees, in which event the contract was to be
placed with him. He drilled a borehole, carried out a survey, drew up plans
and cost figures and travelled to consult the architects, and the authority duly
issued its commitment, but negotiations for the contract broke down and it
was placed with another contractor. At the trial, the judge appeared to hold
that there had been a contract between the parties, but there was no finding as
to who had been at fault when it broke down, and his direction to the jury had
been to award the unjust enrichment value of the services carried out of
nearly $6,000, whereas the jury awarded the full cost of the plaintiff's services
as given in evidence of over $11,000. Held, by the United States Court of
Appeals (9th Circuit), neither judge nor counsel had distinguished between a
contract "implied in fact" and one "implied in law". The latter was a fiction
based on the remedy of unjust enrichment, under which judgment could only
be for the value of the benefit acquired. The judgment would be reduced to
the lower figure, but if the parties did not agree there would have to be a new
trial. R.P. Hill v. A.E. Waxberg (1956). 48
(2) A contract for the sale of machinery by German sellers to Indian buyers
was rendered impossible of performance by the outbreak of war in 1939, at a
time when machiney representing 'Vio in value of the total price of 183,200
rupees _had been delivered, but only 96,010 rupees had been paid. Under the
Indian Contract Act supervening impossibility rendered a contract void, and
by sections 64 and 65 of that Act in such a case there must be mutual resto-
ration of benefit and compensation for any advantage obtained. Held, by the
Privy Council that, taking account of the fact that the delivered machinery
might be useless without the undelivered part or an available alternative
source of supply, the sellers had failed to prove an advantage greater than the
sums already paid by the buyers: Govindram Seksaria v. Edward Radbone
(1947)."
[Note: English case law in respect of the monetary consequences of frus-
tration subsequently diverged from the quasi-contractual basis of compen-
sation reflected in the above sections of the Indian Contract Act, but
ultimately culminated in the English Frustrated Contracts Act 1943 with spe-
cial compensatory provisions based largely on principles of quasi-contract;
however, this landmark case in the law of India is a good illustration of the
application of the principles. For frustration, see post, Chap. 4, Section 3(3).]
(3) Builders submitted a tender which they were led to believe would be 1·266
accepted, although there was no binding contract, for rebuilding war-
damaged premises. At the request of the owner's surveyors they prepared
calculations for steel and timber, an estimate for a notional reconstruction so
that a "permissible amount" could be negotiated with the War Damage Com-
mission, and new specifications and revised estimates together with bills of
quantities, and later amended them still further at the owner's request. He
then sold the building to another developer. Held, by Barry J., while the early
history of quantum meruit may have been based on a genuine action in con-
In such cases, the court would ascertain whether a promise to pay should be
48
Reported in England in (1976) 2 BLR 107.
'' L.R. 74 I.A. 295.
 146 GENERAL PRINCIPLES OF LAW
implied irrespective of the actual views or intentions of the parties. Here the
work done fell outside the nounal work performed gratuitousl)' by a tender-
ing builder, in the mutual belief of the parties that the plaintiff would receive
the contract, and, following Craven-Ellis v. Canons Ltd.50 a promise to pay
reasonable remuneration would be implied: William Lacey (Hounslow) v.
Davis (1957). 51
[Note: In this case the judge did not explicitly consider whether the value to
the owner might differ from the reasonable remuneration which he awarded,
though he did surmise that the work done had an influence on the price
obtained when the building was sold. It is clear that, as in Hill v. Wax berg, the
court was consciously applying a quasi-contractual remedy and that the
"implied promise" was fictional.]
1-267 (4) A developer was the successful tenderer for a joint development
scheme with a council who were also the planning authority, and which con-
tained mixed public and commercial elements. The final result was to be a
building lease, and all costs were to be borne by the developer. After two
schemes prepared by the developer had been discarded, a third scheme was
agreed and approved by the Minister; but following objections by a different
public authority which had not yet been consulted, the developer then agreed
to produce a fourth scheme, which was again accepted by the council, who
gave development approval. The council then changed its policy, and asked
for a scheme with no commercial element, and finally voted formally to drop
the approved scheme. The developer sued for substantial costs over a three-
year period. Held, by Sheppard J., following William Lacey (Hounslow) v.
Davis, that the work had been done for the benefit of both parties on the joint
assumption that a contract would be entered into, and went beyond what
would normally be done gratuitously. The English cases, as opposed to the
Australian cases, showed that in the last 40 years an obligation to pay could be
imposed by law (a promise to pay implied) on the basis of unjust enrichment,
notwithstanding that the parties to a transaction did not intend expressly or
impliedly that such an obligation should arise. If the transaction had gone off
because the parties were unable to agree it would be correct to say each party
had taken that risk. The determining factor was the Council's decision to drop
the proposals for reasons of its own. As to the Council's no benefit argument,
in Lacey's case the essence of the decision was that the defendant had chosen
not to proceed but to sell the building, and not any assumption that benefit
had actually been received, and the plaintiffs were entitled to reasonable
remuneration: Sabemo Pty. Ltd. v. North Sydney Municipal Corporation
(1977)."
(5) An architect agreed with a contractor before tender that certain future
taxation increases would be payable under the contract, and issued a final
certificate containing the increases, which by its terms was to be final and
conclusive. Held, by Morden J., that the architect had no ostensible authority
to contract in this way, and the certificate was invalidated and the owner not
bound by the certificate. But since the owner had reclaimed the tax increase in
question from the revenue authorities, he was liable to the contractor on a
basis of unjust enrichment in quasi-contract: James More v. University of
Ottawa (1978). 53
1·268 (6) Following a letter of intent, from main contractors to a supplier,
requesting a start of work "pending the preparation and issuing to you of the
so (1936] 2 K.B. 403.
SJ [1957] 1 W.L.R. 932.
n (1977] 2 N.S.W.L.R. 880.
s3 85 D.L.R.(3d) 186, Fed. Ct., Canada.
SECT.11] QUASI-CONTRACTUAL LIABILITY 147
official form of sub-contract", a supplier of steel nodes quoted a "budget
price" and commenced manufacture, but protracted negotiations as to time
of delivery and price, and as to consequential loss and delay, had not reached
agreement by the time the last nodes were delivered. 54 The suppliers sued for
the value of the nodes on a reasonable price basis, and the contractors
counter·claimed for damages in excess of the claim for delivery late and out of
sequence. Held, by Robert Goff J ., the question under the terms of the letter
of intent was whether as a result of carrying out the work at the contractors'
request there came into existence a contract by virtue of which the suppliers
were entitled to claim reasonable remuneration. Both parties had expected a
formal sub-contract to eventuate, and the work was done "pending" that con-
tract. If no such contract was entered into the performance of the work was
not referable to any contract of which the terms could be ascertained and,
while it was tempting to imply such a contract, the law simply imposed an
obligation on the party who made the request to pay a reasonable sum for the
work done, such an obligation sounding in quasi-contract. In the present case
there had been no contract at all. Even if there had been an "if'' contract for an
executed consideration there would not have been an obligation to complete
within a particular or reasonable time: British Steel Corp. v. Cleveland Bridge
and Engineering Co. Ltd. (1984). 55
(7) Section 45 of the New South Wales Licensing Act 1971 provided that a
contract by a licensed builder for building work "is not enforceable against
the other party to the contract unless the contract is in writing signed by each
of the parties". A house owner, sued in quantum meruitfor an alleged balance
of the price, pleaded that the contract was a verbal building contract, and so
unenforceable under the section. The Court of Appeal of New South Wales
held that the old cause of action in quantum meruit required proof of the
special contract for building work, and so was defeated by the statute, and
further that there was a legislative intention to prevent a builder from
recovering remuneration, even for completed work, unless the contract com-
plied with the statute. Held, by the High Court of Australia (Brennan J. dis-
senting), that, while the unenforceable contract could be looked at for the
limited purposes of assessing quantum or seeing whether there was an inten-
tion to pay, the action in quantum meruit did not rest on implied contract, but
on restitution or unjust enrichment, arising not from the unenforceable con-
tract itself but from the acceptance of the benefits accruing from the perform-
ance of the contract, in this case when the owner went into occupation. There
was no legislative intention to deprive a builder who had completed work
which had been accepted by the owner of any remuneration for his work. Per
Deane J.: "The tendency to see the rationale of the right to recover remuner-
ation for a benefit provided and accepted ... as contract or promise rather
than restitution has tended to distract attention from ... the basis upon which
the quantum of the amou.nt recoverable should be ascertained. What the con-
cept of monetary restitution involves_ is the payment of an amount which con-
stitutes ... fair and just compensation for the benefit or enrichment
admittedly or constructively accepted. Ordinarily that will correspond
to ... remuneration calculated at a reasonable rate for work actually
done ... or market value of material supplied. In some categories of case,
however, it would be an affront to the requirements of good conscience and
justice to determine compensation ... by reference to a fair remuner-
ation ... or a fair market value.": Pavey & Matthews Pty. Ltd. v. Paul (1987). 56
s4 See for the case in greater detail supra, paras. 1·050--1·051.
ss [1984] 1 All E.R. 504, 24 BLR 94. 1'.or letters of intent generally, see post, Chap. 3,
para. 3·071.
56 162 C.L.R. 221. Illustrated post, Chap. 4, para. 4.282 in the context of illegality.
 148 GENERAL PRINCIPLES OF LAW [CHAP. l
1·269 (8) A care centre was to be built using a fixed price contribution from the
Department of Social Security. The builder knew that the Department would
not pay for variations without prior authorisation, and the variations clause in
the contract ( clause 8) was deliberately struck out on his suggestion. How-
ever, by clause 6 work done to local authority requirements with which the
builder had to comply was, subject to written notification by the builder to the
owner, deemed to be a variation under clause 8. Similarly, by clause 16 differ-
ences in ground conditions from defined conditions entitled the builder, fol-
lowing notification (not in writing) to the owners, to be paid for them together
with any consequent variation, under clause 8. The builder carried out work
under both clauses, but omitted to give notice in writing to the owner or to
obtain formal instructions in either case, although he orally informed the
owner's representative, who agreed with him that the owner would have to
pay additionally for all the work. An arbitrator held the builder entitled to
recover on the basis that the writing requirements were directory only, and
that in any case the owner was estopped, since his agent had agreed to the
work. He also purported to follow Molloyv. Liebe,57 ( where the High Court of
Australia had held that the owner might be liable on an implied promise to
pay in a case where he had not, as required by the contract, countersigned
architect's instructions). Held, by Rogers C.J., the requirement of writing in
clause 6 was mandatory, and the deletion of clause 8 rendered clause 16 inop-
erative. Molloy v. Liebe was now better explained on the basis of unjust
enrichment rather than implied contract, but the principles of the law of resti-
tution, as explained in Pavey & Matthews v. Paul, did not call for an entitle-
ment to recovery where notice was crucial for the requirements of the
contract to be fulfilled, so that in turn the owner could fulfil the DSS require-
ments in regard to variations, and the builder by his neglect had unwittingly
denied the owner the opportunity of obtaining the necessary additional
funds. Held, by the New South Wales Court of Appeal, overruling Rogers
C.J., the claim under clause 16 was valid, since it could be construed with its
internal reference to clause 8 omitted and should not be rejected as a whole;
however the arbitrator's finding of fact on the question of estoppel and the
status of the owner's representative should not be interfered with, so that
both claims could succeed on that ground. Per Priestley J.A.: "I know of no
cases ... where an existing enforceable contract governs ... between two
parties and yet one has recovered ... on the basis of quantum meruit, quasi
contract or restitution." The builder had suffered detriment in that, in
reliance on the owner's agent, he had abstained from giving written notice:
Update Construction Pty. Ltd. v. Rozelle Child Care Centre (1990).58
[Note: This is not a straightforward case. Kirby P. differed from Priestley
J .A. in considering that Pavey's case was, in principle at least, applicable and
would merit further investigation by the arbitrator. Priestley J.A. also
appears to have taken a restricted view of the case of Molloy v. Liebe as
depending upon the relevant work being "outside the contract" in that case,
whereas in the present case it was actually required under the terms of the
contract. This seems a doubtful distinction.]
1·270 It will be noted that the above cases relate to work done in a number of
essentially different situations, for example, work done under
"unenforceable" contracts equivalent to the English statute of Frauds
1677 {that is, where some statutory formality has not been complied
S7 (1906) 4 C.L.R. 437 (1910) (57) 102 L.T. 616, P.C., illustrated post, Chap. 7,"P:a,ra. 7·067.
ss 9 A.C.L.R. 66. , ..
QUASI-CONTRACTUAL LIABILITY 149
with) 59; work done under a void contract of employment due to failure to
comply with a company's articles of association60; work done in closely
analogous situations where contractual formalities, such as an order in
writing, have not been complied with 61 ; work done under a contract ren-
dered void by a suspensory condition62; or preparatory work or work done
under a letter of intent or otherwise pending a contract where agreement
was not in the event reached. 63 It is also now widely accepted that the
implied promise or contract mentioned in the earlier cases as the legal
basis for the action of quantum meruit is a legal fiction, and that the true
basis of liability is the receipt of a benefit by the defendant where, in the
circumstances of the particular case, its value ought in justice to be reim-
bursed to the plaintiff, rather than the reasonable price or remuneration
for work done which would follow from an express or "real" implied
promise or request to do the work ( although quite often reasonable
remuneration may not in fact differ from value received). 64 The judgment
of Deane J. in the Pavey & Matthews case seems likely to become a land-
mark in this field.
It should perhaps be reiterated that the quasi-contractual principle of 1·271
restoration of or compensation for benefit was not applied by the English
case law on frustration65 until the advent of the Frustrated Contracts Act
1943, the exact wording of which in this context requires very careful
analysis. 66
A further class of quantum meruit claim which can be of considerable
practical importance in construction contracts arises in the very common
case where work is done under an existing contract, but additional work is
carried out which it is contended cannot be reasonably regarded as
included in the scope of the original contract.67 Frequently this can happen
where an owner or his AfE is unaware of any claim at the time or, if a claim
is made, he bona fide disputes liability for anything more than the contract
price. 68 On the reasoning of the more modern judgments in the B.S.C. v.
~
9
Compare James v. Thomas Kent Ltd. [1951] 1 K.B. 551, at p. 556; Deg/am v. Guaranty
Trusty Company of Canada [1954] 3 D.L.R. 785; Kiriri Cotton Co. Ltd. v. Dewani [1960]
A.C. 192, at pp. 204-205; Pavey & Matthews Ltd. ·v. Paul (supra).
60
Craven·Ellis v. Canons [1936] 2 K.B. 403.
61
Molloy v. Liebe supra, as explained in the Rozelle Child Care case, supra.
62
Hornibrook v. Eric Newham (1971) 45 A.LJ.R 523, illustrated post, Chap. 3, Section
3(2)(a)(ii), para. 3·061, and see supra, para. 1·259.
t1J William Lacey (Hounslow) v. Davis, supra. as explained in B.S.C. v. Cleveland Bridge,
supra, and see also for a typical example Peter Lind v. Mersey Docks and Harbour Board,
supra. Section 2(5), para. 1·038.
64
See also the persuasive observations about this by Sheppard J. in the Sabe mo case, supra.
6!i Chandler v. Webster [1904] 1 K.B. 493.
66
For frustration generally, see post, Chap. 4, Section 3(3).
1
• See, e.g. in a case of quantity surveyor's charges Kelly v. Northshore Development (1963)
5 W.I.R. 379, West Indies,post, Chap.2, paras. 2·283--2·284, but contrast Gilbert & Partners
v. Knight [1968] 2All E.R. 248,supra. Section 2(8), and see also the building case of Parkin-
son (Sir Lindsay) v. Commissioner of Works [1949] 2 K.B. 6'23,post, Chap. 7, Section 2(4),
para. 7·090.
68
See post, Chap. 7, para. 7·068, and the cases of Brodie v. Cardiff Corporation [1919] A.C.
337 and the Supreme Court of Canada decision in Peter Kiewit Ltd. v. Eakins Construction
Ltd. [1960] S.C.R. 361 there referred to.
 150 GENERAL PRINCIPLES OF LAW
Cleveland Bridge and Rozelle Child Care cases illustrated supra, the basis
of such claims seems logically quasi-contractual, since any implied con-
sensual aspect would be fictitious only.69
1·272 One final class of quasi-contractual quantum meruit appears to arise
where a contract is wrongly terminated against the party carrying out the
work. There is both United States and Privy Council authority that, in a
case where a contractor has made a bad bargain, in the sense that he has
underpriced the work, he may, as an alternative to claiming damages for
rescission, recover reasonable remuneration (on the assumption, of
course, that the benefit received by the owner exceeds the contract price
of the work done). 70 This view which, if correct, certainly entitles the con-
tractor to more than would be recoverable as damages for breach of con-
tract, has, however, been questioned. 71 In regard to this particular class of
quantum meruit the New South Wales Court of Appeal has recently held
(without, it is true, any detailed discussion of the authorities) that a con-
tractor's claim in quantum meruitfollowing a wrongful termination is cor-
rectly quantified on the basis of a reasonable remuneration, rejecting
value of the work to the owner as the basis. 72 It can also be argued as some
support for this view that a basis of value to the owner would provide an
encouragement to deliberate wrongful terminations by owners on becom-
ing aware of diminished commercial profitability of a project under con-
struction, or in the case of public or subsidised projects which it is decided
to abandon for budgetary or other reasons. This subject is further con-
sidered post, Chapter 4, Section 3(1)G), paragraphs 4·230-4·231, and
Chapter 12, Section 3(2)(b).
SEcrION 12. LIABILITY IN TORT
(1) Generally
1·273 For the benefit of legally unqualified readers, tortious liability is a liability
to pay damages which arises not out of contract, but from a wrongful act.
Typical examples are the liability of a negligent motorist ( the tort of negli-
gence), or of a newspaper proprietor for defamatory matter in his
paper (the tort of libel). It has already been seen that one tort (that of
deceit) is highly relevant in considering the law of contract, as the liability
to pay damages for a fraudulent misrepresentation arises independently
of contract. The importance of this is that ~ person who has suffered dam-
age as a result of a fraudulent misrepresentation made to him can sue for
damages notwithstanding that he is not in contractual relations with the
representor, or may not have himself given consideration. So a builder
(IIThis seems to be such a common situation that it has provoked specific legislation: see the
new (1987 amended) section 58 of the British Columbia Laws Equity Act 1979.
70
See Lodder v. Slowey [1904] A.C. 442, P.C.; Boomer v. Muir 24 P.(2d) 570 (1933),post,
Chap. 4, paras. 4·230-4·231, and Chap. 12, Section 3(2)(b).
71 See Chitty Op. Cit. at para. 2142, and the authors there cited.
72
Renard Construction Ltd. v. Minister of Public Works (1992) 26 N.S.W.L.R. 234.
[CHAP.! LIABILITY IN TORT 151
who suffers damage as the result of a misstatement fraudulently made to
him by the architect, or an owner who has suffered damage as a result of a
sub-contractor's similar misstatement in order to persuade him to use the
sub-contractor's product or services, for example, can sue and recover
damages notwithstanding the absence of any contract between represen-
tor and representee.
There have been massive developments in the last25 years in the law of 1·274
tort as it affects construction contracts, which it must be said have led to
considerable confusion and both rapid advance and retreat, in regard to
defective buildings, on a scale not previously seen in English case law.73
This process of drastic reconsideration in regard to liability for defective
buildings culminated in a final historic reversal of this part of the law in
1990."
At the time of the te_nth edition of Hudson, there were three principal
areas of liability in tort which might be expected to affect parties to a con-
struction project. First, there was the potential responsibility of all parties
to a project for damage to person or other property resulting from con-
struction operations or negligently designed or constructed buildings.
This consisted partly of cases of so-called strict liability (that is, indepen-
dent of negligence or fraud) for damage to other property, involving the
torts of nuisance, trespass, or the rule in Rylands v. Fletcher75 ; but more
importantly of cases dependent on the tort of common law negligence
under what has now become universally known, after the eponymous
decision of the House of Lords in 1931, as the Donoghue v. Stevenson
principle. The crucial element for this liability here was foreseeable physi-
cal damage negligently caused to the person or to property, and the recov-
ery of economic loss was only permissible to the extent that it arose
directly from the physical damage (as, for example, loss of earnings past
and future in a case of personal injury, or loss of rents or profits, or the cost
of alternative accommodation, while damaged property was being
replaced or repaired). Economic loss simpliciter was- not otherwise recov- .·
erable under this principle, as has been belatedly recognised in a number
of very recent cases.76 Moreover, where damage to property resulted from
a negligently produced chattel or work product, the traditional liability
under the Donoghue v. Stevenson principle was for damage to other prop-
erty, not to the chattel or work product ( or in a construction case the build-
ing) itself.
. Secondly, in a novel development of the greatest commercial import- 1·275
ance arising from a 1964 House of Lords' decision,77 financial or economic
13 For an analysis and history of these developments up to 1986 see C.C.P.P., 5-01 to 5-05,
and, for the increasing confusion up to 1988, see C.C.P.P., Chap. 6 and paras. 7-01 to 7-09,
and, following theD. & F. case, infra, in the House of Lords in 1988, the editor's analysis in
(1989) 105 L.Q.R. 46.
1• In Murphy v. Brentwood District Council [1991] A.C. 398, analysed by the Editor in "Anns
Beyond Repair" (1991) 107 L.Q.R. 228.
15 As to the latter, see Salmond &HeustonLawofTorts (20th Ed.),para. llOto 111, and see
~ ;'' infra, para. 1 ·338.
,,. 16
See infra, para. 1·353 et seq.
17
Hedley Byrnev. Heller [1964] A.C. 465.
 152 GENERAL PRINCIPLES OF LAW [CHAP.!
loss simpliciter, without physical damage present, became recoverable for
the first time outside the law of contract in a special new class of case in
tort. This essentially required a negligent misrepresentation by the
defendant, or some other form of active intervention, advice or conduct
amounting to a representation, made in circumstances where, while there
was no contract as such between plaintiff and defendant, there was never-
theless a "special relationship" involving a high degree of proximity,
including in particular reliance by the representee and an inferred
assumption of responsibility by the representer, and where financial dam-
age, if the defendant's representation was inaccurate and acted upon,
would clearly result for the plaintiff. The required relationship was, it will
be seen, not far removed from contract. Again eponymously, this has
become universally known as the Hedley Byrne v. Heller, or more simply
Hedley Byrne, principle. This principle has already been discussed, and a
number of examples given, in the special context of the Misrepresentation
Act 1967, with its closely overlapping and closely related new statutory
remedy of damages for innocent misrepresentation, 78 although that Act
applies only between contracting parties. The tenth edition of Hudson in
1970 could do little more at that time than speculate as to the possible
implications of this new principle in construction contracts.
The third area of liability, discussed in the tenth edition, arose under the
Occupiers' Liability Act 1957 (now added to by the 1984 Act). Since these
Acts partly restate and partly modify the common-law liability in negli-
gence of "occupiers" of premises to their "visitors", their principal interest
in the context of construction contracts is to determine which parties to
the project may qualify as "occupiers" or "visitors" respectively. 78•
1·276 Since the tenth edition, however, a further major, if not revolutionary,
extension of the law of negligence took place, following the decision of the
Court of Appeal in Dutton v. Bognar Regis U.D. C.,79 which appeared to
hold that the cost of repairing defects in a building due to negligent design
workmanship or supervision by any of the parties to a construction project
would be recoverable in tort by subsequent owners or occupiers in the
absence of any contract with the persons concerned ( although the case
was actually concerned with a failure of inspection by a local authority to
detect a contractor's bad work in breach of contract). Dutton was rapidly
followed in the Commnwealth,80 and appeared to receive its final seal of
approval when affirmed by the House of Lords and approved by the New
Zealand Court of Appeal within a few weeks of each other in late 1977.81
76
See supra, Section 5(4)(e), para. 1134 et seq.
7
a. See infra, para.1·328-1·332.
19 [1972} l·Q.B. 373.
80
See, .e.g. for early cases, Brook Enterprises v. Welding (1973) 38 D.L.R.(3d) 472; Bevan
Investments v. Blackhall & Struthers (No. 2) {1973} 2 N.Z.L.R. 45; District of Surrey v.
Church (1977) 76 D.L.R.(3d) 721;affd. 101 D.L.R.(3d) 218 (all cases where architects or
sub-consultants were liable for negligent design to owners not in contractual relations with
them). :· _
81
Bowen v. Paramount Builders [1977} 1 N.Z.L.R. 394; Anns v. Merton London"Borough
Council [1978} A.C. 728.
SECT. 12] LIABILITY IN TORT 153
The Anns case, although again immediately concerned, like Dutton,
with the liability of a local authority under the Housing Acts (in failing,
through its inspector, to detect or prevent foundations being laid at less
than the required depth) implicitly, if not actually explicitly, rendered all
parties concerned with new construction (including contractors, sub-con-
tractors and consultant professionals), liable in tort to occupiers for the
cost of repair of latent defects subsequently discovered in buildings which
might threaten the health or safety of the occupiers (that is, the vast major-
ity of defects), notwithstanding that no damage whatever (or no serious
damage) had as yet occurred. On analysis, therefore, this was an entirely
new category of claim for pure economic loss of a special kind. On this
view, the new tortious duty amounted to a warranty by all concerned of
due care on their part as to the habitability of the building and of its com-
pliance with the by-laws. There were other profound elements of novelty
in theAnns decision,82 which by 1989 had been followed in countless cases
in the Commonwealth and in the English Court of Appeal and lower
courts, and accepted in at least seven House of Lords and Privy Council
cases.83 A similar development of the law occurred over approximately the
same period in the United States, though in this case unaccompanied by
the "danger to health or safety" element emphasised by the Anns
decision.84
It is interesting to note that, just as the Hedley Byrne economic loss 1·277
claim emerged in the courts very close in time to the passing of a statute
imposing similar obligations,84a so, too, the original Dutton economic loss
claim, subsequently affirmed in Anns, preceded by a few months and
anticipated the passing of the very similar Defective Premises Act 1972.M
That Act applied only to dwelling-houses, however. Moreover, it had a
fixed limitation period of six years from completion of construction. It
imposed a general duty of care on all concerned with new construction,
enforceable by subsequent owners, but in view of what appeared to be the
much wider scope of the Anns liability, together with a possibly far longer
limitation period in negligence (depending on the first date of "damage")
the 1972 Act had by 1989 fallen into almost complete disuse.
However, in a dramatic decision in 1988 the House of Lords recon-
sidered and overturned the main substance of what had been thought to
be the 1978 Anns principle in regard to the liability of all the various pri-
i,:ate participants in a construction project (other than the public by-law
authority itself, whose liability had been inescapably established by
82
For these see the editor's article in 105 L.Q.R. 46, at pp. 50--52.
63 Ibid at p. 47, n.5.
84
For a short review of the U.S. cases by the editor, see (1978) 94 L.Q.R. 60 at pp. 70--72;
(C.C.P.P., para. 2-17 to 2-18). See, also for a more recent well-researched, and detailed
survey of U.S. law, S. R. Barrett, "Recovery for Construction Defects" (1989) 40 South
Carolina L.R. 919.
84
' The Misrepresentation Act 1967.
85
See Lord Denning M.R.'s pre-Anns analysis of the new Dutton principle and of its chron-
ology in relation to theActin Sparham-Souterv. Town and Country Developments (Essex)
Ltd. [1976] Q.B. 858, at p. 869.
 154 GENERAL PRINCIPLES OF LAW [CHAP.!
86
Anns). In so doing, they were probably strongly influenced by the earlier
judgments in 1985 in the High Court of Australia in Council ofthe Shire of
Sutherland v. Heyman, 87 the first principal Commonwealth court to doubt
the common law negligence implications of Anns, as well as its public lia-
bility aspects. 88 This was followed in 1990 by the still more radical and
indeed historic decision of a seven-judge House of Lords presided over by
the Lord Chancellor in Murphy v. Brentwood District Caunci/,89 where the
liability of the by-law authority under the Public Health Acts for econ-
omic loss (in the form of cost of repair of defects) was overturned and
Anns formally overruled, thus bringing the Anns liability of both public
and private defendants, accepted widely throughout the Commonwealth
since the Dutton case in 1972, to an end in England.
It was immediately clear following Murphy that some jurisdictions in
the Commonwealth might not be prepared to follow the House of Lords'
reversal of direction, in particular in Canada and New Zealand.89a It seems
clear at the time of writing this Edition that Canada will definitely not
follow Murphy,89b and that New Zealand almost certainly will not do so
either.89c For this reason the account of the Anns liability in this Chapter,
largely completed prior to the D & F Estates and Murphy cases, remains
largely unaltered and included in Subsection (6) infra, and will remain
relevant in those and other jurisdictions which continue to follow the
Anns principle.
1·278 In the present state of English law, therefore, it would seem that pure
economic loss (which will include the cost of repairing a building found to
be defective before damage has been caused to person or other property)
will not be recoverable by a plaintiff in tort<JO except;
(a) under the Hedley Byrne principle;
(b) in cases where a contract is also present between the parties, and
there is concurrent liability in tort;
(c) in the case of professional relationships such as between doctors,
solicitors, accountants and financial advisers and their patients or
clients, even if contract is absent91 ;
s6 D. & F. Estates v. Church Commissioners [1989] A.C. 718, analysed in detail by the editor in
(1989) 105 L.Q.R. 46, and examined in detail infra, para. 1·354-1·355.
s7 (1985) 157 C.L.R. 424.
88 See 3 I.C.L.R. 157, reproduced in C.C.P.P. Chap. 7 and its full analysis by the editor of the
judgments in Heyman's case, and see further (1989) 105 L.Q.R. 46, at p. 49.
a<i [1991] A.C. 398. See (1991) 107 L.Q.R. 228, C.C.P.P., Vol. 2, Chap. 7.
a<ia See the cases cited by the editor in (1991) 107L.Q.R. 228, 247-8 for an earlier view, and for
SEcr.12] LIABILITY IN TORT 155
( d) in a very rare class of case, where public or social policy may require
liability, notwithstanding the absence of the element of positive
intervention or assumption of responsibility which is usually essen-
tial in typical Hedley Byrne situations,92 or
( e) by virtue of statute.
As a generalisation, it now seems clear that any claim in tort by a plain- 1·279
tiff for pure economic loss not consequential on damage to a plaintiff's
person or property or falling within the Hedley Byrne principle will be
regarded as novel, and that in deciding the question of liability in such a
novel situation the English courts will proceed incrementally on a case by
case basis and be governed by considerations of policy, and will not
attempt to formulate or apply any general principle in such situations. The
famous two-tier formulation of a general principle to be applied, and the
express rejection of any need to consider the facts of earlier cases in novel
situations, formulated in the two well-known passages from Lord Reid
and Lord Wilberforce in the Dorset Yacht and Anns cases93 may now be
regarded as decisively rejected in England,94 and even in New Zealand is
not regarded as an exclusive test of liability. 95
In the remaining parts of this Section it is proposed to discuss shortly, in
the context of construction contracts:
(a) The Hedley Byrne principle of liability (Subsection (2));
(b) The Donoghue v. Stevenson principle of liability (Subsection (3));
(c) The Occupiers' Liability Act 1984 (Subsection (4));
(d) Strict liability cases (Subsection (5));
(e) The Anns principle of liability (Subsection ( 6));
(f) The Defective Premises Act 1972 (Subsection (7));
(g) The Latent Damage Act 1976 (Subsection (8));
(h) Concurrent Liability and Contribution (Subsection (9));
(i) Liability for Independent Contractors (Subsection (10)).
(2) The Principle in Hedley Byrne v. Heller
(a) Generally
This principle has already been discussed at some length in the context 1·280
of the 1967 Misrepresentation Act.% Until that Act no liability
to pay damages could arise from an innocent misrepresentation

a later view, in (1993) 1 Tort Law Review 152, 160-162, Australia.

a<ib Norsk Pacific Steamship Co. v. Canadian National Railway Co. (1992) 91 D.L.R. 4th 289, 92
See, e.g. per Ralph Gibson L.J. in Pacific Associates Inc. v. Baxter [1990] 1 Q.B. 993, at
S.C. of Canada. p. 1027.
8'Jc Lester & Hughes v. White [1992} N.Z.L.R. 483, and see also Sir Robin Cooke's "An 93
[1970] A.C. 1004, at p. 1027; [1978] A.C. 728, at pp. 751-752, discussed in extenso in
Impossible Distinction" (1991) 107L.Q.R.46. See also, per Sir Anthony Mason, in (1993) 1 C.C.P.P., paras. 6-04 et seq. and 7-08.
Tort Law Review 5, 6-9. 94
See however the discussion by Mason C.J. on this point in (1993) 1 Tort L.R. 5, at pp. 6-9
90 This "exclusionary" view and the limited exceptions set out are not accepted by some
and by Fleming, ibid. at pp. 68 et seq.
distinguished academic writers, however: see Fleming, "Economic Loss in CanaP,_a, (1993) 95 See Cooke P's judgment in the New Zealand C.A. in Mortensen v. Laing [1992] 2 N.Z.L.R.
1 Tort Law Review 68, and Stapleton, (1991) 107 L.Q.R. 249. ,,. 282.
91
Ross v. Caunters [1980] Ch. 297. 96
See ante, paras. 1·127 et seq., and see supra, Section 5(4)(e).
 156 GENERAL PRINCIPLES OF LAW [CHAP.1
made between contracting parties unless it was also a term of a contract.
This had also appeared to be the law for many years in a wider class of
cases where misstatements were made to a person who was not necessarily
a contracting party, since the much criticised decision of the House of
Lords in Derry v. Peek. 97 That case appeared to lay down that no duty of
care existed (apart from contract) in the making of statements, however
seriously given and for whatever purpose, which resulted solely in indirect
financial loss (as opposed to direct physical damage to person or proper-
ty). So a negligent false statement resulting only in such loss, in the
absence of a contractual duty of care or fraud, was not actionable.98 (For
many years English law has permitted the recovery of consequential
financial loss where a duty is owed and breach of it results in physical dam-
age to person or property. Any negligent statements in this sense have
always been actionable, as for instance an incorrect diagnosis and pre-
scription for treatment made by a doctor to his patient, or wrong advice
given by a harbourmaster to a ship as to the position of a sandbank. !19
However, three years prior to the Misrepresentation Act 1967 {which
applied only between contracting parties), the House of Lords in Hedley
Byrne v. Heller' held that an innocent_ but negligent misstatement, al-
though causing financial loss only, could give rise to liability in tort, not-
withstanding the absence of any present or subsequent contractual
relationship between the person suffering the loss and the representor. It
has since been decided that this tortious liability can arise notwithstanding
a contract being subsequently entered into,2 although a more recent tend-
ency of the English courts has shown increasing feluctance to impose or
consider tortious responsibility between contracting parties which
exceeds or is inconsistent with any relevant contractual duty. 3
1·281 The essential characteristic of the Hedley Byrne duty is that it is depen-
dent upon some positive act, intervention or representation by the
defendant. The principle will not generally create an affirmative duty, that
is to say, a duty to warn or to supervise third persons or to take some other
positive step to protect the interest of the plaintiff.4
Such an affirmative duty can only exist in tort in a special restricted class
of professional relationships, such as doctor and patient or solicitor and
client.5 While usually the negligent statement will be made to the plaintiff,
91
(1889) 14 App.Cas. 337.
96 Le Lievre v. Gould [1893] 1 Q.B. 491.
99 See also Halsbury's Laws ofEngland (3rd ed.), Vol. 28, p. 8, and the Rhosina (1884) 10 P.O.
24, at p. 29; affd at p. 131. See also Anderson Ltd. v. Rhodes Ltd. [1967] 2 All E.R. 850.
1
[1964J A.C. 465.
2 Esso Petroleum v. Mardon [1976] Q.B. 801, and see the other cases under the.Misrepresen-
tation Act 1967,supra, Section 5(4).
3 Tai Hing Cotton Mill v. Liu Chong Hing Bank [1986] A.C. 80, and see McClaren Maycroft
v. Fletcher Development [1973] N.Z.L.;R. 100: see also Simaan General Contracting v.
Pilkington [1988] Q.B. 758,per Dillon LJ.
4
See C.C.P.P., paras. 5-03(a) and 5-04. _.
$ See per Oliver J. in Midland Bank Trustee Co. v. Hett Stubbs [1979] Ch. 384;'Forster v.
Outred [1982] 1 W.L.R. 86. See also supra, Section 5(4).
SECT.12] LIABILITY IN TORT 157
this is not always essential. 6 Nor, as subsequent cases have shown, is a
request by the plaintiff for information or advice invariably essential, pro-
vided that the representation, even though volunteered gratuitously, is
made in circumstances where the plaintiff can be expected to receive and
act upon it. While very occasional cases of a similar !~ability had occurred
earlier in the United States (see, for example, the judgment of Cardozo J.
in the well-known case of Glanzer v. Shepard, where a weighbridge
inspector was held liable for inaccurate certificates, and contrast the audi-
tor's liability case of Ultramares v. Touche, where liability was refused)7 it
is interesting to note that the extension of this new broader liability
occurred in the United States at approximately the same time as in
England, as indicated by the landmark judgment and remarkable review
of the authorities, including the Hedley Byrne case itself, in the Supreme
Court of Illinois in Rozny v. Mamul8 where a land surveyor was held liable
in tort for economic loss to the later purchaser of ·a negligently surveyed
building plot.
Varying attempts have been made to define· more precisely the situ- 1·282
ations in which the duty will arise. In Hedley Byrne itself, Lord Pearce
described it as depending upon the gravity of the enquiry and the import-
ance and influence attached to the answer, and Lord Devlin upon~ volun-
tary acceptance of responsibility to be inferred from the circumstances,
either generally where a general relationship is created, such as solicitor
and client or banker and customer, or specifically in regard to a particular
transaction. More recent cases have stressed Lord Devlin's formulation of
voluntary assumption of responsibility by the defendant as the essential
element.9 A close degree of proximity or reliance between plaintiff and
defendant is required: "a duty of care arises when a party is asked for and
gives gratuitous advice upon a matter within his skill or knowledge and
knows or ought to have known that the person asking for the advice will
rely upon it and act accordingly". 10
It is obvious that fine distinctions of fact may tip the balance for or
against liability within the generalised criteria of Hedley Byrne and its sub-
sequent jurisprudence-the informality of an enquiry for information, its
gravity, the status or office of the person making the statement or his
known or likely degree of knowledge may variously affect the prospect of
liability. 11 Public authorities' employees' answers to inquiries by devel-
opers and others have provoked a number of claims for economic loss
6
See, e.g. Ministry of Housingv. Sharpe [1970] 2 Q.B. 223, at p. 278,per Salmon L.J.
1
(1931) N.Y. 236 (1922) 253 N.Y. 170.
"250 N.E.(2d) 656 (1969).
9
See, e.g. per Lord Keith of Kinkel in Yuen Kun Yeu v. A.·G. of Hong Kong [1988] 1 A.C.
175, at p. 192F.
10
See ibid. at p. 192 F-192G. See, for seminal reviews of the principle, Bingham LJ." in
Caparo Industries Ltd. v. Dickman [1989] 1 Q.B. 653, at pp. 677-680; Lord Oliver of Ayl·
merton in that case in the House of Lords [1990] 2 A.C. 605, at p. 638; and Neil L.J. in
McNaughton v. Hicks [1991] 2 Q.B. 113, at pp. 122 et seq.
II
Shaddock v. City Council of Parramatta (1981) 150 C.L.R. 225, commenting on Mutual
Life & Citzens' Assurance v. Evatt [1971] A.C. 793. See also supra, Section 5(4).
 [CHAP. I
158 GENERAL PRINCIPLES OF LAW
under this principle. 12 More recent attempts to establish such a duty
against public authorities under various types of other legislation have
failed, primarily on policy grounds. 13 However, cases in situations other
than those of construction contracts can offer only very limited guidance. 14
The following include some early examples of the Hedley Byrne principle,
mostly in a construction context.
ILLUSTRATIONS
1·283 (1) An architect told a builder he would be responsible for issuing the
necessary notices for by-law approval. Work was done which, without
approval, would be in breach of the by-laws, and the builder became liable to
the owner for the cost of work to obtain by-law compliance. Held, by the
Court of Appeal, that the architect as a professional man had acted gratu-
itously in offering his services and accordingly owed a duty to the builder to do
so to the best of his skill notwithstanding the absence of consideration:
Townsendv. Cinema News (1958). 15
(2) Soil specialists, employed by consulting engineers to a local authority,
provided a report prior to tenders being invited. There were express
exclusions of liability in the contract documents protecting the authority and
their consultants, but not the soils engineers. The specialists' report misled
the contractor, causing him economic loss, for which he sued the specialists in
tort. Held, by a Californian Court of Appeal, that in the absence of evidence
that the defendants did not know their report was intended to provide infor-
mation to tenderers, they were liable in tort to the contractors: Miller v.
Dames & Moore (1961).16
(3) A surveyor prepared "plats" or setting-out surveys of building plots,
each containing a certificate of accuracy, for a developer, who sold on a plot to
a home owner together with the survey. The house and garage then built
encroached on a neighbour's plot. Held, by theSuperme Court of Illinois, the
surveyor was liable to the home owner in tort: Rozny v. Marnul (1969). 17
1·284 (4) The official in charge of the local Land Charges Register negligently
issued a "clear certificate" to a prospective purchaser of land. This positively
12 Shaddock's case,supra, and see San Sebastian Pty. Ltd. v. Minister Administering Planning,
etc. Act (1986) 61 A.L.J.R. 41 and see Gleeson, "Liability of Public Authorities" (1987)
6 A.C.L.R. 5.
13 See,e.g. Curranv.NorthernlrelandHousingAssociation-[1981] A.C. 718; Yuen Kun Yeuv.
A.-G. of Hong Kong [1988] 1 A.C. 175; but see for one remarkably successful exploitation
of the principle by property developers Meates v. A.-G. of New Zealand [1983] N.Z.L.R.
385: see also Craigv. East Coast Bays City Council [1986] 1 N.Z.L.R. 99; Brown v. Heath-
cote C.C. [1986] 1 N.Z.L.R. 76; andStellerv. Porirua Council [1986] 1 N.Z.L.R. 84. These
New Zealand cases would not seem likely to be followed in England.
1• See the analysis of Hedley Byrne and the present incremental and pragmatic approach in
England recently stressed by Neil L.J. in James McNaughton Paper Group Ltd. v. Hicks
Anderson & Co. [1991] 2 Q.B. 113, at pp. 124-127.
15 Now reported in 20 B.L.R. 118, and quoted in greater detail in Hudson, 10th ed., 65--66.
18 [1970] 2 Q.B. 223.
This case anticipated Hedley Byrne itself by a decade.
19 [1972} 2 N.S.W.R. 49. The case is illustrated in detail supra., Section 5(4)(f), para. 1·158-
16 Cal. App. (2d) 305. This case was referred to with approval in Dean Prosser's seminal
article "Misrepresentation and Third Persons." {1966) 19 Vanderbilt L.R. 2?J, and by the
20
21 76 D.L.R.(3d) 721.
Supreme Court of Illinois in Rozney v. Marnul, infra.
11 250 N.E.{2d) 656.
22
SEcr.12] LIABILITY IN TORT 159
benefited the representee/purchaser, since it rendered unenforceable an ear-
lier planning charge in favour of the government. Held, the local authority
was liable to the relevant government department for the financial loss:
Minister of Housing v. Sharp (1970). 18
[Note: In the present climate of the courts, this might have been differently
decided, it is submitted.]
(5) A local authority, during negotiations for a dredging contact, did not
disclose, in response to a general inquiry, the existence of underground mine
workings beneath the sea bed, of which records existed in its archives, but
which were unknown to the negotiating officers themselves. Held, by Hardie
J., while the Hedley Byrne principle could exist between contracting parties, it
should be applied with caution in the context of commercial negotiations
leading up to a contract, and in the absence of any clear misrepresentation the
authority was not liable: Dillingham Construction v. Downs (1972). 19
(6) A sub-contractor, who discontinued working because he had not been
paid, was reassured by the architect that there were considerable sums owing
to the main contractor sufficient to meet his account, and resumed working.
The architect's statement was negligent, and the contractor had received
nearly all the contract sum due to him. The sub-contractor sued the architect
in tort for his loss when the contractor became insolvent. Held, by Cooke J.,
there was a sufficient special relationship to render the architect liable for the
sub-contractor's loss: Day v. Ost (1973). 20
(7) A consulting engineer, who was not a soils specialist, was employed by 1·285
an architect to inspect trial pits, and twice recommended deeper investi-
gations, having seen silty clay in the pits, but was told the owner would not
agree. Later, under strong pressure from the architect when the building
inspector queried the consultant's design, he wrote a letter to the inspector
stating that the material in the trial pits had a substantial bearing capacity.
Later still he issued a certificate that the design conformed to the National
Building Code. Held, by the British Columbia Court of Appeal, that the
engineer was liable in tort to the owner, whom he knew was relying on him,
for not warning him at the time he wrote to the inspector, and also under the
Hedley Byrne principle in regard to the certificate he had issued: District of
Surrey v. Church (1977). 21
[Note: This is a case where, because of a professional relationship, albeit
not in contract, there. appears to have been an affirmative duty to warn.]
(8) A digger operator was sent by his employers to a site with his machine,
and was negligently misinformed by the contractor's foreman when he asked
if there were any cables in a road which his line of work was required to cross.
He damaged Post Office cables and was forced to pay a fine. Held by Richar-
son J ., explaining the Dillingham Construction case and applying Hedley By-
rne, that the defendants by their foreman had assumed responsibility for
giving accurate information, and were liable to reimburse the operator: Clark
Contractors Ltd. v. Drewett (1977). 22
(9) A builder, after being shown preliminary floor plans and elevations, 1·286
confirmed an earlier estimate to a developer that the cost of two proposed
residential units would be $30,500, and the developer made appropriate
1·159, and see also C.C.P.P., para. 5-13.
[1973] 2 N.Z.L.R 385.
[1977] 2 N.Z.L.R. 556.
 160 GENERAL PRINCIPLES OF LAW [CHAP. l
financing arrangements. Later the builder received detailed specifications
from the architects, which he realised would be more expensive, but in spite of
many inquiries as to final cost he gave no indication of an altered estimate
until over $8,000 of work had been done, when he said the final price would be
$57 ,000. The developer would have continued at a highest price of $40,000,
and ultimately finished by another builder, but was unable to sell the houses
profitably and at the time of trial was letting them. Held, by Casey J., applying
Hedley Byrne v. Heller and citing Lord Devlin's formulation, although the
original estimate was not negligent, there was here a special and continuing
relationship of trust and confidence in the builder by the developer who, rely-
ing on the original estimate, drifted into an irreversible commitment to build
at an uneconomic figure. The builder should have told him of his doubts by
the time work was due to start, and was liable in damages: Abrams Ltd. v.
Ancliffe (1978).D
[Note: This case involves a need to correct an earlier statement, and mod-
i:fies the rule that an affirmative duty will not usually be imposed by the Hedley
Byrne principle, except in the case of continuing professional relationships, to
which Casey J. in fact likened this particular relationship. 24 The case was not,
it should be noted, decided in contract as it perhaps might have been.]
1·287 (10) Design and erection sub-contractors for a television mast started
work, and later received an inquiry from the owners about its design, as a
result of vibration and oscillation difficulties experienced by the owners with
other masts elsewhere. They replied "we are satisfied these structures will not
oscillate dangerously". As a result work continued without modification and
the mast was completed, but subsequently failed. Held, by the House of
Lords, that the statement had been negligent, and the sub-contractors were
liable to the owners under the Hedley Byrne principle: IBA v. EMI, (1980). 25
(11) A building society made a maximum loan of £12,000 to house buyers
on the the basis of a valuation report of their own surveyors, for which the
buyers had to pay. The buyers were advised to obtain an independent survey,
and also received statutory notification that the loan did not imply that the
price was reasonable. Shortly after, subsidence occurred costing £18,000 to
repair, and the buyers sued the surveyors in tort. They admitted negligence,
but denied that they owed any duty to the buyers. Held, by Park J., that the
surveyors knew the valuation would be passed on to the plaintiffs, who could
be expected to rely upon its correctness in deciding to buy, notwithstanding
the disclaimer as to the reasonableness of the price. Accordingly there was a
sufficient relationship of proximity in accordance with Hedley Byrne to ren-
der the surveyors liable to the buyers: Yianni v. Edwin Evans (1982). 26
1·288 Of more recent years there has been an unquestionable trend by the
English House of Lords to restrain (for well-stated and understandable
reasons) any previous tendency to extend the Hedl~y Byrne liability into
new professional or statutory duty situations. Thus a duty of care was
rejected as a matter of law as between a house owner and a statutory body
ll [1978] 2 N.Z.L.R. 420; Cf Kidd v. Mississauga Hydro-Electric Commission (1980) 97
D.L.R.(3d) 535, illustrated post, Chap. 4, para. 4· 131; and see Jones v. Hiser Construction
A.(2d) 302 (1984) (M.d. C.A.) there illustrated.
24
Ibid. at pp. 427-428. Itis submitted that a contracting party giving an estimate of the cost of
his own work may also, in the absence of an agreed price, owe a contractual duty of care
sounding in damages: see post, Chap. 4, Section 1(4).
is 40 BLR 1, illustrated more fully supra, para. 1·142. ,·
:u; [1982] 1 Q.B. 438. See also the closely comparable House of Lords decision: in Smith v.
Bush [1990] 1 A.C. 831.
SEcr.12] LIABILITY IN TORT 161
making improvement grants27 ; as between a depositor and the statutory
Commissioner responsible for the protection of deposit-holders28; and as
between auditors and a class of existing shareholders contemplating a bid
for the remaining shares in the company.29 In Australia, the High Court
has rejected any duty of care owed to developers by a planning authority
for negligent mis-statements in planning scheme documents. 30
This tendency was noted expressly by two judgments in the Court of
Appeal in Pacific Associates v. Baxter,31 undoubtedly the most important
case in this aspect of the construction field of recent years. There the
Court, disregarding an earlier dictum of Lord Salmon in the House of
Lords, persuasively rejected any duty of care owed by an owner's engineer
to a contractor while certifying for interim payment, or when giving a pre-
liminary decision on the contractor's claims under Clause 67 of the FIDIC
civil engineering form of contract. Pacific Associates itself was sub-
sequently followed by the Court of Appeal of British Columbia, who simi-
larly rejected any duty of care owed by an owner's engineer to the
contractor in the preparation of the initial design and contract documents
for a roadworks project, but were recently and unpersuasively overruled
by the Supreme Court of Canada. 32
An essential consideration in rejecting a proposed generalised or
affirmative duty of care owed by an owner's construction professionals to
a contractor within the framework of a typical construction project is the
element of conflict of interest, calculated to detract from the whole-
hearted performance of a professional's duty to his client, which the incor-
poration of such a duty into the parties' relationships must inevitably
create, it is submitted.
ILLUSTRATION
Consultants to fire insurers of the plaintiffs prepared a report on the causes 1·289
of a fire, following which the plaintiffs were subsequently prosecuted and con-
victed of arson, though this was later overturned on appeal. The plaintiffs
then brought proceedings against the consultants alleging negligence in their
preparation of their report to the insurers. Held, by the Court of Appeal of
New Zealand, that the plaintiffs had a remedy in contract against the insurers,
although possibly for somewhat less by way of damages than might have been
obtained in tort against the consultants. In defamation proceedings the plain-
tiffs would have had to prove malice in order to defeat a defence of qualified
privilege by the consultants, and for the Court to find a duty of care in negli-
27
Curran v. Northern Ireland Housing Association [1987) A.C. 718.
28
Yuen. Kun Yeu v. A.-G. of Hong Kong [1988] 1 A.C. 175.
29
Caparo Industries v. Dickman [1990] 2 A.C. 605.
30
San Sebastian Pty Ltd. v. The Minister (1986) 162 C.LR. 340.
JI [1990] 1 Q.B. 995,atp.1173H,perPurchasL.J.,andatp.1189C,perRussellL.J. The case is
illustrated infra, paras.1·303-1·304, and considered in detail in the editor's "Charter for
the Construction of Professional" (1990) 6 Const. L.J. 207. See also (1993) 1 Tort Law
Review 152, 167-171, Australia, for a more recent comment.
32
Edgwonh Constrnction Ltd. v. N.D. Lea andAssocUltes (1991) 53 B.C.L.R.(2d) 180; (1991)
6 Const. L.J. 328, C.A., [1993] 3 S.C.R. 206, illustrated infra, para. 1·296.
 162 GENERAL PRINCIPLES OF LAW [CHAP. I
gence would overturn the law of defamation which had evolved to cover such
situations, as well as introduce a conflict of interest into the discharge of the
consultant's duty to the insurers, so that in the circumstances the consultants
owed no duty of care to the plaintiffs: South Pacific Manufacturing Ltd. v.
New Zealand Security Consultants Ltd. (1992). 33
A further example of this trend is to be seen in a recent case in England
where a vendor's solicitor, who had responded carelessly to inquiries by a
purchaser's solicitor as to the possible existence of adverse provisions in a
head lease, was held to owe no duty of care to the purchaser, although
liable to his own client for damage caused by any resulting claim by the
purchaser.34 Again, an accountant for a "target" company submitting draft
accounts and answering general questions by a prospective bidder as to
the current state of its earnings was held to owe no duty of care to the
bidders. 35 Where, however, a professional adviser can be seen to have
stepped outside the exercise of his normal role, he may then be regarded
as having assumed responsibility for positive advice or statements made to
a third person.36 This is the correct principle underlying contrary decision
on the facts of the Pacific Associates case infra, it is submitted.
(b) Application in construction projects
1·290 In construction projects the practical importance of the Hedley Byrne
principle is that it may enable one or other of the various parties involved
who are not in contractual relations with.the particular negligent defend-
ant to recover their financial loss from him. The case of specific negligent
misrepresentations, often on the part of A/Es and others concerned with
the preparation of contract documents, is a relatively straightforward one,
but in other cases the requirements of the principle may frequently be
difficult to satisfy because:
(a) the vital element of an inferred voluntary assumption of responsi-
bility is unlikely to be present, in the absence of some positive state-
ment or intervention or assumption of responsiblity by the
defendant upon which the plaintiff is entitled to rely; or
(b) there is the possibility of express disclaimers of responsibility; or
(c) other parties' contract documentation (or what has recently
become known in construction cases in England as "the contract
setting" or ".the contract structure") may, even in the absence of an
express exclusion, negative the existence of any duty (as, for exam-
ple, binding certificate provisions as to the quality or performance
of work, and some insurance provisions) 37 ; or
Ji [1992] 2 N.Z.L.R. 282.
34 Gran Gelato Ltd. v. Richcliff (Group) Ltd. {1992] Ch. 560, critically examined in (1992) 108
L.Q.R. 539, and compare the Pacific Associates case, illustrated infra, para. 1·303-1·304.
35 McNaughton Ltd. v. Hicks Anderson [1991] 2 Q.B. 113.
36
See, in the case ofsolicitors,Allied Finance Investments Ltd. v. Haddow [1983] N.Z.L.R. 22;
Al-Kandariv. J.R. Brown & Co. [1988] Q.B. 665.
17
See the cases discussed infra, Subsection (3)(d), para. 1-325-1 ·327 and see p3'rdcularly the
remarks of Purchas L.J. in Pacific Associates Inc. v. Baxter [1990] 1 Q.B. 993, at p. 1023.
SEcr.12] LIABILITY IN TORT 163
(d) other factors of the relationship in question may militate against a
Hedley Byrne duty owed to the plaintiff so negativing his entitle-
ment to rely on the defendant (as, for example, an overriding duty
owed to another party inconsistent with that alleged in favour of the
plaintiff)."
The two principal classes of non-contractual relationship providing
a potential liability under the Hedley Byrne principle in construction
projects are those between owner and sub-contractor ( or contractor and
sub-sub-contractor or supplier) and that between contractor (or sub-
contractor) and the NE.
(c) Owner/sub-contractor situations
While an owner may in principle clearly be liable for specific negligent 1·291
statements designed to induce a sub-contractor to undertake or continue
work (compare Day v. Ost, supra), and equally a sub-contractor will be
liable for a specific negligent representation inducing the owner to stipu-
late for the sub-contractor's product or services to be used in the main
contract,39 the present discussion is concerned with arguments that some
more generally based duty of care is owed by a defendant in the perform-
ance of his contractual obligations with a third person so as to entitle the
plaintiff to recover economic loss. While attempts have been made to
assert this, it seems clear that it is incorrect in principle. Thus an action by a
sub-contractor against an owner alleging a duty of care to administer the
main contract in a number of ways so as to avoid economic loss to the
sub-contractor was, obviously rightly, struck out.40
It is submitted that the making of arrangements by an owner for work to
be sub-contracted, a fortiori nomination of a sub-contractor under the
United Kingdom system, is clear evidence of an intention by the owner to
distance himself in law from the sub-contractor in regard to the sub-
sequent performance of the sub-contract itself-the exact converse of the
reliance and close special relationship required for Hedley Byrne
liability. 41
For the same reason, in the opposite case of a claim for economic loss by 1·292
an owner against a sub-contractor arising out of the performance of his
sub-contract, while again sufficiently specific representations or state-
ments made outside the sub-contract may give rise to a liability (compare
the/BA case, supra), the necessary special relationship will not be present
lllSee, e.g. Pacific Associates v. Baxter, ibid.,per Ralph Gibson L.J. the case itself is illustrated
infra, para. 1·303-1·304.
39
See, e.g. Sealand ofthe Pacificv. McHaffie (1975) 51 D.L.R.(3d) 702, and see, for a collat-
eral warranty case, Shanklin Pier Co. v. Detel [1951) 2 K.B. 854, illustrated post, Chap. 13,
para. 13·020. Compare the IBA v.EMI case.
4
" Frederik Nielsen (Canberra) Pty. Ltd. v. PDC Construction (ACT) Pty. Ltd. (1984), noted
in (1988) 7 A.C.L.R. 44.
41
See C.C.P.P., para. 6-02.
 164 GENERAL PRINCIPLES OF LAW (CHAP.!
to support a claim based on the Hedley Byrne principle, it is submitted42
Considerable difficulty was created in this particular context by the House
of Lords decision in 1983 in Junior Books v. Veitchi, 4l where a nominated
:flooring sub-contractor was held liable in negligence to the owner for the
reduced value of a sub-standard ·floor requiring more expensive mainten-
ance. While valiant attempts have been made to explain the case as based
on assumption of responsibility within the Hedley Byrne principle, or as
physical damage under the Anns principle (despite the absence of any
support for either theory in the speeches or facts of the case )44 it has been
more robustly discounted as of no value, 45 and explicitly not followed in
South Africa46 and has attracted powerful academic criticism.47 It is now
clearthatlunior Books offersnousefulguidein a sub-contractor case, and
the three subsequent Court of Appeal decisions in the Muirhead, Simaan,
and Greater Nottingham cases have correctly refused to apply the case, in
the absence of a true Hedley Byrne situation, where economic loss was
sought to be recovered from sub-contractors. While technically not over-
ruled (and now perhaps unlikely to be since it is no longer likely to be
relied on by counsel in the House of Lords}, the case can be safely disre-
garded, it is submitted.
ILLUSTRATION
1·292A Owners engaged general contractors in British Columbia to supply and
install concrete sidewalks and kerbs, and also a firm of engineers to provide
engineering services, including testing of the concrete used for the sidewalks.
Sub-contractors' sub-sub-suppliers supplied defective concrete, so that the
sidewalks deteriorated after three years, necessitating replacement. The
owners in one action sued the suppliers in tort for negligently supplying defec-
tive concrete. The suppliers joined the engineers, claiming contribution and
indemnity in failing properly to test the concrete. The trial judge awarded
damages against both defendants, but held the suppliers liable to indemnify
the engineers. Held, by the British Columbia Court of Appeal, distinguishing
Junior Books v. Veitchi, that a manufacturer of a defective article could not be
liable to an ultimate consumer in tort for damage arising in the article itself or
for economic loss resulting from the defect, but only for personal injury and
damage to other property. Nor could the owners rely on a Hedley Byrne duty
of care, since the element of reliance was absent. They had not relied on the
"See Muirhead v. lndustrial Tank Ltd. [1986] Q.B. 507, illustrated infra, para. 1·323; Simaan
General Contracting v. Pilkington Glass [1988] Q.B. 758, illustrated infra, para. 1·352, the
latter a contractor/sub-sub-contractor case; Greater Nottingham Co-operative Society v.
Cementation Piling Ltd. [1989] Q.B. 71, C.A., a nominated sub-contractor case.
•l [1983] 1 A.C. 520.
44
See, e.g.perLord Keith of Kinkel in the Yuen Kun Yeu case [1988] A.C. 175, at p.196, and
per Robert Goff and Nourse L.JJ. in Muirhead's case, supra, and see also Ralph Gibson
L.J. in London Congregational Union Inc. v. Harriss (a firm) [1988] 1 All E.R.15, at p. 25.
'·' Per Dillon L.J. in Simaan's case, supra.
' Lilliecrap & Wassenaerv. Pilkington [1985] 1 S.A. 475, and see also per Lord Bridge inD. &
6
F. Estates v. Church Commissioners [1989] A.C. 177, at pp. 202.
1
• See Fleming, Oxford Journal of Legal Studies, Vol. IV, No. 2 pp. 240-241;",;tnd see also
C.C.P.P., paras. 5--03(h) and 5-05, 6--02, 7--06 and (1989) 105 L.Q.R. 46, 47.
Se=.12] LIABILITY IN TORT 165
suppliers' skill or judgment,47" but had instead relied on the engineers for their
testing skill. The suppliers owed no duty to the engineers, not having any
contract with them, to supply concrete according to specification. Nor, dis-
tinguishing Bilodeau v. Bergeron, 41 b were the engineers entitled to an indem-
nity from the suppliers: District of Logan Lake v. Rivtow Industries Ltd.
(1990).'"
[Note: The judgment is not entirely clear as to the reasons for dismissing the
engineers' claim to an indemnity, but presumably this would be due to the
absence of a statutory right of contribution or indemnity under British
Columbia law, as under English law, in a case where the co-defendant was not
also liable to the plaintiff.]
( d) Contractor/A/E situations
Since the earliest emergence of priced construction contracts for work 1·293
to be designed or supervised by or on behalf of the owner, contractors
have sought to escape from their completion obligations, or to claim extra
payment, by arguing that completion to the A/E's design is either imposs-
ible, or only possible at unreasonable expense. Equally, when faced with
claims for defective work, they have sought to avoid liability, on grounds
variously of causation or estoppel, by blaming the owner's supervisor for
failing to detect or correct their work, or to take charge of and control over
the temporary works should unexpected physical difficulties arise during
construction. In these attempts they have, in the absence of express pro-
visions, been substantially unsuccessful in the past in all commonwealth
jurisdictions.48
Not surprisingly in the absence of any remedy against the owner in these
situations, the emergence of a new tort for recovery of economic loss, cou-
pled with the professional status of most NEs, has been seized on by con-
tractors' advisers (and in particular in the United States by their insurers
or sureties) in an endeavour to transfer or reduce the burden of these
liabilities by suing the A/E in tort, which in England, being a claim for
economic loss, would have to be on the Hedley Byrne principle. It should
be appreciated that what is involved is not reliance on a specific represen-
tation or intervention by the NE in some special situation such as has
been illustrated supra, where undoubtedly liability may arise, but a simple
allegation of negligence in the discharge of his duties to the owner. In the
case of the A/E's design, there is at least a plausible resemblance to the
Hedley Byrne requirements, since the A/E's design can be represented as
a positive action or intervention on his part, and due care in design pre-
paration can be said to be a matter upon which the contractor is entitled to
rely when pricing the work. In the case of the NE's supervisory function,
on the other hand, unless some specific act or intervention in the course of
the exercise of the supervisory r6le is relied upon, what is alleged is in
essence breach of an affirmative duty based on a negligent omission or
47
'Compare the Muirhead case.
4
[1975] 2 S.C.R. 345, see infra, para. 1·383.
11,
"' [1990] S W.W.R. 525.
•& See post, Chap. 4, "Completion Obligation"; Chap. 5, "Defective Work".
 166 GENERAL PRINCIPLES OF LAW [CttAP.1
failure to protect the position ofthe contractor while acting in the supervis-
ory r6le.
1·294 In terms of both the Hedley Byrne principle itself, as well as the realities
of construction projects, these two types of claim are, it is submitted, fun-
damentally flawed. They appear to have been principally advanced in
North America, and while they appear to have met a surprising degree of
success in some States in the United States, they have in general been
effectively resisted in Canada, until the very recent decision of the
Supreme Court in September 1993, overruling the British Columbia
Court of Appeal, in the Edgeworth Construction case illustrated infra.
This subject is discussed at some length in C.C.P .P., where a number of the
United States and Canadian cases up to 1985 are considered. 49 Design and
supervision are best considered separately.
(i) Design
1·295 The A/E's duty is to design permanent work which, once in place, will
best satisfy his client's requirements. Economy or ease of construction, no
doubt of considerable interest to the contractor, may or may not be of
importance to the owner as against other considerations, such as quality,
amenity or durability and stability. In consequence, the A/E's principal
area of expertise lies in giving effect to his client's amenity requirements
by producing the most suitable permanent work in place to meet those
requirements within the limitations of the available site. The contractor's
area of expertise, on the other hand, lies in the "how" or method, as
opposed to the "what" or final result, of construction; that is, in the design,
selection and organisation of temporary works and the various possible
working methods required to bring the permanent work to completion. It
is not perhaps sufficiently realised by lawyers and judiciaries that, in this
area, the contractor's expertise can reasonably be expected to exceed that
of the AIE (although the latter will naturally need to have a sufficient
knowledge of construction methods in order to avoid an unnecessarily
expensive design being paid for by his client) and it is by the contractor's
superior expertise in this area of "buildability" that he can expect and
should be encouraged to succeed in the pricing competition with his ten-
dering rivals.
Thus it is an absolute fundamental of a priced construction contract for
a project designed on behalf of the owner that, in the absence of provision
to the contrary, the owner does not warrant the practicability or "builda-
bility" of his adviser's design, and on the contrary a contractor, by pricing
for that design, does warrant his ability to carry out and complete it.50
It is submitted that this contractual background or setting is incompat-
ible with any affirmative Hedley Byrne relationship between the contract-
•
9
See C.C.P.P, para. 5-13 to 5-27. See also the U.S. cases mentioned infra, parft...l ·305--1 ·306.
50
See post, Chap. 4, Section 1 and the landmark Thome and Tharsis cases theie illustrated
and discussed.
Secr.12] LIABILITY IN TORT 167
or and the A/E in regard to design. 51 In some American States, however,52
a somewhat vague and generalised duty owed by the designer to the con-
tractor has undoubtedly been held to exist. 53
These United States cases have not been followed in Canada. Thus in 1·296
Vennont Construction Ltd. v. Beatson54 a contractor sued an A/E for delay
costs, to which he was not entitled under his contract with the owner, alleg-
edly due to defects in the drawings. The Supreme Court ·of Canada dis-
missed the claim, pointing out that if such a duty were to exist it would not
be unilateral, and an A/E would be able to sue a contractor for extra hours
worked as a result, for example, of defective work on the part of the con-
tractor. 55 The point has recently been decided in the Court of Appeal of
British Columbia in a well-reasoned decision, after consideration of the
relevant leading cases on Hedley Byrne in England and Canada, and
adopting the views of Brennan J. in the High Court of Australia in Shire of
Sutherland v. Heyman, 56 as endorsed by the House of Lords in England,
regarding the test for imposing a negligence liability in novel situations,
but the case has been ( unpersuasively) overruled in the Supreme Court of
Canada.
ILLUSTRATION
A roadworks authority employed consulting engineers to design a length of
highway and to prepare a full contract documentation, including specifi-
cations and construction drawings. The successful tenderers after completing
the project sued the engineers for economic loss said to be caused by negli-
gence in the design work, including the preparation of plans and specifi-
cations and their incorporation into the tender documents, on which the
contractors allegedly relied. On a preliminary objection by the engineers that
as a matter of law they owed no duty to the contractors, held, by the British
Columbia Court of Appeal, following Pacific Associates v. Baxter,57 that the
contractual relationships in a construction project were a crucial element in
determining liablity. The whole question of errors in design or in plans and
specifications was appropriate subject-matter for the contract between the
contractors and the Ministry. By contrast the engineers had no opportun-
ity to define with the contractors the risks they were prepared to assume, not
being in contractual relationS, nor could they control the contents of the con-
tract between the Ministry and the contractors. The contractors had an op-
51 Compare the rejection of such a duty by certifiers by the Court of Appeal and the remarks
of Purchas LJ. in Pacific Associates v. Baxter (1988) 44 BLR 33, at p. 67; [1990] 1 Q.B.
993.
i See C.C.P.P., paras. 5--16 to 5-18.
2
33
Moyer v. Graham 285 So.(2d) 937 (1973), Sup. Ct., Florida; Donnelly Const. v. Oberg
P.(2d) 1292 (1984), Sup. Ct., Arizona, overruling Blecick v. School District of Cochise
County 405 P.(2d) 750 (1965). See also the interesting case described in C.C.P.P. of Schiltz
v. Culle,:i-Schiltz 228 N.W.(2d) 10 (1975), and see also Lyman Construction v. Village of
Gurnee 403 N.E.(2d) 1325 (1980).
"(1976) 67 D.L.R.(3d) 95.
35
See this same "tortious contract" point emphasised by the editor in C.C.P.P., para. 5-23, at
p. 69 (in the context of an alleged supervision duty).
6
l (1985) 60 A.L.R. 1, at pp. 43-44.
31
[1990] 1 Q.B. 993, analysed in detail by the editor in (1990) 6 Const L.J. 87.
 168 GENERAL PRINCIPLES OF LAW [CHAP.1
portunity to protect themselves in their contract with the Ministry in relation
to the risks they were prepared to bear. On the facts there was no sufficient
proximity between the engineers and contractors to support a duty of care to
avoid economic loss by the successful tenderers. Held, by the Supreme Court
of Canada, reversing the Court of Appeal, that the engineers had knowingly
undertaken to provide information ("the tender package") for use by a
defined class (tenderers) for the purpose of preparing their prices, and the
plaintiffs as tenderers had reasonably relied on the information, so that prima
facie there was a cause of action unless their construction contract with the
owners negated that duty. Clause 42 of that contract stated that any represen-
tations in the tender documents were "furnished merely for the general infor-
mation of bidders and were not in anywise warranted or guaranteed on behalf
of the Minister". This arguably absolved the Authority from any liability for
the plans, but on its express words did not purport to protect the engineers
against liability for their representations. Clause 42 was consistent with the
conclusion that the protection was intended for the benefit of the province
alone. The engineers could have taken measures to protect themselves by
placing a disclaimer of responsibility on the design documents; alternatively
they could have refused to provide the design without ongoing supervision
duties which would permit later alterations to the design, or they could have
insured against their liability. These circumstances negated any inference that
the contractors had contractually excluded their right to sue for the design
deficiencies. No policy reasons existed for denying the duty. The additional
risks would be reflected in the price of the engineers' contract. If the contract-
or was limited to his rights against the construction owner, he would have no
rights in respect of defective plans at all. An important consideration against
the engineers would be that the tendering contractors would be obliged to do
their own engineering and review the accuracy of the engineering design and
information, repeating the process already undertaken by the owner. This
would have to be done in the short time available of two weeks. It would be
more sensible for one firm to be responsible for the adequacy of the design,
barring contractual disclaimers. It would be better for owners to pay more for
engineering services than the indirect cost of additional engineers engaged by
all tendering parties. Held, also, that the duty was owed only by the engineer-
ing firm and not by its individual engineers who had affixed their seal to the
drawings: Edgeworth Construction Ltd. v. F. Lea & Associates (1993). 58
[Note: One of the difficulties of this case is that, being decided on a prelimi-
nary point of law, it is quite unclear from tlie reports either of the Court of
Appeal or of the Supreme Court precisely what the alleged "inaccuracies" in
the design or information or "package" were. By inference from some pass-
ages in the Court of Appeal's judgment, it might have been in the assessment
of provisional quantities taken from the drawings, or perhaps in the area of
"buildability". Possibly the criticism was of the unsuitability of the design
having regard to the state of the surface or sub-soil conditions of the site.
There are many possibilities, each raising perhaps different questions of real
life reliance by a tendering contractor and hence of liability.]
1·296A There are a number of points .at which the judgment of McLachlin J.
seems open to question, viz:
( a) It is most surprising that the closely reasoned English Court of
Appeal case of Pacific Associates v. Baxter (illustrated infra),
on which the Court of Appeal's judgment had (rightly, it is sub-
,·'
>.'! [1993] 3 S.C.R. 206.
SECT. 12] LIABILITY IN TORT 169
mitted) placed considerable reliance, was not even included in
the cases cited in the Supreme Court report or mentioned in
the judgment.
(b) The discussion of the pricing considerations said to support the
engineer's liability takes no account of the fact that, for at least
150 years, contractors have been content to price construction
contracts, and particularly engineering contracts, on terms
that the owner was impliedly ( and increasingly expressly) not
warranting his A/E's design, and at a time when no action by
the contractor against the AIE in tort was remotely possible,
with the consequence that the coritractor must make up for any
design deficiencies at his own cost in order to achieve com-
pletion.5& The view that contractors in the construction indus-
try will have started to rely on engineers ( and presumably to
alter their pricing policies with the accompanying substantial
transfer of risk) with the emergence of the Hedley Byrne liabil-
ity in the 1960s is with respect, unrealistic. Essentially the case
lays down a wholly new set of commercial relationships for
construction projects with major pricing and insurance conse-
quences, while accompanying this major change with the inti-
mation that, if the traditional commercial basis of construction
contracts is desired to be retained, express disclaimers by or on
behalf of the engineers at some point in the contract documen-
tation can achieve this.
(c) The judgment does not seem to be aware that in virtually all
aspects of construction, and in particular in the vitally import-
ant areas of "buildability" and practicality of the design ( as
opposed to the amenity and suitability of the final permanent
work in place), that is in the areas affecting pricing, contract-
ors' or their sub-contractors' expertise is likely to be at least as
great and often greater than that of a designing A.E. 58b
(d) For the same reason, the Supreme Court's apparant view that
tendering contractors do not as a fact under the present con-
tract regime employ equally skilled engineers to check the
practical details of the design and drawings, both from the
point of view of "buildability" and practicality and also from
the point of view of the actual or contingent quantities of work
likely to be required, as well as to search for and detect errors
(from the discovery of which important and legitimate pricing
advantages over their competitors, as well as over the owner in
measured contracts, can be derived) seems equally, with
respect, unrealistic.5Sc Consistently with this, a substantialjur-
ss. See post, Chap. 4, para. 4·036, and the cases 4·043 et seq.
>.'!oSee supra, para 1·295, and post, paras. 4·053-4·059 for this further emphasised and
explained.
ll!c See in the closely related field of errors in the quantities to be deduced from the drawings
the well infonned comments of the Full Court of Victoria cited post, Chap. 8, paras.
8·009-8·010.
170 GENERAL PRINCIPLES OF LAW
isprudence exists in the United States and the Commonwealth
in which contractors have been held to owe a contractual duty
of care to warn A/Es or owners of defects in their designs. 58d
(e) The suggestion that engineers engaged solely to produce a
design package could "protect their position" by insisting on a
supervisory engagement as well, so that ( apart from the risk of
losing their engagement altogether) they could correct design
errors by ordering changes later, overlooks the facts that con~
tractors are not under most contracts entitled to receive vari·
ation instructions if the work turns out to be difficult or even
impossible and some change is needed in order to complete58e;
that a variation instruction given in such circumstances will in
any case not bind the owner5Sf; and that only if it is in the own-
er's independent commercial interest to alter the design will an
A/E usually be able to give such an instruction without incur-
ring liability to his client in negligence.
(f) The judgment makes no mention of the conflict of interest
imposed on an NE performing his design duties if he is to be
exposed to economic loss claims by contractors on "buildabil-
ity" or practicality grounds ( as explained, the heart of their
area of competitive pricing).58g
(g) It is also surprising that the Supreme Court made no attempt at
least to explain or distinguish its own decision in Vermont Con-
struction Ltd. v. Beatson,58 h where a contractor was held unable
to recover delay costs caused by errors in an architect's
drawings.
(h) The Supreme Court also noted the short period allowed for
tendering as a factor supporting A/E liability to the contractor.
This is certainly a valid observation, and indeed a common-
place of construction contracts which has been noted at a num-
ber of points in this book when discussing this subject,58i as also
in C.C.P.P.,58i and almost certainly explains the widespread use
of "changed conditions" clauses in engineering contracts.
Whether or not (as seems entirely possible if not probable)
such a clause existed in the Edgeworth contract, however, the
fact that tenderers have for more than a century been prepared
to tender at short notice at a time when they enjoyed no poss-
ible rights against the NE in tort does not seem a reason for
introducing a novel liability and transfer of risk (and which
would seem independent of the time, however generous, in
fact allowed for tendering).
ss,;, See post, Chap. 4, paras. 4· 100-4· 104.
i11e See post, Chap. 4, para. 4·044 et seq.
S8r See post, Chap. 7, para. 7·024.
58i See supra, para. 1·295 and 1·296, and see post, Chap. 4, paras. 4·053-4·054.
>8h (1976) 54 D.L.R. {3d) 95, not a decision inpelled solely by Quebec law, it i~~µbmitted.
SJi; See, e.g. post, Chap. 4, paras. 4·058-4·059.
Slli See, e.g. C.C.P.P., para. 27·32.
[CHAP.1 SECT. 12] LIABILITY IN TORT 171
(i) The judgment at a number of points treats the "tender pack-
age" prepared by the owner's NE as self-evidently constitu-
ting a representation by the A!E to the contractor (though not
by the owner) that the design is accurate (or perhaps suitable
or practicable or "buildable" depending upon the precise
nature of the complaint) and .that the contractor is entitled to
rely upon it for construction and pricing purposes without fur-
ther checking on his part. So stated, and disregarding the need
for greater precision, it is submitted that this is not a realistic
view of the circumstances at the time of tendering for a con-
struction project, either in regard to the extent of assumption
of risk on the part of the owner's NE, or in regard to the
degree or extent of reliance in reality placed by tendering con-
tractors on construction designs.
However, in the last resort the question whether a Hedley Byrne econ- 1·296B
omic loss responsibility should be imposed on owners' A/Es for the "ten-
der packages" produced by them must be a matter of policy for other
jurisdictions to decide, and would perhaps be more convincingly substan-
tiated after consideration of a specifically identified criticism or inaccur-
acy of the design or "tender package". It is submitted, however, that the
reasoning of the English Court of Appeal in the Pacific Associates case
accords more closely to the consensual and commercial realities of con-
struction contract tendering and is to be preferred on policy grounds-
among other things the Supreme Court's belief that contractor's tendered
prices will be reduced to compensate owners for the increased cost of pro-
fessional services seems extraordinarily theoretical and unlikely in
practice.
The Edgeworth case must also necessarily be of limited practical value to
practitioners in the construction field in the absence of more precise knowl-
edge of the specific criticism of the "design information" made by the con-
tractor in that case, as also of the reasonableness of the reliance placed upon
it by the contractor (having regard, inter alia, to any compensatory pro-
visions in the contract). It seems verypossible that the errors or inaccuracies
in the "tender package" or drawings which are referred to in the judgment
may refer not merely to the permanent design of the work but equally to the
closely related areas ofits practicality or "buildability", or of the practicality
of the design having regard to site and soil conditions encountered, or of the
quantities of work to be deduced from the drawings or design, or of the
suitability of the temporary works or working methods contemplated by
the specification or other documents. 58k
If the case is to be followed, it may be predicted with reasonable certainty:
(a) that the developing case-law will require to identify with
greater precision the examples of "design error" where
ill'< For the latter compare Auto Concrete Curb Ltd. v. South National Conservation
Authority, illustrated infra, para. 1·306.
 172 GENERAL PRINCIPLES OF LAW [CHAP.!
reliance by the contractor on the defective design is regarded
as reasonable, and
(b) that in any case there will be immediate disclaimers of design
and information responsibility by A/Es vis-a-vis tendering
contractors. In this they can expect close co-operation by well-
advised owners, who will wish to minimise the risk to them-
selves of vicarious liability for claims in tort by contractors, or
of the reduced damages recoverable from contractors as a
result of contributory negligence defences, as well as from the
otherwise inevitable increased cost of engineering services
anticipated by the Supreme Court, which they are apparently
to believe will result in corresponding reductions in contract-
ors' tendered prices.
It is also clear that the Edgeworth liability, if accepted, will require
modification of a number of passages in this book, in particular para-
graphs 1·293, 1·296, 4·053 and 4·059.
(ii) Supervision and temporary works
1·297 As previously stated, an action by a contractor for economic loss for
negligence in supervision will be correspondingly more difficult to bring
within the Hedley Byrne principle since what is being alleged is unavoid-
ably an affirmative duty of care owed to the contractor. In the case of
defective work, there can be, of course, no doubt that such arguments will
not protect a contractor as against the owner.59 Similar arguments against
a supervising professional have been robustly rejected in the Canadian
Supreme Court. Thus it was said of a sub-supplier of defective concrete
seeking a contribution under the Quebec Civil Code from a supervising
inspector employed by the main contractor
" ... how could it be fairly heard to say ... Because you failed to supervise me
properly, and you were bound to do so by your undertaking to the contractor,
you must share with me the burden of making compensation and, to that
extent, relieve me of it'. " 60
In that case the main contractor had engaged a consultant, and both the
consultant and the supplier were held fully liable in contract to the con-
tractor for defective concrete which had been delivered. UI).der Quebec
law either defendant was entitled to claim contribution from the other.
The Supreme Court of Canada held that the consultant was entitled to a
full indemnity from the contractor. In another Canadian case it was held
that a contractor was not entitled to refuse to proceed without instructions
s9 See the quotations set outpost, Chap. 5, Section 1(6) and the case of Kingston-upon-Hullv.
Harding there illustrated. But see now the English Law Commissions proposed Contribu-
tory Negligence Draft Bill (1944 Law Com. 219).
"'' See Bilodeau v. Bergeron (1974) 2 S.C.R. 345, at p. 351,per Fauteux C.J. Andsee,per Lord
Esh er M.R. in Beckerv. Medd (1897) 13 T.L.R. 313, 314 ''The person who hap_µndertaken
the duty could not say that he had been negligent in ... [its performance} .. ·:but that the
other person was guilty of contributory negligence in not finding him out."
LIABILITY IN TORT 173
to assist him in a difficulty, even in a case where he was expressly required
to submit his proposed working methods to the engineer for approval, and
that he had been rightly dismissed for that reason. 61
Notwithstanding these robust assertions of the position, some A/Es, 1·298
and in particular some consulting engineers' associations, have used
wording in their published conditions of engagement which unwisely
exaggerates the importance of their supervisory r6le and the extent of
their powers and control over temporary works and methods of working.
Such unrealistic language in Canadian consultants' employment contracts
appears to have been in the forefront of the court's reasoning to two diff-
cult cases. Thus in Demers v. Dufresne,62 the Supreme Court of Canada
held a consultant engineer 50 per cent. liable to a contractor for failing to
detect a glaring error in the latter's compressed air calculations which had
been submitted for approval, and which resulted in an explosion and econ-
omic loss to the contractor. Very shortly after, this case was purportedly
followed in Manitoba in Trident Construction v. Wardrop, 63 where Wilson
J. held an engineer partly liable, together with specialist sub-contractors,
to the main contractor for failure to warn the latter that his working plat-
form might be too low and subject to flooding. Demers' case appears to
have been decided under Quebec law, as an unconvincing application of
its special Civil code "third party beneficiary" civil law contract doctrine
of stipulation pour autri, 54 under which the Supreme Court majority held
the contractor entitled to the benefit of the promises made by the consult-
ant in his contract of employment with the owner. Nor does it appear to be
a correct application of either received French Civil Code doctrines or of
the related United States "third party" beneficiary doctrines.65 Both cases,
therefore, appear to depend on the particular wording of the consulting
engineer's contract of employment.65a The cases, their facts and the rel-
evant wording are analysed and criticised in detail in C.C.P.P.66 It will be
seen from C.C.P.P. that "third party beneficiary" theories underly many
of the United States cases.67 In addition, it must be said that many standard
forms of construction contracts use equally unrealistic and ill-considered
wording about the A/E's powers.68
It is submitted that these two Canadian cases are not of general auth- 1·299
ority, even in Canada, and that in principle no affirmative duty of care is
01 See the valuable decision of the New Brunswick Court of Appeal in City of Monckton v.
Aprile (1980) 29 N.B.R. 631.
62
[1979} S.C.R. 146.
63 (1979) 6 W.W.R. 481.
M See art. 1121 of the French Civil Code and art. 1029 of the Quebec Civil Code.
6' See C.C.P.P., para. 5-24, n.79, and see the Law Commissions analysis of U.S. and French
law, Privity of Contract, Consultation Paper No. 121 (1991), pp. 151-155 and 158--161
respectively.
Mn For the wording see post, Chap. 2, para. 2·097.
611 Paras. 5--22 to 5-26.
67 For an outstanding review of these theories in the U.S., see the Law Commission consul-
tation paper No. 121, on "Privity of Contract", p. 151 (Appendix, para. 14).
68
See C.C.P.P., paras. 17-07 to 17--08 and 17-13 for an explanation for and examples of this
type of wording.
 174 GENERAL PRINCIPLES OF LAW [CHAP. l
owed by a professional to a contractor to safeguard him from economic
loss. Only a positive unqualified intervention or representation, made or
given in circumstances in which the professional could be said to accept
responsibility for its efficacy or accuracy, would, within the terms of the
Hedley Byrne principle when applied to the real relationships on a con-
struction project, create liability, it is submitted. So advice which the con-
tractor was free to accept or refuse, for example, would not create liability.
Nor would a refusal to give advice, or inadvertent or even careless
approval or passing of work which it was subsequently realised was defec-
tive; nor could information as to site conditions passed on in good faith,
with no assurance as to its accuracy and no indication of an intention to
accept responsibility.
However, while the trend of authority is, with good reason, strongly
adverse to the imposition of liability in tort to the contractor by the super-
vising professional, the courts appear to have substantially eroded this
position when applying the statutory contribution remedies available in
most Commonwealth countries. 69
1·300 Discussion of this subject may perhaps conclude with the expression of
the view that, in regard to supervision and defective work, there are much
greater practical difficulties facing supervising professionals than is often
realised, having regard to the speed with which most construction work is
covered up, and the many other matters with which an A/E's periodical
site visits will be concerned. Moreover, there are many examples in the
reported cases in England of widespread and flagrant breaches of contract
only explicable because of rapid and, it must be said, probably deliberate
covering up of defective work. 70 There appears to be a strong element of
unrealistic hindsight in much of the expert evidence apparently so readily
available to support a charge of professional negligence in this particular
area of duty. Owners and others should understand that periodical visits
by A/Es cannot possibly be a substitute for conscientious supervision by
the contractor's own day-to-day supervisory staff, with whom the prime
responsibility should clearly be made to rest both by the courts and the
construction contracts themselves, it is submitted.71
Equally, it is easy for outsiders to be persuaded to take an unrealistic
view of the degree to which an NE can or should exercise control over
contractors' temporary works or working methods. Only if these are seen
to imperil the quality of the pemanent work, or to threaten personal
safety, or risk a substantial delay to the project, is it in his client's interest
for the NE to intervene with advice or instructions. Unless a contractor
has got into difficulties (when he can be expected to press strongly for
69
See, infra, subsection lO(c)(i), paras. 1·383-1·384.
10
See the remarkably similar facts and arguments in regard to defective cladding in East
Ham v. Bernard Sunley [1966] A.C. 406 and William Hillv. Bernard Sunley (1982) 22 BLR
l; Kensington Area Health Authority v. Wettern Composites (1984) 31 BLR 57, and the
robust and realistic judgment, again on very similar facts, of Judge William Stabb in Grayv.
Bennett (1987) 43 BLR 63. See also for a discussion of these cases and of policies•f9r dealing
with the defective work problem, (1990) 6 Const. L.J. 87. ,,.
71
See post, Chap. 2, paras. 2·098 et seq. and Chap. 5, Section 1(6).
SEcr.12] LIABILITY IN TORT 175
written instructions from the A/E) he will normally seek to resist any
attempt to exercise such control, in the absence of a sufficiently explicit
provision in the specification prescribing his working methods, and the
draftsmanship of nearly all construction contracts is seriously deficient in
combining vague and generalised references to the work being done in
accordance with the directions and to the satisfaction of the.A/E with a
marked failure to define his powers of intervention with any precision, or
to spell out the financial consequences of intervention in such situations.72
In all these cases the courts should be slow, itis submitted, to reduce the 1·301
burden of primary wrongdoers, either through the contribution remedies
almost always available in civil law countries, and now by statute in most
conunon law countries,72a or by imposing direct liabilities on supervisors or
inspectors of work in favour of the primary wrongdoers: see for what is
submitted is the correct approach Bilodeau v. Bergeron, quoted supra.73
Particularly to be noted also, on the policy dangers of Courts too readily
imposing liability on supervisors, are the prescient remarks of Lord Keith
of Kinkel when considering relevant factors to be taken into account in
imposing a new liability for negligence:
"The third is a danger of over-kill. It is to be hoped that, as a general rule,
imposition of liability in negligence will lead to a higher standard of care in
the performance of the relevant type of act; but sometimes not only may this
not be so, but the imposition of liability may even lead to harmful conse-
quences. In other words, the cure may be worse than the disease. There are
reasons for believing that this may be so in cases where liability is imposed
upon local authorities whose building inspectors have been negligent in
relation to the inspection of foundations ... " 74
It should be noted that the particular inspector's role in Bilodeau's case
might, if properly carried out, have prevented the defective work. The
supervising A/Es role is much less strong, since on periodical visits he can
rarely if ever prevent defective work in advance, but only detect it after it
has been carried out, and then exercise the remedies available for its re-
moval. Contribution to the wrongdoer's loss, given this background,
seems even less appropriate.
(iii) Certification
Every certificate in a constructon contract is a statement of expression 1·302
of opinion of the architect upon which important, if today usually tempor-
ary, financial consequences will frequently follow. Since the House of
Lords decision in 1974 in Sutcliffe v. Thakrah 75 removed what had long
n See the Singapore SIA contract, Clauses 1(3) and 2, set out in C.C.P.P, pp. 554 and 556,
where this has been attempted.
n, See further infra, Subsection 10(c). See also the English Law Commissions draft Contribu-
tory Negligence Bill permitting reduction of damages (1994 Law. Com. 219).
73
See also the cases cited by Singleton [1986] 2 Const. L.J. 87.
74
Rowlingv. Takara Properties Ltd. [1988] 1 A.C.473, at p. 502, discussing the Ann's liability.
75 [1974] A.C. 727.
 176 GENERAL PRINCIPLES OF LAW [CHAP.!
been thought to be a certifier's immunity, the owner has had a contractual
remedy for negligent over-certification by an A/E or quantity surveyor in
the event of a subsequent failure or insolvency of the contractor. Since the
emegence of the Hedley Byrne principle, coupled with the later House of
Lords decision in 1977 in Arenson v.Arenson76 (where a valuer, appointed
under a contract for a valuation of shares in a private company in the event
of their re-sale, was held liable in tort, in the absence of contract, to the
re-seller for negligence in undervaluing the shares), it had been tempting
to assume that an NE would be liable in tort to a contractor for negligent
under-certification (on interim payment, for example).n There are, how-
ever, powerful factors which support a contrary view. Thus the AJE is
employed, to the knowledge of the contractor, to protect the owner's
interests, not to provide a protection or safeguard to the contractor. More-
over, there is ample authority that an owner does not warrant a certifier's
competence, only his fairness or honesty. 78 For a century or more this has
been accepted by contractors as a sufficient protection, even in cases
where a certificate was a condition precedent to payment. In fact, in the
great majority of his certifying functions, the A/E is in any case acting
administratively, not quasi-judicially, 79 that is to say as the owner's agent.
It would be strange to impose a duty of care on the agent not accepted by
his principal in the construction contract, and also in a matter where a
remedy against the principal is available under that contract. Such a duty
would clearly be outside the "contractual setting" or "contractual struc-
ture" of the construction contract. Additionally, a liability of the A/E to be
"shot at by both sides" would be created which, while not perhaps a con-
clusive factor, would greatly increase the cost, through insurance, of
employing A/Es, and would introduce a clear conflict of interest impeding
a whole-hearted protection of his client's interest by the A/E. 80 Obviously
the case for any such duty is still further weakened in cases where the
contractor is free, under the terms of the contract, to arbitrate or litigate
his claim against the owner at once if dissatisfied with the certifier's
decision. Such a duty would also mean, in such a case, that the contractor
would be free to relitigate the same issue a second time if he failed against
the owner on the first occasion.
ILLUSTRATION
1·303 Dredging contractors operating under a FIDIC-style contract with an ICC
arbitration clause made a "Clause 12" unfavourable conditions claim for hard
76
(1977] A.C. 405.
71
See the clear dictum to this effect by Lord Salmon ibid., at p. 438E.
a See post,
7
Chap. 6.
7<J Sutchffe v. Thakrah, see supra, and see also C.C.P.P., paras. 17---06 to 17---08 where the
factual and historical background is explained.
1111
Compare the rejection of a duty owed to the assured by an insurer's consultan~jn the New
Zealand Court of Appeal in South Pacific Manufacturing Ltd. v. N.Z. Security Consultants
Ltd. [1992) 2 N.Z.L.R. 282, see supra, para. 1·289.
SEcr.12] LIABILITY IN TORT 177
materials. This was rejected by the engineer on the ground that the conditions
were foreseeable. Subsequently the contractors asked for a decision of the
engineer under clause 67 of the conditions, and then took a claim for £45
million to arbitration against the owners, which they finally settled for £10
million. They then brought an action in tort against the engineer for their full
loss, giving credit for the sum received, alleging negligence and breach of a
duty of care by the engineer when reconsidering and deciding their claim as
required by clause 67 of the contract. Details of the engineer's contract with
the owner were not known, but by clause 84 of the construction contract the
engineer was to act independently of the owner; by clause 85 he was not to be
an arbitrator when deciding or certifying, but to use his professional skill and
knowledge of the works, and was not bound to give reasons; by clause 86
neither the Engineer nor his staff were to be personally liable "for the acts or
obligations under the contract, or answerable for any fault or omission on the
part of the Employer in the observance or performance of any of the acts,
matters or things which are herein contained"; Clause 67 was 1n the FIDIC
third edition form permitting immediate arbitration of a disputed engineer's
decision. Held, by the Court of Appeal, not following the dictum of Lord
Salmon in Arenson v. Arenson, and affirming Judge John Davies Q.C., that
the claim should be struck out as disclosing no cause of action: Pacific Associ-
ates Ltd. v. Baxter (1989). 81
[Note: This very important case needs the closest analysis. All members of 1·304
the court appear to have interpreted Clause 86, obviously very badly drafted,
as disclaiming any responsibility of the engineer for his own (as opposed to
the owner's) actions. This seems by no means clear, but Purchas and Ralph
Gibson L.JJ. expressly, and Russell L.J. implicitly, confirmed that their judg-
ments would have been the same had the clause not been present. Moreover,
the engineer's role under Clause 67 would in most civil engin~ering contracts
have been treated as quasi-judicial, but for the express wording of Clause 85
(though this, too, should make no difference, it is submitted). What weighed
particularly in all three judgments was the fact that the contractor was free to
pursue his remedy at once under Clause 67 if he disagreed wit~ t~e en~ineer's
decision and Purchas L.J. indicated expressly that the position might be
otherwi;e if this was not so, although it was also pointed out that, allowing for
the delays involved in arbitration, the damage done to a contractor by a series
of adverse engineer's decisions might be very great. All judges pointed out
that there was no assumption of responsibility to the contractor involved in
the engineer agreeing with the owner to carry out the certifying duties
required by the contract, and that the co~tractor must be taken _to have
accepted the rOle of the engineer as defined 1n the contract., and that tf not he
could have asked for contractual protection from the engineer. In the circum-
stances it would not be "just and reasonable" to impose a duty of care on the
engineer. The decision clearly applies to the majority of current ~n~ted King-
dom standard forms where certificates are not permanently b1nd1ng, but a
number of standard sub-contract forms currently do make interim certificates
a condition precedent to payment, and not all contracts permit early arbi-
tration. It is submitted, however, that there is no liability in tort even in cases
where the contractor is not free to claim without a certificate. The only effect
of finality in such cases is that the damage to the contractor from an. ina~-
equate certificate is more likely ,if~ot certain, to occur. But to argue tha~tn this
situation the certifier is now effectJ.vely engaged by the owner to exeretse due
care in the interest of the contractor (see on this Ralph Gibson L.J.) is contrary
to the case law on the obligations of owners to contractors in regard to their
certifiers, and seems as factually unrealistic as in the case of non-binding
ai [1990} 1 Q.B. 993, C.A.
 178 GENERAL PRINCIPLES OF LAW [CHAP. l
certification. The other principal argument (that the contractor must be
deemed to have accepted the rOle of the engineer as defined in the contract
and, if dissatisfied, could require additional or separate contractual protec-
tion from the engineer) seems equally valid in such a case. Nevertheless, the
position of contracts giving temporary finality to payment certificates until
completion, or permanent finality (as, .e.g. in the final certificate in some con-
tracts) must, on the language used, be regarded as theoretically open. The
principles of the case have been applied and followed, it is submitted entirely
correctly, by the British Columbia Court of Appeal in 1991 in a roadway
design case, where contractors had claimed from engineers economic loss
allegedly caused by their engineer's negligent design and preparation of con-
tract documentation.82]
(iv) Liability of A/Es to contractors in United States law
1·305 There is little point in attempting to review in any detail the United
States law on this subject, which is extremely uneven, although with a pre-
sent-day apparent preponderance of cases affording plaintiff/contractors
a remedy in tort for economic loss against defendant A/Es, whether as
designers or supervisors, and often in the absence of any specific represen-
tation acted on by the plaintiff.83 Many of the United States cases, as
stated, are nominally based on "third party beneficiary" theories. It is suf-
ficient to say that these latter cases, particularly in the light of the Pacific
Associates case in England, would not be followed in either England or the
Commonwealth, it is submitted, for very good policy reasons. Those rea-
sons include conflict of interest with the duties owed by the AJE to the
owner, particularly in design or in consideration and rejection of contract-
or claim cases84; absence of a sufficient reliance on the AJE by the contract-
or or assumption of responsibility by the NE in the typical construction
setting; and a failure to take account of the considerable apparent exag-
geration in some standard forms, but also not excluding their own con-
tracts of employment, of the limited degree of control exercisable by
A/Es, both as a matter of contractual right as well as of the practicalities,
over the course of events and the contractor's own temporary works on
the site.
Thus, cases like Davidson & Jones v. County of New Hanover 85 ;
Normoyle-Berg v. Village of Deer Creek8 6; Mayor of Columbus v. Clark-
Dietz87; COAC v. Kennedy Engineers8 8; Aetna Insurance Company v.
Hellmuth 89 ; Walnut CreekAggregatesv. Testing Engineers and U.S. v.Rog-
ers & Rogers90 ; American Fidelity v. Pavia Byrne and Westerhold v.
82
Edgworth Construction v. Lea &Associates, now overruled by the Supreme Court of Cana-
da and illustrated supra, para. 1·296. See also the editor in [1990) 6 Const. L.J. 297.
63
For a valuable review of these see the Appendix, para. 14 at p. 151 of the Law Com-
mis;.ion's Consultation Paper p. 121, "Privity of Contract (H.M.S.O.).
114
Compare the New Zealand Court of Appeal's decision in Mortensen v. Laing [1991)
3 N.Z.B.L.C. 102, 301, [1992) 2 N.Z.L.R. 282.
as 255 S.E.(2d) 580 (1979), North Carolina.
so 350 N.E.(2d) 559 (1976), Illinois (supervision).
s7 550 Fed. Supp. 610 (1982), Mississippi (design).
88
67 Cal. App.(3d) 916 (1977), California (delay in advice and instructions).
s9 392 F.(2d) 472 (1968), 8th Circuit (supervision of temporary works). . .,
90
248 Cal. App.(2d) 690 (1967); 161 F.Supp. 132 (1958), California (inspection of'Readimix
Concrete). · !14c City of Moncton v. Aprile (1980) 28 N.B.R. 631.
SEcr.12] LIABILITY IN TORT 179
Carroll9 1; Ernst Inc. v. Manhattan Construction 92 ; and Nicholson-Brown v.
City of San Jose93 ; would almost certainly not be followed in England and
the Commonwealth. 93a
In this context, it should also be noted that some of the above United 1·306
States decisions support affirmative economic loss duties owed by A/Es to
contractors, which are not dependent on the special Hedley Byrne
requirements of intervention and vOluntary assumption of responsibility.
In fact it is beginning to be doubtful in the light of recent case law if such an
"imposed duty", independent of Hedley Byrne factors, can any longer be
owed by A/Es ( or indeed other classes of professional advisers where no
contract between plaintiff and defendant is present) for economic loss
either in England or the Commonwealth, with the possible exception of
New Zealand.94 On any view, the absence of some specific and unusual
"one-off" representation or intervention by an AJE will clearly render
liability doubly unlikely, and the Pacific Associates case is authority for the
proposition that such a "one-off'' representation, etc., will have to be giv-
en quite outside the normal services and decisions to be expected from an
A/E under his contract of employment with his client or the construction
contract itself, it is submitted.
(v) Liability of A/Es to Contractors in Canada
The judiciary in Canada appear very recently to have gone far further 1·306A
than any other Commonwealth jurisdiction in holding that construction
owners' A/Es owe duties of care in tort to safeguar'd contractors, both at
the pre-tender, design and post-contract supervision stages, against incur-
ring economic loss.
Thus while the Supreme Court of Canada rejected a claim under
Quebec law for contribution by a supplier of defective concrete against
the inspecting engineer in 1974 in Bilodeau v. Bergeron,94 a and in 1976 in
Vermont Construction Ltd. v. Beatson94b rejected a contractor's claim
against the NE for alleged delay costs due to defects in the drawings, and
while the Court of Appeal of New Brunswick in 1980 had rejected a con-
tractor's claim against the owner to be entitled to receive instructions
from the engineer when a tunnel collapsed during construction,940 the
91 393 S.E.(2d) 830 (1981) and 419 S.W.(2d) 73 (1967), Louisiana and Missouri (over-
certification), and contrast, in the Court of Appeal in England, Pacific Associates v. Baxter
{1990] 1 Q.B. 993, illuStratedsupra, and see (1990) 6 Const. L.J. 87.
02 551 F.(2d) 1026 (1977), 5th circuit (delay in decisions).
93
62 Cal. App.(3d) 526 (1976) (changes in plans and specifications).
!Ila Nor indeed in many U.S. jurisdictions.
!14 See Caparo Industries v. Dickman [1990] 2 A.C. 605; Murphy v. Brentwood District Coun-
cil [1991] 1 A.C. 398; but see Pacific Associates v. Baxter [1989) 3 All E.R. 1150 {1990]
1 Q.B. 993, in particular per Ralph Gibson L.J. at pp. 1026, 1030, and see also Murphy v.
Brentwood District Council [1991] A.C. 398, and in New Zealand Mortensen v. Laing
(1991) 3 N.Z.B.L.C. 102, 301, [1992) 2 N.Z.L.R. 282, where the New Zealand Court of
Appeal held that an insurer's consultant reporting on the causes of a fire owed no duty or
care to the assured.
!l4o [1974] 2 S.C.R. 345.
!14b (1976) 67 D.L.R. 3d 95.
 180 GENERAL PRINCIPLES OF LAW [CHAP.1
Supreme Court in 1979, in another Quebec contribution case, held an
engineer liable to a tunnelling contractor for failing to detect an error
in the contractor's compressed air calculations, and shortly thereafter Wil-
son J. in Manitoba held an engineer liable, together with specialist sub-
contractors, to a main contractor for failure to warn him that his working
platforms were too low having regard to prospective flood levels.94d
These cases were followed in 1983 and 1984 by two first instance
decisions in Ontario holding the A/E liable to the contractor for economic
loss caused by negligence during the pre-contract stage of design and
preparation of contract documents. 94• These latter cases were, however,
disapproved by the Court of Appeal ofBritish Columbia in 1991 in Edge-
worth Construction Ltd. v. N. D. Lea & Associates,94 r in what appeared to
be a valuable judgment correctly applying the principles enunciated by
the English Court of Appeal in 1989 in Pacific Associates Ltd. v. Baxter. 94s
However, the Supreme Court has now overruled the Edgeworth Con-
struction Ltd. case.94h
The following is a very recent example of the difficulties likely to arise if
other jurisdictions are to follow the lines now apparently being adopted in
Canada.
ILLUSTRATION
1·306B Contractors on the first five stages of a project to deepen and widen a river
bed in Ontario had used conventional draglines and backhoes for the removal
of soil above and below water. The contract did not specify any method of
working but merely required that the contractor's methods should have the
prior approval of the engineer. Tenderers for the sixth stage, however, ten-
dered on the basis of using the cheaper method of suction dredging, and so
stated in their tender documentation. After their contract was accepted
environmental permits for suction dredging from the Ministry of the
Environment could not be obtained, and the contractors had to use the con-
ventional method. The trial judge held that the firm of engineers employed by
the owners were liable to the contractors in tort for failing to warn tenderers
who might contemplate the use of suction dredging that there were environ-
mentally based restrictions which might be imposed by the relevant author-
ities preventing the use of that method. He further held the owners liable in
contract, on the ground that the contractors were entiteld to contractual com-
pensation for the alteration in the method of working, and also in tort as being
responsible in law for the negligence of their engineers. Held, by the Ontario
Court of Appeal, that there had never been an alteration in the contractual
method of working, so that the owners were not liable in contract; but that the
"4d See supra, paras. 1·296, 1·297 and 1·298, and the doubts expressed supra, para.1·299, and
see also C.C.P.P., paras. 5·13-5·27.
9,, Brown & Huston Ltd. v. City of York (1983) 5 C.L.R. 240; Cardinal Construction Ltd. v.
Brockvi/le (City) (1984) 4 C.L.R. 149.
9ir (1991) 4 W.W.R. 251, illustrated supra, para. 1·296.
-Ns [1990] 1 Q.B. 993, illustrated supra, para.1·303, analysed by the editor in (19~0) 6 Const.
L.J. 207.
!Mh See supra, para. 1·296, where the case is extensively and critically analysed.
SECT.12] LIABILITY IN TORT 181
engineers had been negligent, since suction dredging was no more destructive
than using draglines and was an acceptable method of excavation, and that a
competent engineer would have made enquiries of the authorites and would
have included relevant information in the tender documents. It had been con-
ceded that the owners would be responsible in law for such negligence, so that
they were liable to the contractors in tort as well: Auto Concrete Curb Ltd. v.
South National River Conservation Authority (1992). 94;
[Note: It is submitted that, even allowing for the Supreme Court's overrul-
ing of the Edgeworth Construction decision in British Columbia at the end of
the following year in 1993 noted supra, this decision is unconvincing both in
regard to the facts and the law. On the facts, although the evidence is not
discussed in the report, it is difficult to believe that contractors tendering for
dredging would be less aware of environmental restrictions on the use of suc-
tion dredging than the engineers, or indeed their predecessors on the earlier
phases. The contract did not require or stipulate the use of suction dredging,
which was their decision. No special knowledge of the owners or their engin-
eers existed which would not have been available to the contractors, as in the
U.S. cases supporting a duty of disclosure in Government contracts. The duty
found appears to have been an affirmative one, namely to make enquiries and
then inform tendering contractors of possible difficulties affecting their price,
which goes far beyond any previous example of a Hedley Byrne duty in the
construction field. Confidence in the.case is not increased by the cursory man-
ner in which the Pacific Associates case is referred to, and its explanation as
being due to the presence of an exclusion clause in that case, which examin-
ation of the judgments shows had been deliberately and expressly discounted
by the English Court of Appeal as a reason for their judgments. The basis for
distinguishing the Pacific Associates and Edgeworth Construction cases stated
by Catzman J.A. does not, therefore, seem well-founded. 941Finally, the own-
ers' concession that they would be responsible in law for the negligence of a
private firm of engineers seems surprising, at any rate in the light of the
English case law on this subject.94 k
The following quotation from Catzman J .A. 's judgment in the Auto 1·306
Concrete case encapsulates the proposition which the case seems to
approve:
"In his reasons, Yates J. did not identify the 'relevant information' which the
engineer failed to supply in the tender material. In context, however, it is
clear-particularly from his finding that the suction dredging method would
have been within the contemplation of a competent engineer in the prep-
aration of the tender documents for this project-that he was referring, at
minimum, to the absence of any indication to a potential bidder contemplat-
ing the performance of the work by that method that there·were environmen-
tally based restrictions which the authorites having jurisdiciton over the
subject-matter of the project might impose and which, unless successfully
met, would preclude the employment of that method." 941
Having regard to the history of five previous contracts using the dra-
gline method, the case seems as surprising in its findings of fact as in the
94, (1992) 89 D.L.R. (4th) 394.
-Ni See (1992) 89 D.L.R. (4th) 394, 402.
m See infra, Subsection (11), para. 1·387.
~4l Ibid. at p. 400h-401a.
 182 GENERAL PRINCIPLES OF LAW [CHAP. I
nature of the duty imposed on the engineer. Claims based on an alleged
inability to use suction dredging are in fact very commonly advanced by
dredging contractors.94m
( e) Limitation
1·307 While the tort of negligence remained limited to the recovery of dam-
ages for personal injuries or physical damage to property under the
Donoghue v. Stevenson principle, the date of "the accrual of the cause of
action" in tort for the purposes of section 2 of the Limitation Act 1939,
now section 2 of the 1980 Act (that is, the date of damage) was relatively
easily ascertained. However, the Hedley Byrne principle, and also the
Anns principle, were both examples of a quite new liability in negligence
for pure economic loss, rather than physical damage, and this has given
rise to difficulty in ascertaining the exact date of accrual under the tra-
ditional wording of the English Limitation Acts.95 In the case of Hedley
Byrne liability, the choices might be said to lie between the successive
dates of the original negligent statement or advice, the later date upon
which the plaintiff acted upon it, a still later date when economic loss
would become unavoidable, and finally the date when actual loss
occurred. Sometimes, of course, loss will become inevitable immediately
upon action in reliance on the statement, but in many cases not. In the last
resort this would seem to be principally a question of fact. 96
However, the alternative three-year "discoverability" period, subject
to the 15-year "long-stop" under the Latent Damage Act 1986 and sec-
tions 14A and 14B of the Limitation Act 1980, as amended, will now apply
in cases of Hedley-Byrne liability (and indeed, with the abolition of the
Anns liability, this seems likely to be the only area of tortious liability in
which the 1986 Act will continue to apply). This may serve to mitigate the
difficulties of ascertaining the accrual date in economic loss cases, but on a
wider basis the logical solution would be to extend the discoverability
principles of the 1986 Act to actions in contract generally, so reducing the
pressures on plaintiffs to seek to establish concurrent liabilities in contract
and tort, or artificial invocations of Hedley Byrne liabilities in contractual
situations. 97
94
See, e.g. the case of Morrison-Knudsen International v. State ofAlaska, illustrated supra,
m expansions of liability were likely to develop from a "merged" tort of this
para.1·160.
95
In the case of the Anns liability now overruled and abolished by Murphy v. Brentwood
District Council [1991 J 1 A.C. 398, see the Sparham-Souter, Pirelli, Ketteman and many
cases referred to in the author's "Negligence in Defective Buildings" (1989) 105 L.Q.R. 46,
at pp. 57-59.
% Forsterv. Outred [1982] 2 All E.R. 753; UBAF Ltd. v. European American Banking Cor-
poration [1984] 2 All E.R. 226; Secretary of State for the Environment v. Essex Goodman
Suggitt [1986] 1 W.L.R. 1432; Moore v. Ferrier [1988} 1 W.L.R. 267.
97
See (1991) 107L.Q.R. 228,246-7, and 1993TortLaw Review 152, 162-4, and see Mullany
(1991) 54·Mod. L.R. 349; and see the perceptive comments ofMustill L.J. on the distorting
effects of conferring limitation advantages as between tort and contract when holding that
the 1986 Act did not apply to contractual as opposed to tortious negligence in S.,.oc. Com-
merciale de Reassurance v. Eras Ltd. [1992] 2 All E.R. 82, at p. 86 cited infra, Siibsection
(10), para. 1·376.
SEcr.12] LIABILITY IN TORT 183
(3) Liability Under the Principle of Donoghue v. Stevenson
(a) Generally
Apart from certain cases of strict liability (that is, where negligence is 1·308
not a necessary ingredient and which are dealt with in Subsection (5),
infra) the Donoghue v. Stevenson liability represents the adaptation to
modern society of the earlier generic tort of common law negligence. As
explained in Subsection (1), supra, the liability is essentially concerned
only with physical damage negligently caused to the person or property of
others, without which there can be no liability, although economic loss
following directly from the physical damage will also be recoverable.
Donoghue v. Stevenson in 1931 was an extension to manufactured prod-
ucts of earlier more primitive examples of common law negligence (as, for
example, by the driver of a vehicle). The House of Lords specifically held
that where a chattel was put into circulation by a manfuacturer in circum-
stances where intermediate examination by a consumer was not practical
or likely, and harm might foreseeably result, there was the necessary
"proximity" to support a duty of care, independently of any contract, to
see that it was safe. The principle was based on two requirements of "prox-
imity" and of foreseeable harm. The principle was rapidly extended into
widely different fields far beyond the manufacture of food, so as to include
all other goods, as well as repairers, assemblers and distributors of goods;
repairers of electric wiring in houses98; builders' control of their current
building operations99; builders' permanent work 1; architects' decisions
controlling current building operations2; and indeed ahnost any field of
human or commercial activity where there was the necessary "proximity"
and physical damage to person or property could be foreseen as a suf-
ficiently proximate or direct result of the negligent act or omission com-
plained of.
Following a period of confusion in the 1970s, when the quite different 1·309
liability for economic loss under the Hedley Byrne principle (which
required a much closer degree of "proximity" or reliance), was still emerg-
ing, the two principles tended at first to be treated as one, with any foresee-
able loss, whether physical or economic, regarded as satisfying the
requirement of harm.3 It soon became clear, however, that undesirable
kind, and that it was necessary to return to the original essential bases of
the two separate liabilities. Thus, not only does the Donoghue v Stevenson
principle involve the essential concept of physical damage, but the dam-
age must be to other property, and not, where the basis of liability is a
9
s Hanley v. Mayoh [1954] 1 Q.B.383.
911
A. C. Billings & Sons Ltd. v. Riden (1958] A.C. 240.
1
Gallagherv. McDowell Ltd. [1961] N.I. 26, N.I.
2
Clay v. A. J. Crump Ltd. [1964] 1 Q.B. 583.
>See,e.g. per Salmon L.J. in Ministry ofHousingv.Sharp [1970] 2 Q.B. 223, atp. 278D,278E,
and see C.C.P.P., paras. 1-05 to 1-08, 5-03(h) and 5-04.
 184 GENERAL PRINCIPLES OF LAW [CHAP. l
defective chattel or building, to that chattel or the building itself. 4 This
distinction had been well understood and had continued to be applied in
the United States.5 On the other hand, the Hedley Byrne liability requires
a much closer relationship between plaintiff and defendant, and positive
conduct by the defendant amounting to an assumption of responsibility on
his part, and not on omission or failure to act, as in the case of an affirm-
ative duty of care such as in Donoghue v. Stevenson cases, if simple econ-
omic loss is to be recovered. 6
(b) Application to construction contracts
1·310 Contractors and sub-contractors, as the persons actually carrying out
building operations, are clearly liable, if negligent, to persons injured by
their operations, or by subsequent failures or accidents in a building after
completion caused by their negligence. 7 In the case of damage to property,
and in particular adjoining property, strict liability in nuisance, trespass or
under the rule in Rylands v. Fletcher may offer alternative remedies, even
where negligence is absent, to owners and occupiers. 8 In the case of dam-
age to person or property on the site, there is also a potential liability of
both owner and main contractor as occupiers under the Occupiers' Liabil-
ity Act 1957.'
In all cases of negligence owners and contractors may sometimes be
liable vicariously for the negligence of their contractors or sub-contractors
respectively, but unless the work in question is held to be of an inherently
dangerous nature they will usually be protected by the independent
contractor doctrine. However, the owner must not himself have been
negligent, for example, in his selection of the contractor, or in instruct-
ing or supervising him. This subject is dealt with in greater detail infra,
Subsection (11).
1·311 In addition to the owner or contractor, the NE may also be held liable
for damage to property or personal injury where the accident can be
shown to result from a negligent permanent design, 10 or in the much less
usual case where he has chosen positively to intervene and design or con-
trol the contractor's temporary works or methods ofworking, 11 but con-
siderable misunderstanding, particularly in North America, 12 appears to
4
See Lord Brandon's dissenting judgment in Junior Books v. Veitchi [1983] 1 A.C. 520, at
pp. 549 and 550-551, and the landmark decisions in D. & F. Estates Ltd. v. Church Com-
missioners for England [1989] A.C. 177 and Murphy v. Brentwood District Council [1991]
1 A.C. 398.
s See Traynor C.J.'s decision in Seely v. White Motor Co. 403 P.(2d) 245 (1965), Sup. Ct.
California.
6
See Subsection (2), supra.
1
Nuisance, since it is a proprietorial remedy, will not generally be available to third persons
who are not owners or occupiers: see Salmond and Heuston, Law of Tort, (20th ed.), pp.
67-68.
a Separately discussed infra, Subsection (5).
9
See infra, Subsection (4).
'°11 Voli v. lnglewood Shire Council (1963) 56 Q.L.R. 256, Queensland, illustratedi(ifra.
Clay v. A. 1. Crump & Sons Ltd. [1964] 1 Q.B. 533, illustrated infra. ,:_.
12 See the previous discussion and references to C.C.P.P. in para. 1 ·305-1 ·306, supra.
SEcr.12] LIABILITY IN TORT 185
exist as to the extent of an architect's or engineer's control over the con-
tractor's operations. In general not only is it neither the function nor inter-
est of the architect to intervene in or control the contractor's day-to-day
operations, but on the contrary the contractor has the right to carry o~~ the
work in whatever manner he chooses in the absence of express prov1s1ons
to the contrary .13 The architect's function is generally limited to providing
the necessary instructions and drawings so as to show the final result
required, and to intervene if bad permane7:t work is b~ing constructed.
The specification may, of course, expressly rmpose requrrements for par-
ticular work processes (for example, periods for curing concrete before
striking formwork, temperatures at which concreting is forbidden, the
number of passes of specified rollers to achieve compaction of soil sur-
faces, and so on), and may even provide for inspection by the architect's or
engineer's representative at certain stages. These requirements are not
only often expressed to be minimum requirements but are, of course,
almost always inserted in the contract exclusively for the protection of the
owner's interest in the quality of the final permanent work, and it is sub-
mitted that the architect owes no duty of care to third persons during the
course of construction in this regard, except to the extent that strict com-
pliance with positive instructions given by him as to a particular method of
working can be shown to be the principal effecti~e cause .of inju~y or dam-
age to a third.person. If the architect gives any instruction w~~h can ~e
safely complied with if full precautions are taken, he cannot, 1t IS subrmt-
ted be liable without some further positive intervention on his part. 14
Eq~ally, while an architect can in principle be liable in tort for a failur~ ~f
his permanent design during contruction, this co~d only be the case, 1.t is
submitted, if the failure is due to a fault inherent m the permanent design
and not to the contractors' failure to protect or support the work by what-
ever means may be necessary during construction. In considering these
matters it should be borne in mind that the contractor's supervisory staff
are continuously on the site or in touch with the site personnel, whereas
the architect's visits are of a periodical character; that the contractor as
their employer is able to give direct instructions to its person?el while the
architect is not; that the possibility of conflicting instructions IS not ac~ept-
able for practical purposes; and that an architect, if he intervenes by g1v1ng
positive instructions as to methods of working, at once .expose~ lh:e
employer to a possible financial claim on the ground that the instruction 1s
not necessary .
On many occasions the courts in all countries appear to have leaned too 1·312
far in holding the architect liable for matters which are more properly the
contractors' responsibility,15 but, fortunately, three seminal cases in the
United Kingdom in the 1960s greatly clarified the position, it is submitted
1) See Clayton v. Woodman & Son (Builders) Ltd. [196i] 2 Q.B. 533,. illustrated. infra.
H See Oldschoo/v. Gleesons (Construction) Ltd. (1976) 4 BLR 103, illustrated mfra.
11 See, e.g. the decision of the High Court of Australia in Florida H_otels v. Mayo (1965) 113
C.L.R. 588, illustrated infra, and see the discussion supra, Subsectron (12) (2)(b) and gener-
ally C.C.P.P., Chap. 5.
 186 GENERAL PRINCIPLES OF LAW [CHAP.!
entirely correctly,16 and remain equally valid at the present day. This sub-
ject is considered further,post, Chapters 2, 17 4, 18 5, 19 and 1.20--21
The following passages from the judgment of Pearson L.J. (as he then
was) in Clayton v. Woodman, infra, are, it is submitted, an outstanding
analysis and statement of the position. While the case was particularly
important in the United Kingdom because it concerned the then current
RIBA form of contract, these passages remain equally valid in all jurisdic-
tions where priced contracts supervised by the owner's own professional
adviser are used, whether the work is designed by him or not, and whether
in a building or civil engineering context:
1·313 "It is quite plain, in my view, both as a general proposition and under the
particular contract in this case, that the builder, as employer, has the
responsibility at common law to provide a safe system of work ... so that
everything is as safe for the workmen as it reasonably can be. It is important
that that responsibility of the builder should not be overlaid or confused by
any doubt as to where his province begins or some other person's province
ends in that respect. The architect, on the other hand, is engaged as the agent
of the owner for whom the building is being erected, and his function is to
make sure that in the end, when the work has been completed, the owner will
have a building properly constructed in accordance with the contract ... and
any supplementary instructions which the architect may have given. The
architect does not undertake (as I understand the position) to advise the
builder as to what safety precautions should be taken or, in particular, as to
how he should carry out his building operations. It is the function and the
right of the builder to carry out his own building operations as he thinks fit.
But it cannot be right, in my view, to impose on the architect two conflicting
duties in this situation: his duty to the owner to insist on performance of the
contract, and some other duty supposed to be owed to the builder or to the
builder's workman to make a variation in the specificaiton in the circum-
stances of the case. " 22
"It might be suggested tht the fault of the architect was in not advising the
builder, through his existing representative on the site ... as to how the work
required by the specification should be executed. If he had done so, the archi-
tect would have been stepping out of his own province and into the province
of the builder. It is not right to require anyone to do that, and it is not in the
interests of the builder's work people that there should be a confusion of
function as between the builder on the one hand and the architect on the
other. I would hold that it was plainly not the architect's duty to do that ... it
might be suggested that the architect should have given a warning to the
builder's workmen ... as to how the work should be done or that there was
some risk involved in doing it in a particular way. But there, also, it seems to
me that he would be stepping out of his own province and entering that of the
builder. He was entitled to assume that the work would be carried out prop-
1
~ Clayton v. Woodman [1962] 2 Q.B. 533,per Salmon J.; [1962] 1 W.L.R. 585, C.A.; East Ham
Borough Councilv. Bernard Sunley [1966] A.C. 406,per Lords Upjohn and Pearson, quot-
ed post, Chap. 5, Section 1(6) andA.M.F. (International) v. Magnet Bowling Ltd. [1968] 1
W.L.R. 1028, per Mocatta J., quoted post, Chap. 5, para. 5·021.
17
See post, Section 6(2)(d), para. 2· 138.
18 See post, Section 2(4)(b), para.4·176.
19
See post, Section 1(6), para. 5·020.
1~2 See post, Section 1(2)(f) and (g), paras. 7·025 et seq.
1
12
Per Pearson L.J. in Clayton v. Woodman [1962] 1 W.L.R. 533, at p. 593.
SEcr.12] LIABILITY IN TORT 187
erly, that the builder knew his own business and would properly perform his
own operations."23
These passages relate to accidents or damage caused by the building or 1·314
engineering operations themselves. na The other aspect of tortious
responsibility arises, however, after the building or works are complete
and handed over to the owner, if at some later date third parties are
injured or property damaged as a result of an accident caused by the negli-
gence of those who built or designed them.
English law Was at first reluctant to concede any such duty in the absence
of contract.24 But following the decision in Donoghue v. Stevenson absence
of a contractual relationship was no longer an objection in principle. The
law, however, remained subject to the severe doctrine-caveat emptor or
lessee-that a purchaser or lessee of an existing or completed house or
other property could not subsequently complain of any defect in the prop-
erty, and this meant that in practice many persons injured as a result of such
defects were defeated by the immunity so conferred. 25
Later it was held that this immunity of the vendor or lessor of a com-
pleted building did not extend to his contractor,26 or his architect,27 and
that the duty was "to use reasonable care to prevent damage to persons
whom he may reasonably expect to be affected by his work". 28 Since the
tenth edition, however, the so-called rule in Otto v. Bolton has been
authoritatively disapproved by the courts and is no longer law. 29 In
addition the Defective Premises Act 1972 brought about a similar result
by imposing a general duty of care on all parties taking part in new con-
struction of dwelling-houses. The only possible application of the rule
now remaining is in cases where plaintiff and defendant are contracting
parties,30 where effect may be given to any contractual disclaimer, or
indeed to perhaps wider exemptions derived from the "contractual set-
ting" or "contractual structure" of the project as a whole. 31
ILLUSTRATIONS
(1) Contractors drove a large number of piles into the soil while preparing 1·315
the site for a large building in the heart of the city, and the heavy vibration
23 Ibid. at p. 595. See also,perSalmonJ., and,per Mocatta J.,post, Chap. 2, paras. 2· 196-2·197.
21a Draft Regulations and an Approved Code of Practice are now apparently proposed which
would transfer important responsibilities from contractors to owners, and create a new
cl.ass of safety professional to be engaged by owners - see the Draft Construction (Design
and Management) Regulations under sections 2-4 of the Health and Safety at Work Act
1974. This seems an unwise if not disastrous policy totally opposed to the realities of site
control and of contractors' greater expertise in methods of construction than
professionals'.
2• Winterbottom v. Wright (1842) 10 M. & W. 109; Earl v. Lubbock [1905] 1 K.B. 253;
Malone v. Laskey [1907} 2 K.B. 141; Ballv. City of London Corp. [1949] 2 K.B. 159.
:!!i Otto v. Bolton [1936] 2 K.B. 46, following Bottomley v. Bannister [1932] 1 K.B. 458 and
Cavalierv. Pope [1906] A.C. 428. And seeBallv. City of London Corp. [1949] 2 K.B.159.
:u; Billings v. Riden [1958] A.C. 240; Gallagherv. McDowell Ltd. [1961] N.I. 26, N.I.
27
Voli v. Inglewood Shire Council (1963) 56 Q.L.R. 256, Queensland.
Billings v. Riden, infra.
2ll
w Dutton v. Bognor Regis Urban District Council [1972] 1 Q.B. 373, at p. 394, per Lord
Denning M.R.; Anns v, Merton London Borough Council [1978] A.C. 728, at p. 759,per
Lord Wilberforce. Jn Ibid, at p. 759c. 31 Discussed infra, paras. 1·325-1 ·326.
 188 GENERAL PRINCIPLES OF LAW [CHAP. l
caused serious damage to an old house belonging to the plaintiffs, who were
compelled to demolish a large part of it under a dangerous structure notice.
The contractors contended that the building was exceptionally old and frail,
and that this action did not therefore constitute a nuisance since a normal
building would not have suffered damage. Held, even if the building was in
such an unusually frail state that nuisance could not be established, the
defendants were absolutely liable for the damage done by them under the
rule in Rylands v. Fletcher (1868) 32: Hoare v. MacAlpine (1923). 33
(2) A fireman attending a fire in the first defendants' factory premises was
electrocuted and killed. The cause of his electrocution was:
(i) that obsolete tumbler switches, which were in fact the main switches,
had been left on, although the firemen had switched off all the other
switches so that no current should have been in the part of the building
affected by the fire;
(ii) two wires had been transposed so that although all the switches except
the main switches were off, current was still flowing in that part of the
building. The second defendants or their predecessors had done work
in the building in 1930, 1946 and 1950, and the transposing of the wires
was due to the negligence of some employee of the second defendants
on a previous occasion which it was impossible to identify. The fault
was one which might have been found if a proper test had been carried
out after work was done. The second defendants had not pointed out
to the first defendants, who were the occupiers of the factory, that the
main switches were obsolete. It was negligent of the first defendant's
manager not to know where the main switch was.
Held, the first defendants were 10 per cent. to blame and the second defend-
ants 90 percent. to blame, and both were liable in damages for the death of the
fireman: Hartley v. Mayoh & Co. and the N. W. Electricity Board (1954). 34
1·316 (3) Contractors working on occupied premises obstructed the access to the
premises, so that visitors to the premises had to make a short diversion onto
the adjoining premises in order to reach those on which the contractor was
working. The adjoining premises were in an unfit and dangerous condition
and the plaintiff fell and was injured there while on her way home after
visiting the occupiers of the premises. Held, by the House of Lords, that the
fact that the contractor was not in contractual relations with the defendant
was irrelevant; the duty owed by the contractor was not the same as the duty
of the owner (whose duty as a licensor, for instance, might be of limited scope
and avoided by proving a plaintiff's knowledge of the danger, or warning);
and, notwithstanding that the plaintiff was aware of the dangerous condition
of the adjoining premises, the contractor was liable for failure to use reason-
able care to prevent danger to persons who might be expected lawfully to visit
the house. Per Lord Keith, a contractor is not normally liable for a danger not
of his own creation on adjacent property, with which he has no right to inter-
fere, but if, as here, he does not provide a reasonably safe approach to a house
he may be liable if a person, attempting to enter or leave the house, is precipi-
tated into the danger on the adjacent property: Billings v. Riden (1958). 35
"L.R. 3 H.L. 330 (whereby an occupier of land is strictly liable if he brings anything
inherently dangerous upon it which escapes and does damage).
,, [1923] 1 Ch. 167.
34
[1954] 1 Q.B. 383.
J~ [1958] A.C. 240. See also the remarkable facts (contractor damaging cable in roa,d_ liable to
factory owner affected by loss of electricity) in S. C. M .. ( U. K.) Ltd. v. W.J. Whittall & Sons
Ltd. (unreported, 1970, C.A.).
SECT.12] LIABILITY IN TORT 189
(4) Builders negligently plugged a hole in a wooden floor. The defect was
not noticed by the owner, who subsequently let the house to the plaintiff's
husband. The plaintiff was injured when the heel of her shoe went through the
hole. Held, by the Court of Appeal of Northern Ireland, that the immunity in
relation to real property established by Cavalier v. Pope and Otto v. Bolton
only applied to vendors or landlords of property, and that the builders owed a
duty in tort to all lawful users of the house they had constructed: Gallagher v.
McDowell Ltd. (1961). 36
(5) An architect administering the then current RIBA form of contract 1·317
(which provided that the contractor should carry out and complete the works
in accordance with the contract and in every respect in accordance with the
directions of the architect) was advised by an experienced bricklayer that it
would be better to pull down an existing wall (which it was intended to use in
the works if it was sufficiently strong) because it would be difficult to cut a
chase in it to take a concrete floor. The architect satisfied himself that the wall
was adequate for its intended function, and decided not to change the original
intention. The bricklayer was injured when the work was carried out without
support being arranged for the wall. The contractor was required by the speci-
fication to provide all necessary shoring and support. Held, by the Court of
Appeal, that the architect did not in the circumstances owe any duty to the
workman. To do more whether by advice or warning would be to step out of
his own province into that of the builder. Had he ordered the work to be
carried out without supports that would have been a different situation, but
all he had done, as he was entitled to do, was to refuse to alter the contract:
Clayton v. Woodman & Son (Builders) Ltd. (1962). 37
(6) The plaintiff attended a meeting at a public hall, and was injured when
the stage collapsed. He sued both the architect and the owners of the hall, who
had hired it out to the association giving the meeting. The design of the floor-
joists and stage was defective. Under the architect's contract of employment
all his plans and specifications were subject to the inspection and approval of
his employers' public works department. Held, by the High Court of Aus~
tralia, that (1) the architect was independently liable in tort for failing to
design a stage capable of bearing the number of people likely to assemble
there; (2) nothing in the contract of employment of the architect could affect
his liability to third persons; and (3) the owners were also vicariously liable for
the architect's negligence, the immunity of landlords (if there was indeed a
letting) not extending to persons letting out property for public purposes:
Voli v. Inglewood Shire Council (1963). 38
(7) Ptjor to entry on the site by main contractors, an architect, after a tele- 1·318
phone discussion with the demolition contractors who had cleared the site,
approved of their leaving an existing wall standing on the site without support
in a dangerous condition. The architect had accepted the opinion of the
demolition contractors that it was safe, and though he subsequently
visited the site and had an opportunity to do so, did not in fact examine the
wall carefully. The building contractors did not do so either, but assumed that
the architect had satisfied himself about its safety. A workman of the building
]!;[1961] N.I. 26, N.I.
37
[1962) 2 Q.B. 533. per Salmon J.; [1962] 1 W.L.R. 585, C.A. The judgments of both
Salmon J. and of Pearson L.J. in the Court of Appeal are of the greatest importance in
regard to the principles involved, and should both be borne in mind when considering the
case of Clay v. Crump, infra. See the further quotations and discussion post, Chap. 2, paras.
2·138-2· 140 and 2·196----2· 197; Chap. 4, Section 2(4)(b), Chap. 5, Section 1(6), paras. 5·021-
5·023; Chap. 7, Sections 1(2)(f) and (g).
,s 110 C.L.R. 74.
 190 GENERAL PRINCIPLES OF LAW [CHAP.1
contractors was injured when the wall collapsed. Held, by the Court of
Appeal, that the architect, the demolition contractors and the building con-
tractors were all liable to the workman: Clay v. A.J. Crump Ltd. (1964). 39
(8) An architect was employed under RAIA terms of engagement (similar
to those of the RIBA), which included "periodical supervision and inspection
as may be necessary to ensure the works generally are executed in accordance
with the contract; constant supervision does not form part of the duties under-
taken ... ". The building owner in fact employed no main contractor, using his
own foreman and leading hands to supervise the work, which included a con-
crete swimming pool, in conjunction with the architect. The architect
visited twice a week, including a Friday at a time when the reinforcement for
the concrete aprons of the pool was not yet fixed. After the visit, the mesh
reinforcement was placed longitudinally instead of transversely. By the next
visit the concrete had been poured. When the formwork was struck, the con-
crete collapsed and injured a workman. The building owner when sued joined
the architect as a third party'. Held, by the High Court of Australia (Windeyer
J. dissenting), that the architect's obligation was to inspect formwork and
reinforcement before pouring and not to assume that the foreman would
postpone pouring of concrete till the next inspec;tion. He should have given
clear and express instructions to the foreman that concrete should not be
poured until the architect had been notified and had inspected: Florida Hotels
Ltd. v. Mayo (1965).~
[No.te: Without knowing what evidence was before the court, t~is decision
cannot be legitimately criticised, but the facts as reported certainly would
appear to carry the supervisory function of the architect as far ~s it can poss-
ibly go. While Barwick C.J. seems to have thought that the architect was also
directly liable in tort to the plaintiff, it is plain, however, that the decision is in
terms concerned only with the extent of the duty of supervision owed by the
architect to the owner. Furthermore, although the judgments expressly refute
any distinction based on the fact that the building owner was the direct
employer of the men on the site and had e_ngaged no main contractor, it is
obvious that such a special situation might call for a greater degree of care by
the architect. The important limits to the architect's area of responsibility as
defined in Clayton's case also do not appear to have been present in the
court's mind.]
(9) Holiday camp proprietors P. had a building and maintenance subsidiary
1·319
which employed N., "labour-only" contractors, tO fix joists and boards on a
roof to receive the felt of A., specialist roofing contractors. One of the
"labour-only" employees left a hole in the roof unguarded before going to
lunch, and an employee of the roofers fell from the roof an~ was injured. He
sued P.'s subsidiary, his own employers A., and N. No special arrangements
about safety had been made by anyone. Held, by the Court of Appeal, that as
P. was employing two small contractors who were to work in proximity and
one of whom was "labour-only", P. had assumed the duty of co-ordinating the
work and was under a duty to see that reasonable safety precautions were
taken. P., N. and A. were all liable, and as between each other were each
one-third liable: McArdle v. Andmac Roofing (1967). 41
(10) Owners demolishing two houses before developi~g them beca~e
liable under a party wall award for damage done to a third house. Their
i9 [1964) 1 Q.B. 533. Prima facie the architect would seem entitled to contribution or
indemnity.
4ll 113 C.L.R. 588.
41 {1967] 1 W.L.R. 356. See also Clarev. L. Whittaker & Sons (London) Ltd. [1976] I.C.R.1.
SEcr.12] LIABILITY IN TORT 191
contractors admitted liability, but sued the owner's consulting engineers,
alleging a duty to supervise and negligent design. Held, by Sir William Stabb
Q.C., following Clayton v. Woodman and distinguishing Clay v. Crump, that
the claim failed. Per Judge Stabb, the duty of care in no way extended into the
area of how the work was carried out. There was no duty to instruct the build-
er how to do the work, nor to detect faults during the progress of the work.
The contractor could not seek to pass the blame for incompetent work onto
the engineer on the ground that he failed to intervene to prevent damage to
adjoining property. As to the design, only if a design was so faulty that a com-
petent contractor could not have avoided the resulting damage by taking all
possible precautions should the engineer in principle be liable: Oldschool v.
Gleeson (1976).,u
[Note: It by no means follows, however, that an impossible design will ren-
der the designer liable to the contractor for a loss of this kind. Depending on
the particular facts of relative expertise, opportunity to check the design, and
the nature of the contractor's warranty to the owner of his ability to complete
(discussed supra, paras. 1·295-1·296), some reservation or warning by the
contractor, followed by confirmation of his requirements by the AJE, would
be necessary, it is submitted, to establish the necessary assumption of
responsibility usually required for application of the Hedley Byrne principle.
Even then the contractor's contractual obligations might make it difficult to
show reliance and detriment, it is submitted.]
(11) The occupier of a house adjoining a highway engaged an apparently 1·320
competent tree-felling contractor to remove a tree in his front garden. The
contractor negligently damaged telephone wires, which fell across the high-
way, and a passer-by was injured by a car running into him. Held, by the Court
of Appeal, that since the work was neither of an inherently dangerous nature
nor carried out on the highway itself, the case did not come within any of the
recognised exceptions to the independent contractor rule, and the occupier
was not liable: Salsbury v. Woodland (1970). 43
(12) A farmer engaged a firm of bricklayers to do work and undertook to
provide equipment. He provided a farm ladder to carry up materials and one
of the partners was injured when it collapsed. Held, by Chapman J., that while
not liable under the Occupiers' Liability Act 1957, since the ladder was no
longer under the farmer's control and had been taken over by the contractors,
he owed a duty of care either as a bailor or lender of a chattel or as an occupier
of property who intended others to come and use appliances supplied by him:
Wheeler v. Copas (1981). 44
(13) A developer/converter of property engaged specialist tradesmen indi-
vidually and had scaffolding erected by one of them. Some unknown person
had placed planks on the scaffolding which collapsed, injuring a self-
employed plasterer. Held, by Mann J., since the developer had not engaged
· anyone to superintend the scaffolding, he was liable in negligence for failure
to exercise proper care and control over the building appliances he had sup-
plied: Kealey v. Heard (1983). 45
[Note: The developer here was effectively a main contractor.]
(14) A local authority designed and built premises for letting with an inter- 1·321
nal glass panel which was dangerous because it was too thin. A tenant who
had been injured when falling against it sued in negligence. Held, by the Court
42
4BLR 100.
43
[1970] 1 Q.B. 324.
44
[1981] 3 All E.R. 405.
45 [1983] 1 All E.R. 973.
 192 GENERAL PRINCIPLES OF LAW [CHAP.!
of Appeal, that the local authority were not, by reason of limitation, liable
under section 1 of the Defective Premises Act 1972, nor under section 4(1) of
that Act, since it was not a case of breach of a repairing obligation. But Bot-
tomley v. Bannister was no longer law, and a lessor's immunity for the state of
the premises at the time of letting no longer extended to a lessor/builder.
Since these landlords were also the designers and builders, they were liable
for common law negligence: Rimmer v. Liverpool City Council (1985). 46
[Note: See Stephenson L.J. 's judgment in this case for a valuable discussion
of the various alternative bases for an occupier's or landlord's liability for
defective premises.]
(15) Plastering sub-contractors on a large luxury development introduced
an unspecified coat of browning plaster balanced by a thinner coat of bonding
plaster. The main contractors' supervisors must have known of this and that it
was a breach of manufacturers' instructions. There were widespread falls of
plaster in the development, and a subsequent flat owner sued the main con-
tractors for the cost of repairs. Held, by the Court of Appeal (and affirmed,
although obiter, by the House of Lords, who held there was no liability in any
event), the main contractors were not liable for the negligence of the sub-
contractors: D. & F. Estates v. Church Commissioners for England (1987). 47
(16) Developers partly demolished a cinema prior to its redevelopment,
and left it unattended before commencing construction. Children broke in
and were seen to make fires in and near it, but this was not reported to the
police or the developers. Eventually children or teenagers deliberately set fire
to it and seriously damaged adjoining property, whose owners sued the devel-
opers. Held, by the House of Lords, that this was not an obvious fire risk, and
since the previous acts of vandalism were not known they were not liable. Per
Lord Brandon, the owners' general duty was to exercise reasonable care to
ensure the building did not become a source of danger to neighbouring build-
ings. Whether that extended to prevent young persons obtaining unlawful
access and setting fire to it must depend on whether the behaviour was
reasonably foreseeable: Smith v. Littlewoods Ltd. (1987). 48
(c) Proximity and economic loss limits
1·322 Notwithstanding negligence causing physical damage in circum-
stances which otherwise might give rise to liability under the Donoghue v.
Stevenson principle, there are situations where liability will be excluded,
because the claim, or a part of it, is in reality for an economic loss which is
not sufficiently proximate to such physical damage as does exist.
One such situation will be where the plaintiff himself does not have a
sufficient proprietary or possessory right in the damaged property, but
only some contractual right in relation to it, so that his claim is on analysis
for economic loss only, although resulting from physical damage-"con-
tractual relational loss" as it has been recently described in the Supreme
Court of Canada. 49 Thus, where a dredger caused physical damage to an
underwater pipe line leading from an oil company's storage tanks to an oil
46 [1985] 1 Q.B. 1, C.A.
47 3 Const. L.J.110, C.A.; [1989] A.C. 177, H.L. doubted on this point in (1988) 4 Const.L.J.
100. This case initiated the demise of the Anns economic loss liability - see infra,
para. 1·354.
48
[1987] A.C. 241. Compare Perlv. Camden London Borough Council [1984] 9.;s. 242.
49 By La Forest J. in Norsk Pacific Steamship 11. Canadian National Railway [1992] 1 S.C.R.
1021; 91 D.L.R. (4th), 289, Discussed by Fleming in (1993) 1 Tort L.R. 68.
SEcr.12] LIABILITY IN TORT 193
loading terminal, the proprietor of the terminal was held entitled to
recover his trading losses during the period of repairs by the High Court of
Australia, notwithstanding that the pipe line was the property of the oil
company.50 However, this 1976 decision was expressly not followed by the
Privy Council in 1986 in Candlewood Navigation Corporation v. Mitsui
OSK. 51 There the owners of a vessel who had chartered it out on bare boat
charter and received it back on time charter were unable to recover the
cost of repairs and lost profits during repairs following a collision,
whereas, had they never made this "lease-back" arrangement, there could
have been no defence to their claim. The House of Lords applied the long-
established principle in Cattle v. Stockton Waterworks, 52 namely that a
mere contractual right, and not a proprietary or possessory right, in
relation to a damaged chattel will not support an action for the damage in
tort. So also, under the Roman Dutch law of deli ct, a ship which had negli-
gently collided with a loading buoy owed no duty to pay delay and demur-
rage charges to the next ship due to use the buoy.53 The principle is to avoid
the spread of an indeterminate number of claims of indeterminate amount
following a physical accident, and might well present a difficulty, for ex-
ample, for a main contractor suing for negligent damage by a third party to
the works under construction ( although it is submitted that the nature of
his possessory control and interest in any completed permanent work
might, in fact, be adequate to support a claim).
For similar policy reasons some types of economic loss, though foresee- 1·323
able, may be considered too remote notwithstanding admitted physical
damage. Thus in two similar cases where contractors negligently damaged
public electricity cables in a road which they knew supplied an adjoining
factory, they were held liable for replacing goods damaged by the result-
ing power shut-down and for loss of profit on the sale of those goods, but
not for, in the one case, a close-down of other plant or, in the other case,
profit lost due to the reduced production caused by the shut-down.54
ILLUSTRATION
A fish merchant engaged specialist tank contractors to instal a tank for the
storage of his stock of live lobsters. A sub-sub-supplier selected by the
specialist contractors supplied defective sea-water pumps for the oxygen-
ation of the tanks, which were not suitable for United Kingdom voltages and
liable to cut out, and as a result the plaintiff lost his entire stock of lobsters. He
so Caltex Oil (Australia) Pty. Ltd. v. The Dredger Willemstad! (1976) 136 C.L.R. 52.
51
[1986] A.C. 1, and see Leigh & Sillivan Ltd. v. Aliakmon Shipping [1986] A.C. 785, and
C.C.P.P., paras. 7·03 and 7·07. See also in the U.S. East River Steamship v. Transamerica
Delaval Inc. 106 S.Ct. 2295 (1986).
52
(1875) L.R. 10, Q.B. 453.
53
Osborne Panama S.A. v. Shell & BP South African Refineries [1980] 3 S.A. 653, aff. [1982]
4 S.A. 890.
54
S.CM. (U.K.) Ltd. v. Whittall [1971] 1 Q.B. 337; Spartan Steel Alloys Ltd. v. Martin [1973]
Q.B.27.
 194 GENERAL PRINCIPLES OF LAW [CHAP. I
claimed in tort, against the supplier of the pumps, for a number of heads of
economic loss including cost of replacement and repair of pumps and loss of
interest on capital employed. Held, by the Court of Appeal, that the supplier
had been negligent and the loss of the lobsters foreseeable but, since the
plaintiff had relied on the specialist and not on the supplier, the case could not
be brouglJ,t within the Hedley Byrne principle and, following Spartan Steel, he
was entitled only to the value of the lobster stock killed and loss of profit on
the lobsters: Muirhead v. Industrial Tank (1986).55
1·324 A number of cases in this area have currently been the subject of conflict
and doubt. It is not clear, for example, whether the High Court of Aus-
tralia regards the Caltex case (supra) as having been correctly decided,56
and this doubt is reflected in the strongly divergent views expressed in the
Supreme court of Canada in a case where a railway bridge had been negli-
gently damaged by a barge, causing loss to one of the principal commercial
users of the bridge. 57 This difficult area of liability for economic loss in tort
is in fact as milch concerned with questions of causation and remoteness of
damage, which can be notoriously difficult to rationalise, as with substan-
tive liability.
(d) Disclaimers and "contract structure" or "contract setting"
exemptions
1·325 It has already been seen that a defendant's disclaimers will ex hypothesi
have a particularly powerful effect in negativing the Hedley Byrne liability
in tort, itself based on representation and assumption of risk. The follow-
ing discussion, however, applies equally to claims for physical damage,
and in particular to disputes between the various parties to a construction
project, whether under the original Donoghue v. Stevenson principle or
the later Anns principle,58 or the statutory duties of care owed to visitors or
tenants under the Occupiers' Liability Acts 1957 and 1984,59 or to sub-
sequent owners and occupiers under the Defective Premises Act 1972,60 as
well as to other possible areas of strict liability such as nuisance or tres-
pass.61 Since the law at present appears to accept the concept, at least in
some areas, of concurrent liability in both tort and contract,62 it follows
that in many cases brought in tort an exemption or limitation of liability
may arise under the contract between plaintiff and defendant. Normally
effect will be given to such a limitation notwithstanding that the action is
brought in tort. In construction projects there is also the likelihood of dis-
claimers or limitations in a related or background contract to which either
the plaintiff or the defendant may not be a party, but of the terms of which
55 [1986] Q.B. 507.
~ See Fleming, "Economic Loss in Canada" (1993) 1 Tort L.R. 68, at p. 71.
51 Norsk Pacific Steamship v. Canadian National Railway, supra, n.49 and see Fleming Op.
Cit. See also Sir Anthony Mason on this case in (1993) 1 Tort L.R. 5, 7-8.
58 As to which latter see infra, Subsection (6).
59 See infra, Subsection (4).
60 See infra, Subsection (7).
~1 See infra, Subsection (5).
62
See infra, Subsection (9).
SEcr.12] LIABILITY IN TORT 195
they are well aware, or have referred to in their own contract. Given the
network of sub-contracts or related direct contracts (including those of
the employment of the A/E) the presence of such a known third party
agreement is a very real one in construction projects. Thus it has already
been seen that the possible liability of the AfE to the contractor in tort has
been rightly restricted by the English courts in the light of his r61e as
defined by the express or implied terms of the construction contract
between the contractor and the owner. 63
The principal provisions in construction contracts which may have the 1·326
effect of reducing or eliminating liability are, first, those certification pro-
visions which are conclusive as to the quality of work and, secondly, pro-
visions for insurance or joint insurance, which are often marketed as, .and
frequently expressly required to be, for the benefit of sub-contractors as
well as contractors ( and indeed in many cases would lack practical value if
they were not) 64 and also, notably in the case of damage to the works,
expressly cover damage whether or not due to the negligence of the con-
tractor or his sub-contractors (for similar practical reasons).
Thus in a case where widespread defective and dangerous cladding was
found after completion, the owner's claim in tort for repair costs against
the main contractor under the (then) Anns principle was defeated by the
final certificate provision of the contract, on the ground that the claim
arose out of the contract, which defined the extent of the duty. 65 Later,
where an owner sued two negligent sub-contractors in tort under the
Hedley Byrne principle for serious defects discovered in the works, their
duty was similarly held to be eliminated by the main contractor's immun-
ity as against the owner, following tests on completion and handover,
under Clause 30 of the Model A Mechanical Plant contract. 66
Again in the case of insurance provisions, a negligent sub-contractor
causing a fire which destroyed or damaged the works, while clearly prima
facie liable in tort to the owner, was able to defeat his claim (or more
probably that of the owner's insurer) by virtue of Clause 20C of the
pre-1980 RIBA/JCT main contract, under which the owner assumed
responsibility to the main contractor for care of the works and for their
insurance.67 Similarly, by virtue of clause 22A of a main contract requiring
joint insurance of the works to be taken out by the main contractor, the
owner was unable to recover in tort from a domestic sub-contractor that
part of his claim in tort which represented damage to the building.68
All the above, however, were cases of standard form provisions well 1·327
known in the industry, in the light of which both contractors and sub-con-
63
See Clayton v. Woodman and the discussion supra, Subsection (2)(d). See also Pacific
Associates Ltd. v. Baxter, supra, para. 1·303.
64 See post, Chap. 15.
65
William Hill v. Sunley (1982) 22 BLR 1, C.A.
66 Southern Water Authority v. Carey [1985] 2 All E.R. 1077, per Judge Smout Q.C.
67
Norwich City Councilv. Harvey [1989] 1 W.L.R. 828, C.A.
68
Surrey Heath Borough Council v. Lovell Construction and Haden Young (1988) 42 BLR
30, Judge Fox-Andrews Q.C.
 196 GENERAL PRINCIPLES OF LAW [CHAP. l
tractors might be expected both to tender and make (or not make) their
own insurance arrangements. On the other hand, in a case where a special-
ist sub-contractor imposed a limitation of liability in his sub-contract of
which the owner was unaware, the owner was able to sue successfully in
tort. 69 Again in a difficult Scottish case where the owner under the main
contract was the leaseholder of part only of a building, and insurance was
to be taken out by him, a negligent sub-contractor who had caused a fire
was sued by the owner of the remaining part of the building, who had no
part in the construction contract, and no such defence was available to the
sub-contractor, and when in third party proceedings he sought to enforce
the main contract indemnity and alleged failure by the owner to take out a
policy providing protection for the sub-contractor against third party
claims, he failed. 70 In conclusion, it should perhaps be pointed out that
while many of the above cases were clearly physical damage cases (for
example, the fire cases) under the Donoghue v. Stevenson principle, others
concerned liability in tort under the differentAnns principle for the repair
of defects in a building, now formally abolished in England by the Murphy
decision. 71
There may well prove to be policy and other difficulties about the auto-
matic enforceability in tort of exemption or limitation clauses, even if
known to the plaintiff, made in a contract between the defendant and
some third party, for example, in personal injury cases, where the exemp-
tion refers to obviously dangerous operations, as with electric wiring or
fire.
(4) The Occupiers' Liability Acts 1957 and 1984
(a) Generally
1·328 These Acts are concerned with the liability of an occupier of premises to
persons coming onto his premises as vi~itors. The 1957 Act was passed to
unify and clarify the complicated case law which had developed as
between the different categories of lawful visitor represented by invitees
and licensees. The Act of 1957 differentiated only between "lawful visi-
tors" (that is, the old invitees and licensees, now unified under one duty-
"the common duty of care") and trespassers, to whom no duty as such was
provided for in the Act, so that the duty remained regulated by the com-
mon law. To lawful visitors the duty under the 1957 Act is "to take such
care as in all the circumstances of the case is reasonable to see that the
visitor will be reasonably safe in using the premises for the purposes for
69 Rumbelows Ltd. v. AMK (a firm) (1980) 19 BLR 25,per Judge Fay following a dictum of
Lord Denning M.R. in Morris v. C. W. Martin & Sons Ltd. {1966] 1 Q.B. 716.
70 Aberdeen Harbour Board v. Heating Enterprises (1988) 4 Const. L.J. 195,per Lord Clyde,
Outer House. A further difficulty facing the sub-contractor was that he had ~(!·invoke the
main contractor's rights against the owner while himself a stranger to that cOritract.
71 See infra, Subsection (5).
SECT. 12] LIABILITY IN TORT 197
which he is invited or permitted by the occupier to be there" (section
2(2)).
The Act of 1984, which applies to personal injuries only, unlike the 1957
Act, was passed in order to define statutorily a limited duty of care owed to
trespassers, and was expressed in deliberately general terms - "to take
such precautions as are reasonable in all the circumstances to see that they
do not suffer injury" -provided that the occupier has reasonable grounds
to believe that a danger exists on the premises.72
The Act also created a new duty of care owed by landlords to persons
suffering damage as a result of any failure by them to comply with a cov-
enant to repair. 73 This has now been replaced by section 4 of the Defective
Premises Act 1972, but is outside the purview of this book.
At the outset a number of points should be noted, namely:
(a) the Act imposes a duty to avoid damage to the visitor's property as 1·329
well as personal injuries, except possibly in regard to certain cases
of theft, and includes any consequential financial damage 74;
(b) a building contractor can be an occupier under the Act. 75 Further-
more, multiple occupancies are possible (that is to say, more than
one person can be an occupier of the same premises at the same
time)76;
(c) the liability under the Act can be restricted or removed by con-
tract,n but such restrictions cannot operate against strangers to the
contract78 although restrictions can probably be imposed by con-
ditions made known by an occupier to his visitors79;
(d) the Act probably does not apply to damage done by positive build-
ing operations or other activities on premises, but only by the state
of the premises, in spite of the words "things done or omitted to be
done" in section 1(1). 80 Damage due to such active operations
would presumably fall within the ordinary tort of negligence on the
well-known Donoghue v. Stevenson principle, however,s1 and in the
A.M.F. case Mocatta J. held that premises under construction and
in an unsafe state due to negligent protection of the work were cov-
ered by the Act.
n s.1(3)(a) and (4).
n s.4.
74
See s.1(3)(b), and Workington Harbour and Dock Board v. Towerfield (Owners) [1951]
A.C. 112; A.M.F. International Ltd. v. Magnet Bowling Ltd. [1968] 1 W.L.R. 1028, at
p. 1050,per Mocatta J., and see also s.5(1) of the Act.
15
Savory v. Holland & Hannen & Cubitts [1964] 1 W.L.R. 1158.
7
~ Wheat v. Lacon {1966} A.C. 552; A.M.F, International Ltd. v. Magnet Bowling Ltd., infra;
Fisher v. CH. T. Ltd. [1966J 2 Q.B. 475.
77 s.2(1) of the Act.
78
s.2(2) of the Act.
79
Ashdown v. Samuel Williams & Sons Ltd. {1957} 1 Q.B. 409, a decision of the Court of
Appeal before the Act.
80
See s.1(2) and Odgers, [1957] C.L.J. pp. 39-40, and many later writers, but this is disputed
in Salmond & Heuston (19th ed.), para. 92, n. 56.
81
See supra, Subsection (c).
 198 GENERAL PRINCIPLES OF LAW
It cannot be said that the 1957 Act has been invoked very often in regard
to the duties inter se of the more usual parties to a building project.
(b) Application to construction contracts
(i) As between owner an;J, contractor
1·330 An owner normally parts with temporary possession of the site under
what is in effect a revocable licence, under which the main contractor has a
high degree of everyday control of the site.82 In general an owner only
impliedly warrants to do nothing positive to impede or obstruct the con-
tractor.83 If the owner is occupier, and (which in some projects may be
doubtful depending on his degree of control of the site) the contractor a
visitor (they can, of course, both be occupiers under the Act simul-
taneously vis-d-vis third persons)/>4 then the Act would seem to impose a
new obligation on the owner, and an express term in the contract would be
needed to restrict or avoid it. Furthermore, section 3(1) of the Act would
appear to prevent any such exclusion or restriction operating in the
employer's favour against strangers to the contract, such as employees of
the main contractor, or sub-contractors. In this context section 2(3)(b ),
"An occupier may expect that a person in the exercise of his calling will
appreciate and guard against any special risks ordinarily incident to it, so
fat as the occupier leaves him free to do so", needs to be borne in mind. In
addition, the Act only creates a duty to avoid damage to person or prop-
erty, it is submitted (see the words "reasonably safe in using the premises"
in section 2(2)), so that it will not assist the contractor if some default of
the employer has rendered his work more difficult or expensive.
(ii) As between the main contractor and sub-contractor
1·331 Here there certainly seems to be little in the Act which is inconsistent
with the terms normally to be implied in the more usual sub-contracts
where the main contractoi is on the site simultaneously and beyond any
doubt, as between these parties, in overall control of it. The same con-
siderations as are adumbrated in (i) above would appear to apply to cer-
tain early types of sub-contract where the main contractor may not yet be
effectively present on the site himself, for instance, in the case of sub-
contractors for clearance· of the site or for excavation, or for the erection
of the steel or concrete frame of the building.
(iii) As between non-contracting parties
1·332 For example, as between main contractor and other contractors of the
employer,85 or as between sub-contractor and employer. Here the Act
clearly can be vital, since it affords a potential remedy not otherwise avail-
able, and .furthermore one which cannot by definition be excluded or
82 See post, Chap. 12, Section 3(2), and see Chap. 4, Section 2(2)(b).
63 See post, Chap. 4, Section 2(2). 84 See the cases illustrated infra.
S.< See, e.g. the A.M.F. International Ltd. case.
[CHAP.1 SECT. 12] LIABILITY IN TORT 199
restricted. The potential liability of the owner and main contractor as joint
occupiers85a to such third parties and also to a far wider class of third par-
ties, such as adjoining owners or occupiers and the employees of all per-
sons engaged on the site, renders it doubly important that an effective
indemnity clause is present in the contract between building owner and
main contractor, so as to redistribute the burden of such claims effectively
according to whatever policy is deemed to be appropriate. As will be
seen86 the A.M.F. decision and subsequent cases mean that the contract-
or's indemnity clause as currently drafted in the RIBAfJCT forms will
prove ineffective in all cases where joint liability, whether under the Act
or otherwise, and in whatever proportions, is held to exist as between main
contractor and owner on the one hand and some third person on the other,
even when the only failure alleged against the owner is one of inspection
or supervision of the contractor.87
Before referring to the small number of cases decided under the Act, it 1·333
may be desirable to emphasise that a finding of "occupancy" under the
Act does not necessarily connote liability, and that the nature of the occu-
pancy will be of vital importance in determining whether or not there has
been breach of the duty of care. Thus an owner out of possession for a
three-year period, for instance, will generally be far less likely to be found
to be in breach of duty than the main contractor in effective control of the
site, even apart from the vitally important section 4(b) of the Act, which
provides that:
"where damage is caused to a visitor by a danger due to the faulty execution
of any work of construction, maintenance or repair by an independent con-
tractor employed by the occupier, the occupier is not without more to be
liable if in all the circumstances he has acted reasonably in entrusting the
work to an independent contractor and has taken such steps as he reasonably
ought in order to satisfy himself that the contractor was competent and that
the work had been properly done."
This subsection resolved doubt as to the law prior to the Act and the
extent to which the occupier's duty was absolute, in the sense that it could
not be discharged by delegation to an independent contractor. ss However,
as will be seen, it did not, on the facts found, avail an owner who had
engaged an architect to supervise a main contractor. 89
JLLUSTRA TIONS
(1) Shot-firer sub-contractors, called in to help in blasting rock on a landing 1·334
site, sent a skilled man to do the blasting, the main contractors providing any
S5•/bid.
86
See post, Chap. 15, Section 2(3).
81
See also the discussion on indemnity clauses, supra. Section 9(5), and see post, Chap. 15.
88
See,e.g, Thomsonv. Cremin [1956] 1 W.L.R.103; Waddlev. Wallsend[l952]2Lloyd'sRep.
105, at p. 130; Green v. Fibreglass Ltd. [1958] 2 Q.B. 245; Lyons v. Nicholls [1958] N.Z.L.R.
409,N.Z.
gi See the A.M.F. case, illustrated infra.
 200 GENERAL PRINCIPLES OF LAW [CHAP.1
further men who were necessary. Held, by the Court of Appeal, the main
contractors owed the skilled man a duty as occupiers under the Act: Savory v.
Holland & Hannen & Cubitts (1964). 90
(2) Main contractors in control of a building structure sub-contracted the
repairing of roof members and trusses, and in addition ordered the necessary
scaffolding and staging for working platforms from competent scaffolders.
The roofing sub-contractors' employees made and moved the staging and
working platform without any sufficiently experienced supervision. Held,
by Lawton J., that the main contractors were not in occupation or control of
the staging, and accordingly were not liable under the Act to an injured
employee of the sub-contractors: Kearney v. Eric Waller Ltd. (1967). 91
(3) A. were the owners of a club, and licensed the running of its restaurant
to B. B. arranged a contract for the redecoration of the restaurant, but used
his own electricians. One of the decorators' plasterers was injured by live elec-
tric wires. A. had the right to go through the restaurant, controlled the door to
the whole premises, and had a pennanent maintenance man on the premises
who took an interest in the work. Held, by the Court of Appeal, that both A.
and B. were occupiers under the Act of 1957: Fisher v. C.H.T. Ltd. (1966). 92
1·335 (4) M., building owners, entered into a 1957 RIBA contract with T., con-
tractors, for the construction of a bowling alley at Barnsley. M. also entered
into a separate direct contract with A. for the sale and installation of the tim-
ber bowling lanes and machinery in the building, and agreed on dates when
the building would be ready to receive A.'s equipment. A. in due course
entered under clause 23 of the building contract and commenced work at a
stage when the roof was on, but guttering and external surface drainage were
incomplete, and external doorways were unfinished. A.'s work was separated
from the rest of the work inside the building by a polythene screen. After an
exceptionally heavy rainstorm, surface water flooded into the building
through one of the doorways, which was protected by a plank and some
polythene, damaging much of A.'s work beyond repair. A. completed the
work, and brought an action (inter alia) against both M. and T. under the
Occupiers' Liability Act. It was found that relatively simple precautions by T.
would have prevented the ingress of water during construction, that T. was in
a better position than anyone else to note and assess the risk, but that M., who
had received an express assurance from T. that the building would be ready
for A., did not, via their own salaried architect, make any specific inquiry from
the private architects (whom they had employed under a special arrangement
as the named architects under the building contract, with the salaried archi-
tect described as a "consultant") as to whether the premises were fit and ready
for A.'s work to begin. The private architects had themselves made no
attempt to satisfy themselves as to the state of the building. Held, by Mocatta
J., (a) thatM. wasanoccupierundertheAct,andon thefacts,since he had not
instructed the private architects to see that the building was ready, had not
brought himself within section 2(4)(b) of the Act so that he was liable to A.;
(b) that (in spite of T.'s arguments that it was M. who had invited A. into th_e
premises, that he, T., had only permitted A. to enter, that A. 's work was physi-
cally separated from T. 's, and that T. was working under the supervision and
control of M.'s architects) T. was nevertheless also an occupier and liable to
A. 93; (c) that the Act applied to damage to property as well as personal injur-
90 [1964] 1 W.L.R. 1158.
91 [1967] 1 Q.B. 29.
w [1966} 2 Q.B. 475.
93 Wheatv. Lacon [19661 A.C. 552, applied.
SECT. 12] LIABILITY IN TORT 201
ies, and included consequential damages as well .as direct physical damages;
and (d) that, as between M. and T., M. was liable as a joint tortfeasorfor 40 per
cent. and T. for 60 per cent. of the damage; but (e) that T. was liable in dam-
ages to M. for the whole of the claim against M. since M. was in breach of a
number of provisions in the bills requiring him to protect the works during
construction94 : A.M.R International Ltd. v. Magnet Bowling Ltd. and G. Percy
Trentham Ltd. (1968). 9s
In principle, an occupier can be liable for plant and equipment since, 1·336
under section 1(3)(a) of the Act, moveable structures are covered, and
this might well apply to ladders, planks, scaffolding or other plant on a
building site. However, a farmer undertaking to provide equipment has
been held not liable under the Act (though liable in ordinary negligence)
where he had handed over defective equipment (farm ladders) into the
control of a firm of bricklayers, one of whom was injured. 96 Again, a devel-
oper contractor who had provided scaffolding to a self-employed plas-
terer was liable in negligence, but not apparently under the Act, for failing
to supervise alld prevent an unknown third person from leaving unsafe
planks on the scaffolding.~
One important limitation on the operation of the Act arises where per-
sons using rights of way over a defendant's land are injured due to failure
to maintain them properly. Provided the person concerned is the occu-
pier's visitor, no problem arises and the Act will apply. But if the person
concerned is not his visitor and is merely exercising a right of way whether
public or private, over the property, then there is no duty under the Act
since he is not a visitor. Moreover, no duty of care at common law is owed
by an owner of servient land in such a case to persons exercising dominant
rights. 98
(5) Strict Liability
Negligence is a necessary ingredient of many torts. Thus it has been seen 1·337
that where strangers or trespassers on the land of an occupier have created
a danger to adjoining land, a duty of care is owed by the occupier to take
reasonable steps to prevent it.99 So, too, building and other operations
negligently carried out which cause damage to other property will attract
liabil~ty under the Donoghue v. Stevenson principle. Nevertheless, where
an occupier or his contractors cause direct damage to or interfere with the
use of adjoining land, liability may exist under one or other of the three
torts of Rylands v. Fletcher, nuisance or trespass, and if so will usually be
strict and independent of the need to prove negligence although it would
94
Mowbray v. Merryweather [1895} 2 Q.B. 640, applied.
95 [1968] 1 W.L.R. 1028.
96
Wheelerv. Copas (1981] 3 All E.R. 405, supra, Subsection (3), para. 1·320.
97
Kealey v. Heard [1983] 1 All E.R. 973, supra, Subsection (3), para. 1·320.
' Holden v. White [1982} l Q.B. 679, C.A. (private right of way), applying Greenhalgh v.
5
British Railways Board [1969] 2 Q.B. 286, C.A. (public right).
99
Smith v. Littlewoods Ltd. (1987] A.C. 241, illustrated supra, para. 1·321.
 202 GENERAL PRINCIPLES OF LAW
seem that foreseeability of the type of damage on which the plaintiff relies
is now a necessary ingredient.998
(a) Rylands v. Fletcher
1·338 There is some controversy whether this eponymous absolute liability
differs in any material way from the law of nuisance itself. Expressed in
very generalised terms, an occupier (or his contractor) who brings and
keeps on his land something likely to do damage to adjoining property
(sometimes expressed as "escaping to" that property) is bound to prevent
it from doing so at his peril, even if not negligent. Consent (for example, in
the case of domestic water tanks on the successive floors of an apartment
building) may avoid the liability, but in general liability will turn on the
extent to which the courts will regard the activity in question as a "non-
natural" use of the land.
For practical purposes the principle is best understood by examining its
application by the courts to particular facts. Rylands v. Fletcher itself! was
concerned with the escape of water from a reservoir into a mine on adjoin-
ing land. The principle has been applied to the bulk carriage or storage of
high voltage electricity, but not to domestic wiring, to industrial water un-
der pressure, but not to domestic water. Chemical or petrol storage will
probably qualify. The best-known example in the construction field is the
decision of Asprey J. in 1923 inHoarev. McAlpine. 2 There, pile-driving on
one side of the street seriously damaged an ancient hotel on the opposite
side, so that a large part of it had to be demolished, and the defendants
relied on a defence available in nuisance cases, namely that the hotel was
abnormally frail and unstable. As prey J. held that the principle in Rylands
v. Fletcher applied, while agreeing that it was probably also a case of nuis-
ance (he also found, however, that the hotel was not abnormally
unstable). Once the principle applies, it would seem that only a defence of
Act of God (inevitable accident) applies.3
(b) Nuisance
1·339 Nuisance is to be distinguished from trespass, with which it in some
cases overlaps, in that it usually arises from an unreasonable state of
affairs on the occupier's land as a result of which the use or enjoyment of
the plaintiff's land is impaired, or in some cases physical damage is done to
property or person (for example, by a flood resulting from blocked drains
on the defendant's land, or by cricket balls from a ground which is too
small). Thus unguarded scaffolding from which objects fall onto adjoining
land might well qualify. Once such a nuisance is created by an occupier ( or
by persons on the land of another, as, for example, by a contractor) negli-
9'laCambridge Water Co. v. Eastern Counties Leather PLC [1994] 2 W.L.R. 53.
1 (1868) L.R. 3 H.L. 330.
2 [1923) Ch.167, illustrated supra, para.1·315.
3 Nichols v. Marsland (1875) L.R. 10 Ex. 255.
[CHAP. l SEcr.12] LIABi°LITY IN TORT 203
gence will be irrelevant. Moreover, even if the defendant does not himself
create the nuisance, he will be liable ifhe knows or ought to know of it and
has allowed it to continue4; similarly, if the nuisance is due to a latent
defect, where the occupier could with reasonable care have known of it.
Thus there is very little scope for a defence of no negligence, and indeed in
practice the burden of proof of showing inevitable accident or absence of
fault will shift to the defendant, unlike cases of negligence. 5 However,
unlike trespass, a nuisance is not actionable without proof of damage,
whether in the form of physical damage or interference with enjoyment or
use of the plaintiff's land. The question of nuisance or no nuisance will
often be a relative one, involving concepts of reasonableness and differing
with the locality and types of the premises, both dominant and servient,
which are involved.
Thus in the case of noise, a common accompaniment of building or
demolition, the question will be what is an unreasonable level of noise
after taking account of reasonable restrictions on hours of working, 6 and
of what is reasonable in a business district, for example.7
The duty in nuisance also appears to be non-delegable, so that an owner
will be liable for a private nuisance caused by his independent
contractors.8
(c) Trespass
Trespass differs from nuisance in that it involves a positive act of inter- 1·340
ference or entry, however slight, onto the property of the plaintiff. It is
actionable, unlike nuisance, without proof of damage. It involves a degree
of deliberation; thus, scaffolding from which objects are likely to drop
onto property is a nuisance, but objects thrown down onto adjoining land
are a trespass.. Ignorance of the boundaries will be no excuse. The slightest
violation of a boundary will be a trespass, such as placing objects on the
plaintiff's land, driving nails into his wall, using it to support scaffolding, or
leaving a ladder, planks or a shed or piling rubbish against it.9 It is also a
trespass to make excessive use of a private right of way.
Trespass equally includes a violation of the air space above the plain-
tiff's land, at any rate at a height which would interfere with any possible
use of his land. Moreover, an injunction is obtainable as of right and as a
matter of course in the case of continuing trespasses, and there is no quest-
ion of balancing the plaintiff's interest against that of the defendant or of
• Sedley Denfield v. O'Callaghan [1940] A.C. 880.
5
See Salmond & Heuston op. cit. at para. 22---03, p. 80, but see the Cambridge Water Co. case
supra.
6
Andreaev. Selfridge [1938] 1 Ch.1; Clerk & Lindsell on Torts, 16th ed. (1989), para. 24--08.
1
Wherry v ..Hutcherson Ltd. (1987) Aust. Tort. Rep. 80-107 N.S.W., Hodgson J., and see
Lloyds Bank v. Guardian Assurance (1986) 35 BLR 34, C.A.
8
Mataniav. National Provincial Bank (1936) 106 L.J. K.B. 113; Clerk & Lindsell op. cit. at
para. 3-42.
9
See Salmond & Heuston op. cit. at para. 4· 1(3).
 204 GENERAL PRINCIPLES OF LAW [CHAP.1
the public, and it will be irrelevant that the plaintiff has in fact suffered no
damage.
ILLUSTRATIONS
1·341 (1) An advertising sign was erected projecting into air space above the
plaintiff's property. He claimed a mandatory injunction for its removal. The
defendant argued that at best the sign constituted a nuisance, and that there
was no inconvenience to the plaintiff. Held, by McNair J., that the sign was a
trespass, and even if there was no inconvenience the plaintiff was entitled to
his injunction: Kelson v. International Tobacco Co. (1957). 10
(2) An adjoining owner's building was dangerous and needed repair. His
neighbour refused a request for a licence to put scaffolding partly over and
partly onto his property. The defendant nevertheless proceeded to erect the
scaffolding. The plaintiff sought an injunction. The defendant asked for a sus-
pension of the injunction while the repairs were carried out. Held. by Walton
J., not following Stamp J., who had granted but suspended an injunction
where a tower crane had oversailed adjoining property, n an injunction must
issue as a matter of course and no suspension could be granted, notwithstand-
ing that the damage suffered would be so slight as to be trivial:John Trendbest
Ltd. v. National Westminster Bank (1980). 12
1·342 (3) Occupiers of three properties sought an injunction against the use by a
developer of two tower cranes, whose booms, whether free, swinging or in
use, would oversail their properties. In only one case was there any possibility
of interference with the use of that plaintiff's property, and that in the future,
when the owner might himself wish to develop using a tower crane. The
cranes were too high to interfere with normal use of any of the properties, so
that no damage at all would be suffered. The development was of a nature
where it would be reasonable and economic to use tower cranes. It was con-
tended that the cranes were at most a nuisance, and that in the absence of
proof of damage the action must fail. Held, by Scott J., following the Ke/sen
and Woollerton cases and Graham v. Morris & Sons 13 the invasion of a neigh-
bour's air space was a trespass, and proof of damage was not required. Tres·
pass, following Trendbest and not following Woollerton, did not depend upon
any balancing of rights, nor was the balance of convenience at the interlocu-
tory stage of any relevance, and the injunction must issue forthwith: Anchor
Brewhouse v. Berkly House (1987). 14
[Note: This is, with respect, an outstanding judgment, though of necessity
given extempore, in which the relevant English authorities are carefully con-
sidered. It seems a remarkable omission that it has not been more widely
reported. Scott J. considered that a change in the law might be desirable to
enable the courts to permit the economical and speedy completion of proper-
ty developments on proper commercial terms, but that the courts ought not to
claim such a right indirectly by the withholding of injunctions.}
It should perhaps be noted that in trespass cases such as the above it
has been held that damages can be recovered on the basis of a reasonable
payment or remuneration for licensing the trespass.
10 [1957] 2 Q.B. 334.
11Woollerton & Wilson Ltd. v. Costain Ltd. [1970) 1 W.L.R. 411.
1239 P. & C.R. 104.
u [1974} Qd. R. l,per Campbell J., Queensland.
'
4
38BLR87.
LIABILITY IN.TORT 205
( d) Withdrawal of support
Disregarding problems of subjacent support, land in its natural state is 1·343
entitled to the lateral support of adjacent land, and interference with it by
adjacent excavations will, but only on proof of damage having occurred,
entitle a plaintiff to recover damages. Negligence will be irrelevant. More-
over, an injunction where damage is anticipated can be obtained on the
normal principles of balance of convenience in a proper case, and in
extreme cases where damage has already occurred a mandatory injunc-
tion requiring the defendant to restore the status quo may be issued.
Buildings as such, however, are not automatically entitled, as is land, to
this protection (although if as a result of excavations the land unencum-
bered by the weight of its buildings would have subsided in any event, the
cost of the damaged buildings will be recoverable also). However, many if
not the majority of buildings will be entitled to support by grant, express
or implied, or by prescription, so attracting the same rights of protection as
natural land. Furthermore, while an owner may not yet have acquired pre-
scriptive rights as against his neighbour, that will not avail a third party
wrongdoer (which might include a contractor making unauthorised exca-
vations, for example, it is submitted}. This, too, is one of the cases where a
landowner will be liable for the acts of his independent contractor. 15
Problems can arise from the fact that a subsidence may occur long after
the excavation which caused it. It has long been held that in such cases
limitation does not start to run until the later subsidence occurs. 16 It fol-
lows that damages cannot be recovered for apprehended future damage
until it occurs, not withstanding previous damage suffered, although in
principle quia timet injunctions to prevent further operations, or even
mandatory injunctions requiring protective work if the evidence is suf-
ficiently strong, may be available. 17 As a result, expenditure incurred fol-
lowing an initial subsidence, with the object of preventing an otherwise
likely future subsidence, is not recoverable. 17a
If, however, the excavation occurs while the land is in single occupation 1·344
( as, for example, upon preparing and levelling land for sale in lots), and
the subsidence occurs after the purchaser has acquired his lot, it has been
held in New Zealand that the strict liability of withdrawal of support no
longer applies, and that the landowner will be liable only under the ordi-
nary principles of negligence. 18
One entirely exceptional case, however, exists in the case of loss of sup-
port due to extraction of water from the underlying strata of adjoining
land ( as opposed to its removal from defined channels such as rivers and
is Dalton v. Angus (1881) 6 App. Cas. 740.
16 Bonomiv. Backhouse [1861] 9 H.L.C. 503; Darley Main Colliery v. Mitchell (1886) 11 App_.
Cas. 127.
17
Redland Bricks Ltd. v. Morris [1970] A.C. 652; Midland Bank Pfc. v. Bardgrove Property
Services Ltd. [1993] 9 Const. L.J. 49, C.A.
17• The Midland Bank case.
18
Blewman v. Wilkinson [1979] 2 N.Z.L.R. 208, C.A., approving Bognuda v. Upton &
Shearer [1972] 2 N.Z.L.R. 741.
 206 GENERAL PRINCIPLES OF LAW [CHAP.!
streams). So in a case where subsidence on adjoining land was caused by a
contractor's keeping water clear from his excavations by pumping, it was
held that there was no cause of action,19 and this case was approved and
followed by the Court of Appeal where a water authority extracted water
in large quantities from nearby land, despite warnings that it would cause
subsidence to the plaintiff's cottage.20 The reason appears to be that the
sinking of wells and extraction of water from the underlying soil ( as
opposed to its removal from defined surface channels) is an inalienable
right, and even a malicious motivation or the certainty of causing subsid-
ence elsewhere is irrelevant. On the other hand, the removal of a bed of
wet sand or running si)t causing subsidence has given rise to liability.21 The
right seems exceptional, although well established in England unless legis-
lation supervenes.
Pollution of water, rather than its extraction, would seem to be gov-
erned by the law of nuisance, and after a conflict of judicial opinion has
very recently been held by the. House of Lords to require forseeability of
the type of damage inflicted.21a
(6) Liability under the Anns principle
(a) Generally
1·345 The emergence of this new principle of liability has already been dis-
cussed in Subsection (1), and its origin in the Dutton case in the Court of
Appeal in 197222 and its apparent confirmation by the House of Lords in
197823 and its subsequent history has been analysed in great detail in a
series of chapters in C;C.P.P. 24 Its recent dramatic reconsideration, and
partial demolition, by the House of Lords in 1988, has been analysed in
depth in an articleinL.Q.R. in 1989,25 and its final wholesale demolition by
a House of Lords of seven judges in Murphy v. Brentwood D. C. ,26 analysed
in L.Q.R. in 1991."'
The facts in both Dutton and Anns were almost identical. In each case
foundations of houses not taken to the required depths were not detected
by the local authority's building inspector. Both cases held that, assuming
negligence on the inspector's part, tJie local authority was liable in tort to
subsequent purchasers of the houses who had had to carry out investi-
gations and major repairs when signs of movement, such as cracking and
io Langbrook Properties Ltd. v. Surrey County Council [1970] 1 W.L.R.161,per Plowman J.
20 Stevens v. Anglian Water Authority [1987} 1 W.L.R. 1381.
21 Jordeson v. Sutton Southcoates and Drypool Gas Co. [1899] 2 Ch. 217.
21 • Cambridge Water Co. v. Eastern Counties Leather PLC [1994] 2 W.L.R. 53.
22 Dutton v. Bognar Regis Urban District Council [1972] 1 Q.B. 373.
2l Anns v. Merton London Borough Council [1978] A.C. 728.
24 See Chaps. 1, 2 and 3 (reproducing (1977) 93 L.Q.R. 16; (1978) 94 L.Q.R. 60; (1978) 94
L.Q.R. 331); Chap. 5, para. 5-03, (d), (e) and (f); Chap. 6 (reproducing articles in [1984/5]
C.L.J. 4 and 176); and Chap. 7 (reproducing [1986] I.C.L.R 157).
25 (1989) 105 L.Q.R. 46-74.
26 [1991] 1 A.C. 398.
'"" "Anns Beyond Repair" (1991) 107 L.Q.R. 228.
SECT.12] LIABILITY IN TORT 207
sticking of doors, were seen. Although concerned with local authority lia-
bility, both cases contained passages expressly stating that the builder
would be similarly liable ( and by implication any architect whose negli-
gence in design or supervision could be said to have caused the defects in
the building)."
The principle, as confirmed in Anns in 1978, could be defined as
imposing a liability for the cost of repairing defects in a building on any
person whose negligence, whether of design, bad workmanship or failure
of supervision, had led to a condition constituting a risk of damage to the
health or safety of the occupiers of the building, whether or not that dam-
age (or indeed any physical damage) had yet occurred. A not dissimilar
liability ( although without the emphasis on the health and safety element)
had also emerged in many States in the United States by 1978. 28 Viewed
from a somewhat different angle, the duty could be said to be the equiv-
alent of a tortious warranty of care by all concerned with its construction
to ensure the suitability, from this point of view, of the building.
The Anns decision cointained several very important novel features, as 1·346
follows:
(a) Hitherto, liability for building or other operations (disregarding
liability for personal injuries), as for chattels put into circulation,
had been for damage done to other property ( as, for example, the
chattels of an owner occupier, or to adjoining property) and not for
repair of the defective chattel or building itself
(b) Although serious confusion was undoubtedly created by the pres-
ence in Dutton andAnns of the early superficial cracking associated
with movement, that was merely an accident of that particular type
of defect29 and in many other cases a highly dangerous defect might
be discovered where as yet no physical damage whatever had
occurred. The claim was, on analysis, not for dealing with that rela-
tively trivial symptomatic damage, but for the removal of the
underlying more serious defect. In other words, the claim was
essentially for anticipatory repairs to avoid future damage, hitherto
unknown in the tort of negligence except under the special circum-
stances of the quite different Hedley Byrne principle.
(c) So far as the housing authority were concerned, liability for negli-
gent inspection or supervision amounted to the imposition of an
affirmative duty to take positive steps to protect the plaintiff against
a third party wrongdoer, akin to a professional duty of care
relationship. The housing authority might neither themselves have
created, nor taken any action unnecessarily increasing, the damage
27
See the resulting Commonwealth cases imposing liability on the architect referred to
supra, Subsection (1), para.1·276.
For a short review of the United States cases, see C.C.P.P., para. 2-17 (reproducing (1978)
2ll
94 L.Q.R. 60, at pp. 70-72), and for a full and highly researched account see S.R. Barrett jn
(1989) 40 South Carolina L.R. 891, Recovery for Construction Defects.
m See (1989) 95 L.Q.R. 46, at pp. 57-59.
 ,.,..---.._
208 GENERAL PRINCIPLES OF LAW [CHAP.1
or risk of damage (the previously accepted basis of liability for pub-
lic authorities exercising statutory powers, under the well-known
East Suffolk doctrine ).30 They had simply failed to ensure that the
builder did his work properly, and so to prevent hiin from causing
the danger.
(b) The limitation problem
1·347 The emergence of this new liability immediately gave rise to a major
limitation problem (and indeed the Anns case was itself primarily con-
cerned with that aspect). Under most limitation legislation in the United
Kingdom and the Commonwealth, the starting date for the limitation pe-
riod in both contract and tort depended on the date when the cause of
action arose. That test itself produced dramatically different dates, often
causing obvious injustice, depending on whether the action was in con-
tract (date ofbreach) or in the tort of negligence (date of damage), which
it is difficult to believe were intended or foreseen by the legislation's orig-
inal framers. The problem was always particularly serious in construction
cases, where defective work could easily escape detection and then be
concealed, often very soon and albeit innocently, by the covering up which
is an essential feature of the greater part of construction work, and where
on the other hand damage might not occur until many years later. It is a
remarkable fact of common law jurisprudence that little was done to rem-
edy this serious flaw in the legislation for nearly a century, when industrial
disease cases at last led in England to the Limitation Acts 1963 and 1975,
now re-enacted in the 1980 Act. While these stipulated a shortened limi-
tation period in personal injuries cases, they noW permitted a test of care-
fully defined knowledge of his rights on the part of the person suffering the
injury to govern the start of the period. Not until the Latent Damage Act
1986, however, long after the Dutton and Anns decisions and the new
Anns liability, but undoubtedly inspired by it, did the Act of that year
apply a similar test of "discoverability" to property damage claims in negli-
gence. The start of the limitation period was discussed in Dutton only obiter,
but was specifically in issue inAnns. In Dutton, Lond Denning M.R. orig-
inally thought that the timeran from the date of the defective work31 but the
Court of Appeal (which again included Lord Denning M.R.) in Sparham-
Souter32concluded that, in a case where no accident had as y~t occurred, the
date must be the date of "knowledge" or "discoverability" of the defects for
which repairs were claimed under the Anns principle.
1·348 In Anns itself, approval appeared to be given, in a highly ambiguous
passage in Lord Wilberforce's speech, to the Sparham-Souter view,33 and
this was followed by Balcombe J. 34 and subsequently by a unanimous
Court of Appeal, though unexpectedly overruled in the House of Lords,
30 East Suffolk Rivers Catchment Board v. Kent [1941] A.C. 74.
31 [1972] 1 Q.B. 373, at p. 396.
32 Sparham-Souter v. Town and Country Developments (Essex) Ltd. [1976] Q.B. 8_58.
33 See [1989] 105 L.Q.R. 46, at p. 55. ~~~·:
,.. Crump v. Torfaen Borough Council (1981) 19 BLR 84. ' 162-4; and by Mullany in (1991) 54 Mod. L.R. 349.
Secr.12] LIABILITY IN TORT 209
in Pirelli General Cable Works v. Oscar Faber & Partners. 35 The House of
Lords now laid down a "first physical damage" test, treating the superficial
cracking in a factory chimney-lining, which had disclosed the need for sub-
stantial repairs, as the relevant "damage" for limitation purposes. While
Lord Fraser of Tullybelton, no doubt impressed by the possibility of Anns-
type claims where not even superficial damage had yet been done, sug-
gested a "doomed from the start" date for such cases in Pirelli this
appears t? _have been subsequently widely disapproved. 36 This st.:i.ting
date definition was subsequently refined in the courts to "first relevant and
significant" or "first serious" damage37 or, in the case of local authority
defendants, the first date of "imminent danger to health or safety".38
. The P_irel~ "first.physical damage" test was, in evidentiary terms, highly 1·349
t~practtcal. It failed, moreover, to deal with the many cases where, in
spite of a known and serious defect, no physical damage at all existed as
yet. However, the Pirelli view was expressly not followed, and reasonable
discoverability preferred, in the Supreme Court of Canada40 and follow-
ing Heyman's case, seems unlikely to be followed in Austral/a.4t The
Pirelli speeches apparently considered that the problem would finally be
dealt with by the then imminent Latent Damage legislation.42 Unfortu-
nately, however, the Pirelli "first damage" test appeared to have been per-
~et~at~d for many years by the express safeguarding of already accrued
lmntatwn defences under the old law effected by section 4(1)(a) of the
Latent Damage Act 1986.43 Unless the Act was amended, therefore, this
problem, at least in "no physical damage at all" cases, could be expected to
return to the House of Lords, had not the abolition of the Anns liability
altogether in Murphy v. Brentwood District Counci/43a rendered the 1986
Act almost entirely superfluous in property damage cases (see infra).43b
(c) Application of the Anns principle
(i) To whom duty owed
Anns itself appeared to consider that the duty would be owed to "own- 1·350
ers or occupiers", although not to "a negligent building owner ... the
35 [1983] 2 A.C. 1.
36
See, e.g. per Lord Brandon in Ketteman v. Hansel Properties [1987] AC 189 at p
207F-207H. . . ' .
37 London Borough of Bromley v. Rush & Tompkins Ltd. (1985) 35 BLR 94; Ketteman'scase,
supra.
35 lones v. Stroud District Council [1986} 1 W.L.R. 141.
39
See (1989) 95 L.Q.R 41, at pp. 58-59 and the cases there cited.
40
City of Kam/oops v. Neilsen (1984) 10 D.L.R. (4th) 64.
41
See Glee~on (1987) 6 A.C.L.R. ~· at p. 15, citingPartlett (1986) B. & Const. L.J. 33, at p. 36;
and. see, in New Zealand, Greig J.'s discussion of the authorities in Lester & Hughes v.
White [1992} N.Z.LR. 483.
42
See [1983] 2 A.C. 1, at p. 19H,per Lord Scarman.
43
See (1989) 105 L.Q.R. 46, at pp. 59 and 77 where the abolition of this section of the Act is
suggested.
o. Discussed infra, para. 1·357.
430
See the further discussion of the limitation problem in (1993) 1 Tort Law Review 152
'
 210 GENERAL PRINCIPLES OF LAW [CHAP. I
source of his own loss". However, it was subsequently held by the House
of Lords that no such duty could be owed to a non-resident owner devel-
oper or to a non-resident long leaseholder.44 Subsequently in 1986 the
Court of Appeal held that no such duty was owed to the original building
owner, a fortiori if he had employed professional advisers. 45 Considerably
prior to Peabody, Summers J. in New Zealand had held that no such duty
could be owed to a contractor.46
(ii) Applications of principle
1·351 The rapid spread of the principle in the Commonwealth since 1972,
often in cases against A/Es, has already been mentioned. 47 The principle
of housing or by-law authority's inspectorates' liability was accepted by
the Supreme Court of Canada,48 and by the Court of Appeal of New Zeal-
and. 49 The principle has been applied in England in numerous cases
involving almost every type Of defect in a building, many concerned also
with determining the degree and date of first relevant damage for the start
of the limitation period. Apart from many foundations cases, these
include design of a floor slab (against both builder and inspector)50 ; inad-
equate concrete cover leading to corrosion and spalling of concrete51 ;
inadequate drains and omission of damp-proof courses52; and negligent
fixing of concrete mullions (against the supervising architect).53
Unfortunately, during this period of widespread acceptance of the
Anns principle it became less necessary in limitation cases to distinguish
between a claim on the Anns principle for anticipatory repairs, when no or
only superficial damage had occurred, and full Donoghue v. Stevenson
cases (where the full damage to property has eventuated and the claim is
for that damage, as in a successful claim by a later owner for losses due to
burglaries caused by the negligent construction by the defendant of a
security door for a previous owner) 54; or where damage to property had
been caused by flooding due to a negligent drainage design. 55 The need to
44
Peabody Donation Trustv. Sir Lindsay Parkinson [1985] A.C. 210, overrulingAcrecrestv.
Hattrell & Partners [1983) Q.B. 260 on the latter point. See also Hambro Life Assurance
Pie. v. White Young & Partners (aft.rm) (1987) 38 BLR 16, C.A.
4S Investors in Industry Commercial Properties Ltd. v. South Bedfordshire District Council
[1986] I Q.B. 1034.
46 Harris v. Demolition Contractors [1979] 2 N.Z.L.R. 166, discussed in C.C.P.P., para. 6-14.
47
See supra, para. 1·216.
48
City of Kamloops v. Neilsen (1983) 10 D.L.R. (4th) 64.
49
Mount Albert Borough Councilv.lohnson [1979] 2 N.Z.L.R. 234, and see its extension to
planning authorities in Craigv. East Coast Bays Council [1986] 1 N.Z.L.R. 99, and to cases
of amenity loss only in Stiegler v. Porirua County Council [1986] 1 N.Z.L.R. 84.
50
Warlock v. SAWS (aft.rm) (1982) 22 B:CR 66, C.A.
51 London Borough of Bromley v. Rush & Tompkins [1985] 35 BLR 94.
52
London Congregational Union Inc. v. Harris & Harris (1986) 35 BLR 65 (perhaps on its
facts a Donoghue v. Stevenson case). Compare in Australia Holdenv. Goodridge & Wyong
Shire Council (1985) (S.C. ofN.S.W., Lee J.) 24.7.85.
s:i Kensington Area Health Authority v. Wettern Composites (1984) 31 BLR 57.
s• See, e.g. Dove v. Banhams Ltd. [1983) 1 W.L.R 1436.
"See the Harris & Harris case, supra.
SECT.12] LIABILITY IN TORT 211
distinguish between the two liabilities for limitation purposes still remains
important. ssa
(iii) Principle not applicable
Even before the D. & F. Estates and Murphy v. Brentwood District 1·352
Council cases, there were a number of cases where the Anns principle was
held not to apply. Thus where a main contractor suffered reduced pay-
ments by the oWiler on the ground that tinted glass from a sub-supplier
was not of exactly even colour, he was, in the absence of physical damage
or danger, unable to recover in tort from the sub-supplier, since the loss
was economic only.56 More strongly, perhaps, where sub-strength con-
crete columns were discovered in a tower block building, so that it could
not be used for its intended purpose without being strengthened, the
Court of Appeal held that, in the absence of physical damage or danger, a
claim in negligence by a leaseholder occupier for the repair costs would be
for economic loss only and not recoverable. 57 In another case, later pur-
chasers of a building who discovered it contained an ineffective central
heating system were unable to recover from its designers and installers in
negligence, since neither physical damage nor health or safety were
involved. 58
(d) The Heyman and D. & F. Estates and Murphy cases
(i) Heyman's case
Although the future of theAnns principle in New Zealand and Canada 1·353
remains to be guessed at,59 the High Court of Australia's landmark and
well-researched judgments in Shire of Sutherland v. Heyman in 198560
offered an opportunity for radical reconsideration of the Anns principles
as they had become understood in England.60a That opportunity was effec-
tively grasped by the House of Lords in 1988 in the D. & F. Estates case,
and in 1990 in Murphy v. Brentwood District Council. 61
In Heyman's case, subsequent purchasers of a dwelling-house sued a
local authority for the alleged negligence of its building inspector in either
inspecting or failing to inspect the defective foundations of the house dur-
ing construction. The relevant housing legislation was for practical pur-
poses the same as that in England. 62 The High Court of Australia held that
"' See the Nitrigin case illustrated infra, para. 1·360.
56
Simaan General Contracting Co. v. Pilkington Glass Ltd. [1988] Q.B. 758, C.A.
51
Department of the Environment v. Thomas Bates & Son Ltd. [1989] 1 All E.R. 1075. This
case was decided by the Court of Appeal shortly after D. & F. Estates in the House of
Lords, but affirming, however, Judge Smout's much earlier judgment in 1987.
ss Ernst & Whinney v. Willard Engineering (1987) 40 BLR 67.
19
See infra, para. 1·359-1·360.
00
(1985) 59 A.L.J.R 564.
00a As had also been suggested in 1986 I.C.L.R., reproduced in C.C.P.P., para. 7-39.
61
[1989] A.C. 187 and [1991] A.C. 398, respectively; both discussed infra.
6< See C.C.P.P., para. 7-34.
 ,,.----..
212 GENERAL PRINCIPLES OF LAW [CHAP.!
the plaintiffs, in the absence of evidence of a sufficient reliance on or of an
assumption of responsibility by the defendant council, must fail. In so
holding, the court refused to follow almost every point of novelty which
Anns had been thought to have decided. So far as the liability of public
authorities acting under statutory powers was concerned, all the judges
considered liability must depend upon some action creating or increasing
the risk of damage suffered by the plaintiffs, and could not arise from an
affirmative statutory duty of care, nor any general duty owed to private
persons to see that a house built by other persons was properly built.
Three out of the four judges emphasised the affirmative nature of the
alleged supervisory duty on the facts before them, and were clear that in
the absence of some recognised special relationship, such as professional
adviser and client or employer and employee, or of reliance or asswnption
of responsibility, there could be no liability. Two judges at least con-
sidered that, notwithstanding the presence of minor damage, Anns-type
claims were essentially for economic loss.63 The case is of the greatest
importance in its clear implication that supervisory A/Es, as well as local
authorities' supervisors, could not owe an affirmative duty of care in tort
to third persons for economic loss in the absence of some more specific
action or assumption of responsibility on their own part. 64 The Heyman
case and its four judgments are analysed in detail in C.C.P.P. 65
(ii) The D. & F. Estates case
1·354 This case has been analysed and discussed in L.Q.R. in extenso,66 and
has already been mentioned in the context of the decline of the Anns prin-
ciple. 67 Briefly, plaster was applied in breach of manufacturers' instruc-
tions, and a substantial area fell down many years later during
redecoration. Subsequently, considerably larger areas were discovered to
be hollow, and found as a fact to create a risk of further falls and personal
injury to occupiers. The latter had not as yet been taken down and
repaired at the time of trial. The House of Lords held that neither the main
contractor nor his plastering sub-contractors owed any duty of care to the
plaintiff flat-owners. So far as the plaster which had fallen was concerned,
the only damage had been to carpets, and was trivial and cou).d be disre-
garded. So far as the unrepaired areas were concerned, as yet there was no
damage and the danger, being known, was now over and removal and
replacement would cure it. Excluding personal injury, the law of negli-
gence had not hitherto extended beyond physical damage to property
other than the defective building or chattel itself. In so far as it dealt with
any matter other than the liability of a public authority exercising powers
under the Housing Acts, Anns was not binding and its speeches must be
r,,See C.C.P.P., paras. 7-30 to 7-32. This had been consistently submitted in all the earlier
L.Q.R. articles referred to supra, but defined by both Lord Denning M.R. in Dutton, and
by Lord Wilberforce in Anns.
64
See C.C.P.P., para. 7-38.
6s See Chap. 7 (reproducing (1986) I.C.L.R. 157).
66
(1989) 105 L.Q.R. 46-78. 67
See supra, para. 1·277.
SEcr.12] LIABILITY IN TORT 213
regarded as obiter, in so far as they dealt with the common law negligence
of builders and others. While there might be cases of liability where physi-
cal damage was done to other parts of a building, regarding the building as
a large and complex structure,678 here the damage was limited to replacing
the very work which had been negligently done. In essence the claim was,
therefore, for economic loss and not recoverable unless the requirements
of the Hedley Byrne principle were satisfied.
It should be noted that Lord Bridge (who gave one of the two speeches 1·355
in the case) had very shortly before expressed his particular agreement
with the judgment of Brennan J. ( the most openly condemnatory of Anns)
in the Heyman case, and had suggested that, in so far as it laid down the
duties of housing authorities, legislation on this aspect might be con-
sidered.68 As to the "complex structure" and "damage to another part"
suggestion, 68a which was expressly reserved by the D. & F. Estates judges
for consideration on a future occasion, this seemed difficult to justify and
was doubted in L.Q.R., at least in the context of the typical anticipatory
repairs case where no damage, or only superficial damage, has as yet
occurred, and the claim is for the much larger repair bill to cure the under-
lying defect. 69 The qualification is, however, easier to accept in a straight-
forward normal Donoghue v. Stevenson case, where the full accident
failure or damage has already occurred and no anticipatory element is
involved. Thus if electrical wiring is negligently performed and the whole
building burnt down, or negligence in the design or construction of the
structure provokes a full-scale collapse of the building, the "other part"
theory becomes very understandable. 69a
Lord Oliver in particular propounded a second possible qualification,
namely an action brought for by-law breach, which he considered might
still come within the purview of the Anns decision.70 Since almost any
defect in a building can be shown to be a breach of one at least of the
by-laws as currently drafted in England, this would effectively overturn
the D. & F. Estates case itself, and amount to little more than an objection
to the plaintiff's case as there pleaded. There is little authority supporting
the view that the English housing legislation was intended to confer a right
on the public to sue private persons such as developers, builders or A/Es,
for breach of the by-laws; but in any event there seems no reason either in
authority or principle for such private persons to be liable for by-law
breaches on a wider and different basis of quantum than under the com-
mon law Donoghue v. Stevenson principle; in other words, there was an
element of circularity in the argument, which begged the principal quest-
ion.71 These two areas of possible exception to the D & F demolition of
Anns were further explored in the House of Lords in the Murphy case
discussed infra.
67
What became known as "the Complex Structure theory".
•
68 Curran v. Northern Ireland Co-ownership Housing Association [1987J A.C. 718, at p.
726B-726D. 68o See n.67a.
69
(1989) 105 L.Q.R. 46, at pp. 71-72, 75, and 76, and see the later note (1990) 106 L.Q.R.11
"Negligence and Complex Structures".
69o See the discussion in (1991) 107 L.Q.R. 228, 235-7. 70 Ibid. at pp. 70-74.
71
See Ibid. at pp. 72-74, and see a later Note, (1990) 105 L.Q.R. p. 11.
 214 GENERAL PRINCIPLES OF LAW [CHAP. l
(iii) Combined effect of the two cases
1·356 It should be appreciated that the Heyman case was essentially con-
cerned, as were Dutton and Anns, with the liability of a public authority
acting in a supervisory capacity, where the complaint was of a failure to
prevent a third party wrongdoer from breaching the by-laws. The judg-
ments in the Heyman case, therefore, based themselves primarily on the
essentially affirmative nature of the alleged duty, rather than any econ-
omic loss aspects of the claim. In rejecting that duty of care, the Heyman
case remains a powerful authority not only where similar breaches of a
statutory duty by a public authority are alleged, but also wherever similar
affirmative duties are alleged against A/Es and others acting in a supervis-
ory rOle who have done nothing themselves to create or increase the risk
of danger. 72
The House of Lords in the D. & F. Estates case, on the other hand, was
not concerned with public authorities or any failure of supervision on their
part (where in any event its hands were tied irretrievably by the binding
ratio decidendi of the Anns case). They were faced, on the contrary, with a
straightforward case of work done negligently by a builder and his sub-
contractors which created a danger for future occupiers. The judgments in
the House of Lords, therefore, based themselves primarily on the essen-
tial need for damage to (other) property under the Donoghue v. Stevenson
principle, and the view that the claim for repairs to the defective plaster-
work in the building was, on analysis one for economic loss, and so not
recoverable in the absence of a Hedley Byrne relationship between the
builder and later owner.
(iv) Effect of Murphy v. Brentwood District Council
1·357 In May 1990 a specially convened House of Lords of seven judges presi-
ded over by Lord Mackay of Clashfem, the Lord Chancellor, formally
overruled the House's earlier decision in 1978 inAnns, when holding that
a housing authority under the English Public Health Acts owed no econ-
omic loss duty of care to third persons (that is, where no personal injuries
or physical damage to other property was involved), and specifically for
the cost of repair of defects or by-law breaches in a house or building in
respect of which it had been required to carry out its statutory duties. The
case and its consequences, with an examination of the preceding history
reflected in the Anns and D. & F. Estates cases, has been exhaustively
analysed in L.Q.R. and elsewhere. 73 The consequences of the Murphy case
in England may be summarised as follows: ·
(a) Housing authorities, not only in exercising their ancillary or sec-
ondary powers of supervision ( as inAnns and most of the preceding
cases) but also in the exercise of their primary statutory duty to
12 See C.C.P.P., para. 7-38 on this latter aspect. • ,· ,
7J (1991) 107 L.Q.R. 228, and see the editor in "Common Law Developments Applicable to
Construction" (1992) 11 A.C.L.R. and in (1993) 1 Tort Law Review, 152, 154 et seq.
SEcr.12] LIABILITY IN TORT 215
approve or reject plans, as in the Murphy case itself, owe no eco-
nomic loss duty of care, as above defined, to any class of the public,
including particularly the owners or occupiers of the dwelling-
houses in question.7'f
(b) Similarly, no such duty in tort will be owed by private defendants,
such as developers, builders, architects or sub-contractors involved
in the design or construction of defective buildings, whether the
liability is expressed as depending on common law negligence or
by-law breach.75
(c) A residual liability of both public and private defendants may be 1·358
left, but only where the plaintiff can bring himself within a classical
Hedley Byrne situation, involving positive actions or represen-
tations amounting to a voluntary assumption of responsibility by
the defendant which has been relied and acted on by the plaintiff.
This will rarely if ever apply, therefore, to the owners or subsequent
owners or occupiers of houses or buildings, unless they have
received and acted on explicit representations made to them by
public or private defendants before purchasing their property
(apart, of course, from any rights they may have secured by contract
or may derive by assignment).
(d) Even in classical Donoghue v. Stevenson cases (that is, situations
involving personal injuries or damage to other property of the
plaintiff), three of the four Murphy judges reserved their position
as to whether a by-law authority owed any such duty of care to
members of the public when performing its statutory functions. 76
(e) The case will therefore re-focus attention on the Defective Prem-
ises Act 1972, which had fallen into disuse, as the remaining basis
for establishing an economic lqss liability in tort by private defend-
ants in England to the owners or occupiers of defective
dwelling-houses. 77
( f) Despite the express rejection by the judges in Murphy of the
"complex structure theory" adumbrated by Lords Bridge and
Oliver in the D. & F. Estates case as a possible basis for surviving
liability,78 this may still offer adventurous plaintiffs an oppor-
tunity to establish a liability in tort where catastrophic damage has
resulted in parts or the whole of a building as a result of defects in
another or limited part of the building, for example, defective elec-
74 See (1991) 107 L.Q.R. 228, at p. 231.
15 See ibid. at p. 244.
76
See ibid. at pp. 233-234.
11
See infra, paras. 1·361-1·363, for an account of this Act, and for some of the prospective
difficulties, see also (1991) 107 L.Q.R. 228, at pp. 242-243.
g See on this (1989) 105 L.Q.R. 46, at pp. 65, and 71-75; and see the author's Note, (1990) 106
7
L.Q.R. 11 for the D. & F. Estates case on this point; and (1991) 107 L.Q.R. 228, at pp.
235-237 for the Murphy speeches on the point.
 216 GENERAL PRINCIPLES OF LAW
tric wire which causes the loss of the building by fire. The evolution
of this last part of the law currently remains uncertain.79
1·359 The above comments relate to English law. There are clear indications
that Murphy may not be followed in other jurisdictions.80 In Canada, City
of Kamloops v. Nielsen 81 had already shown an intention not to follow the
English House of Lords in the context of limitation of action under the
Anns doctrine, and again in Roth.field v. Monolakos 82 the Supreme Court
refused to follow the Peabody case in the House of Lords,83 when holding
a by-law authority liable for economic loss to an owner/developer. Later
in 1992 four out of seven judges expressly confirmed Anns and rejected
Murphy, although in a case involving a different type of economic loss.83•
Meanwhile, already in 1991 the Saskatchewan Court of Appeal had not
hesitated to refuse to follow Murphy when holding sub-contractors'
specialist roof frame sub-suppliers liable in negligence to owners for the
cost of reinstating a roof some 12 years after completion.83 b
While the Shire ofSutherland case in Australia84 suggests that Australia
may well follow similar lines to England in this context, New Zealand,
which had played a prominent part in the development of the Anns doc-
trine in its Court of Appeal decision in Bowen v. Paramount Builders,85 is
unlikely to do so. 86 Indeed in October 1991 Greig J. in the New Zealand
High court refused to follow Murphy, regarding himself as bound by a line
of New Zealand authority to the contrary. 87 That position was repeated by
the Court of Appeal itself in 1992.M
In the light of these clear indications of a probable conflict in the com-
monwealth in regard to the retreat from the Anns doctrine, it has been
considered appropriate to leave the preceding discussion of that doctrine
in this book, much of it written prior to the D. &. F. Estates and Murphy
decisions, unaltered. The present law seems likely-to be rapidly overtaken
by new case law in all jurisdictions.
1·360 The effect of the abolition of the Anns liability, and the distinction
between that liability and the liability for damage to other property under
the traditional Donoghue v. Stevenson liability for damage to other
property, is clearly shown in the following recent case.
79
See the editor's "Common Law Developments Applicable to Construction", (1992) 11
A.C.LR. 1, for a discussion of the possibilities, and also (1990) 106 L.Q.R. 11.
80 See (1991) 107 LQ.R. 228, at pp. 247-248.
81 [1984] 10 D.L.R. (4th) 64.
82
[1989] 2 S.C.R. 1259.
83 Peabody Donation Fund v. Sir Lindsay Parkinson [1985] A.C. 210, supra, para. 1·350, and
analysed in C.C.P.P., Chap. 6.
83> Canadian National Railway v. Norsk Pacific Steamship [1992] 1 S.C.R. 1021; 91 D.L.R.
(4th) 289.
SJb University of Regina v. Pettick (1991) 79 D.L.R. (3d) 615.
S4 Discussed supra, paras. 1·353, and analysed in depth in C.C.P.P., Chap. 7.
85
See supra, para. 1·276.
00 See Sir Robin Cooke P.'s powerful article, (1991) 107 L.Q.R. 46.
87-ss Lester and Hughes v. White (1992) 2 N.Z.L.R. 483, commented on by Smellie .t/(1992) 9
I.C.L.R. 237.
[CHAP.1 SEcr.12] LIABILITY IN TORT 217
ILLUSTRATION
.Special~st pipe rnanufacture~s supplied owners of a chemical plant in 1981
w_1th unsuitable steel alloy tubing. This cracked in 1983, and being unable to
discover the cause, the owners repaired the cracks and continued to use the
pipes; Jhe pi~es again failed a year later in 1984, this time causing a major
~xp~os1on which damaged much of the owner's plant in the vicinity, and caus-
ing 1t to be closed down. The owners issued a writ in 1990 for the damage to
the plant caused by the explosion, and for loss of profit while it was closed. It
was conceded that the cause of action in contract was time-barred but the
defendants, relying.on the Pirelli "first damage" rule, contended 'that the
cause of action had accrued in 1983 at the time of the first cracking and
repairs, so that the action in tort was also out of time. Held, by May J., that the
first damage in 1983 was a defect in quality causing economic loss only, and in
the absence of any Hedley Byrne duty relationship, of which there was no
evidence, and applying Murphy v. Brentwood, no cause of action existed in
1983; but that on the assumption of negligence a cause of action first accrued
in 1984, when the plant was damaged by the explosion, so that the action was
not statute-barred: Nitrigin Eireann Teoranta v. lnco Alloys Ltd. (1992).89
(7) The Defective Premises Act 1972
It is an irony that this potentially very important Act had, at the time of 1·361
writing, shortly before the D. & F. Estates and Murphy cases, fallen into
ahnost entire disuse; indeed it was effectively pre-empted in 1972 by the
Court of Appeal in Dutton, so that it effectively never came into use at
all. 90 One reason for this was that the Dutton andAnns principle operated
much more widely, not being limited, like the Act, to "the provision of a
dwelling". Another was that the potential "first damage" start of the limi-
tation period in an Anns negligence case might well considerably post-
date the rigid six-year period dating from completion of the work under
section 1(5) of the Act (which in many cases might mean that a later pur-
chaser had liftle or perhaps no limitation period left by the time he pur-
chased the house). A third reason was that by section 2 of the Act an
exception, never recommended by the Law Commission, had been
allowed taking out of the Act all houses sold under an "approved scheme"
(that is, that of the National House Builders Registration Council).91
However, it would seem that approval of the N.H.B.C. schemes was in fact
withdrawn at some date after 1979, and, that no approved schemes now
existed by 1991."
a9 [1992] 1 W.L.R. 498.
90 See this chronology described by Lord Denning M.R. in Sparham-Souter v. Town and
Country Developments (Essex) Ltd. [1976] Q.B. 858, at p. 869.
91 See per Lord Bridge in the D. & F. Estates case, supra, at p. 195, and the suggestion for
abolition of section 3 in (1989) 105 L.Q.R. 46, at p. 77.
92
~ee theeditorin (1991) 107 L.Q.R. 228, at pp. 242-243, on this curious and virtually unpub-
' lished development, and the observations of Ralph Gibson L.J. in Warner v. Basildon
Corporation [1990] 7 Const. L.J. 146 there referred to. See also supra, para. 1·277.
&
'
tI
 /'-
218 GENERAL PRINCIPLES OF LAW [CrtAP. 1
Since interest in this Act is likely to revive powerfully following the
Murphy case, a short comment on it seems desirable despite the relative
absence of authority at present.
1·362 Section 1 of the Act applies to persons "taking on work for or in connec-
tion with the provision of a dwelling" (including conversion or enlarge-
ment of buildings). It creates an oddly phrased duty:
"to see that the work which he takes on is done in a workmanlike or, as the
case may be, professional manner, with proper materials a~d so that as
regards the work the dwelling will be fit for habitation when completed. " 93
This rather curious wording clearly contemplates and includes con-
tractors, sub-0011.tractors, architects or surveyors and suppliers and sub-
suppliers, it is submitted. By section 1(4) the duty is extended to devel-
opers and others who build houses for sale.
It is interesting to note that the duty is not expressly stated to be a duty
of care, but appears to be a duty to do the work (whether of design or
construction) in a workmanlike or professional manner and using proper
materials, coupled with the equivalent of a statutory warranty of suit-
ability of the building on completion. Close examination of the wording
raises the question whether the fitness for habitation requirement rep-
resents an additional and separate duty, or merely qualifies and explains
the preceding two work and materials duties. The distinction could ?e of
some practical importance, since breaches of contract or professional
practice not involving fitness for habitation would, on the one view, be
outside the purview of the Act. It will be seen post, Chapter 494 that, in the
context of the implied contractual obligations with regard to the quality of
construction work, the concept of fitness for habitation or of suitability
generally only becomes of relevance in those cases where the usual
(lesser) implied terms with regard to work and materials corresponding to
the merchantable quality obligations in Sale of Goods have been duly
complied with. The wording of the Act was discussed by the Court of
Appeal ll1 the quite different context of the time when the duty com-
menced in 1979,95 and statements were then made obiter to the effect that
there was no separate duty of fitness for habitation, and that all defects
must breach that minimum requirement to be within the purview of the
Act and these dicta were followed by an official referee in 1992 on a pre-
limi~ary point of law.96 The last word has probably not been heard on this
subject,-however.96• It should be added that, in what appears to be a quite
separate and unrelated later section, what is expressly described as "a duty
of care" arising out of work of construction, repair or maintenance cre-
ating a defect in a building is not to be displaced by subsequent disposal of
the building.97
93 s.1(1). !>4 See Section 1(2).
95 Alexander v. Mercouris {1979] 1 W.L.R. 1270.
96 Thompson v. Alexander & Partners (1992) 59 B~~ 81'.per Judge Es~r L7wis O.C.
96a The duty has been described by the Law Comnusston 1n 1994 as a strict (1.e. not due care)
duty in their Contributory Negligence paper - see Law Com. No. 219, para.11.0, n.27.
-~~ w L.Q.R. 228, at p. 245.
SECT.12] LIABILITY IN TORT 219
Main contractors who engage domestic sub-contractors will be liable
for their work as well as the sub-contractor, it is submitted, since the main
contractor will have "taken on" the work he has chosen to sub-contract.
Whether this will be so in the case of a nominated sub-contractor may be a
more difficult question, but in principle it is submitted that the result
should be the same.
It is a defence to a contractor, however, if he has merely carried out his 1·363
own work properly in accordance with his instructions,98 but this will not
avail him in a design-and-build case, it is submitted (since he will not have
received instructions as to design) and since agreement by an owner with
plans or specifications is not in any case to constitute instructions for this
purpose. 99 The section 1(1) duty is owed to every person who may sub-
sequently acquire the dwelling, subject to the six-year limitation period
from completion of the work in section 1(5). To what extent the duty
imposed by the Act is a strict one (subject to the statutory defences) can be
expected to provoke a substantial jurisprudence. It is clear, however, that
the Act applies to cases of non-feasance as well as misfeasance. 1 Section 2,
as already indicated, excepts approved scheme houses from the Act. The
precise intention of section 3 is not entirely clear, but it does appear to
abolish what may be left of the caveat emptor rules on a subsequent dis-
posal, but only in respect of defects in a building created as a result of work
done in that building, and not defects resulting from simple neglect.
Section 4 is again apparently unrelated and imposes a general duty of
care on landlords to all persons likely to be affected by a defect in the
building of which the landlord knows or ought to know, in cases where the
landlord is under an obligation to repair. It replaces and slightly extends
section 4 of the Occupiers' Liability Acts 1957.2
Despite its brevity, the language of the Act is in places puzzling, and its
supplementation by a body of case law can be expected to accelerate
strongly following the D. & F Estates and Murphy cases. It would seem,
incidentally, that, perhaps by an accident of wording, the Latent Damage
Act 1986 will not apply, with its extensions of the limitation period on
"discoverability" grounds, to claims under the 1972 Act3---4, since the 1986
Act applies expressly to claims for "damages for negligence", which
would not seem to include the statutory remedy as defined in the 1972 Act.
(8) Latent Damage Act 1986
But for the Dutton and Anns cases, it is ironic, in the light of the final 1·364
demise of th~ principle in those cases following the D. & F Estates and
9£ s.1(2).
99 s.1(3).
1
Andrews v. Schooling (1991) 53 BLR 68, C.A.
'See, for a valuable discussion of all the various possible landlords' and occupiers' liabilities,
Stephenson L.J.'s judgment in Rimmerv. Liverpool City Council [1985] Q.B. 1, C.A., illus-
trated supra, Subsection (3), para. 1·321.
l-4 See per Ralph Gibson L.J. in Warner's case.supra, and the reference to this, in (1991) 107

220 GENERAL PRINCIPLES OF LAW
Murphy cases, that this Act would almost certainly not have been passed.
Construction defects can easily escape detection, as can also the sub-
sequent initial "damage" caused by some of those defects, until perhaps
many years later when symptoms of the underlying defect finally become
apparent, so that occupiers of defective buildings, in Anns "anticipat?ry
repairs" situations (unlike Donoghue v. Stevenson cases where physical
damage to other property has occurred, which will usually be immediately
apparent),5 could easily find that they had lost their rig~t of action ev~n
before becoming aware of it. Previously that was only likely to occur m
contract, although it could there be sometimes avoided by expressing a
contractual obligation in indemnification terms. 6
The basic intentions of the Latent Damage Act 1986 were stated to be
1·365
extremely simple and only two in number, namely, first, to allow an
alternative limitation period to the traditional six-year period, based _on
three years from the date of actual or ascertainable knowledge of the exist-
ence of the cause of action, but, secondly, to balance this increase of
exposure of defendants by an overriding "long stop" of 15 years, dating
not from the damage but from the relevant breach of duty complained of
(that is, whether or not the damage necessary to create the cau~e o! action
in negligence had yet resulted). A subsidiary but important objective was
to enable the alternative three-year period, 'dating from knowledge of the
cause of action, to enure for the benefit of, and be transferred between
successive owners of the property in question.
Since the Limitation Act 1980 had similarly provided for a "discover-
ability" test in personal injuries cases (although with no "Ion? sto?"), the
1986 Act adopted the technique of introducing two new sections mto the
1980 Act (sections 14A and 14B}, the first governing the new alternative
three-year discoverability period for latent damage, and the second the
"long stop" 15-year period. This was effected by section 1 of the 1986 Act.
Section 2 of the 1986 Act also introduced a new section 28A into the 1980
Act governing suspension of the new alternative thr~e-year ~~riod in
cases of disability or death. The very iniportant substantive proVIs1on con-
ferring similar rights on successive owners of property, on the other ~and,
is for some reason governed by section 3 of the 1986 Act and not by incor-
poration into the 1980 Act. . (c) The 1986 Act provides an alternative three-year period dating from
This technique has not made for ease of comprehension, b~t _t~e drafts-
manship has in a number of respects attracted considerable cr1t1c1sm from
7
commentators and seems certain to produce many problems.
1-366 The main points to be observed are as follows:
s See; e.g. Nitrigin Eireann Teoranta v. Inca Alloys Ltd. [1992] 1 W.L.R. 498, illustrated
supra, para. l ·360.
6 See, e.g. county & Di.strict Properties v. Jenner [1976] 2 Lloyd's Rep. 728, discussed post,
Chap. 4, paras. 4·289-4·290. · . .
1 See in particular the broad-ranging and detailed commentanes m 1987 ?Y Cap~er, pub-
lished by Legal Studies & Services Ltd. (London, 1987) and by Merk1n, pu~!!shed by
Lloyds of London Press.
r-·.
'·
I,
[CHAP.1 II SECT. 12] LIABILITY IN TORT 221
( a) The 1986 Act does not apply to personal injuries. Thus this aspect of
i1 liability for defective buildings and structures will continue almost
,,,rl indefinitely after completion, without any long stop, until the stan-
dard three-year period of limitation for personal injuries under the
! 1980 Act commences to run following the failure or accident caus-
ing the injury. A still further extension of that period, based on lack
of knowledge as defined by section 14, may also be possible under
sections 11-13 of the 1980 Act, with a further discretionary exten-
sion of time under section 33. However, it seems that where there
I are mixed claims for other damage as well as for personal injuries,
sections 11-13 and 33 of the 1980 Act, and not those sections
inserted by the Latent Damage Act 1986 (sections 14A and 14B)
will apply.'
(b) The 1986 Act applies to any action for "damages for negligence".
11
Remarkably, "negligence" is not further defined. This means tor-
l tious negligence only, and excludes actions brought for breach of
contractual requirements of due care9 ( and so will lead to plaintiffs
in contractual relations with defendants arguing for a concurrent
liability in tort) 10 and perhaps also actions for breach of statutory
duty. Additionally, the 1986 Act does not apply to the duties under
sections 1 and 4 of the Defective Premises Act 1972 respectively, 11
which has its own special limitation period. Whether it applies to
damage to property under the Occupiers' Liability Act 1957,
remains to be seen. On the other hand, tortious liability under the
Hedley Byrne principle, including economic loss negligence claims
in traditional professional and client relationships, appears to be
governed by the Act. The new sections 14Aand 14B in the 1980Act
do not limit themselves to claims for damage to property, and so
will cover economic or financial loss unassociated with damage to
property. On the other hand, section 3 of the 1986 Act, conferring a
special right of action on successive owners, does expressly limit
itself to claims for "damage to property in which the plaintiff has an
interest". As noted, this latter section stands in its own right and
does not employ the device of amending the 1980 Act.
1·367
first knowledge of the cause of action, which will clearly only be of
practical relevance if the usual six-year period under section 2 of
the 1980 Act, dating from the traditional accrual of the cause of
action, has already expired when proceedings are commenced. The
initial onus of proof of_lack of knowledge will clearly be on the
.
a See Merkin op. cit., at p. 101.
9
Soc. Commerciale de Reassurance v. Eras Ltd. [1992] 2 All E.R. 82.
iu See the percipient comments ofMustill L.J. ibid. at p. 85, cited infra, Subsection (10), para.
1·376.
1
1 See supra, Subsection (7).
 222 GENERAL PRINCIPLES OF LAW [CHAP.1
plaintiff (as indeed in relation tO the traditional period) once limi-
tation is pleaded. 12
(d) The value of the alternative three-year period is very substantially
increased in construction cases by section 3 of the 1986 Act, which
in cases of latent damage to property confers a fresh cause of action
on each successive owner on his acquisition of that property, and
dating from the original cause of action, provided that no preceding
owner has had knowledge of the material facts during his own
period of ownership: section 3(1)(b). The wording will not, there-
fore, allow a later successive ·owner to "inherit" any unexpired part
of the three-year period in a case where his predecessor had knowl-
edge, or indeed any unexpired portion of the tradional period
(though in the latter case if the duty is owed, like the Anns duty, to
future occupiers this may not be an embarrassment).
1·368 (e) There are elaborate attempts at defining the "material facts" and
"other faets", knowledge of all of which will prevent the alternative
three-year period coming into operation: sc;e section 14A(6), (7)
and (8) of the 1980 Act. In addition, in successive owner cases there
are further refinements as to the required knowledge: section 3(6)
of the 1986 Act.
(f) The ascertainment of the precise starting date of the 15-year "long
stop" period seems bound to give rise to considerable difficulty on
the facts in construction cases, as had become apparent when con-
sidering breaches of construction contracts under the old Limi-
tation Acts. Under the 1986 Act, the period starts "from the date
(or if more than one, ·from the last of the dates) on which there
occurred any act or omission which is alleged to constitute negli-
gence and to which the damage is alleged to be attributable (in
whole or in part)": section 14B(l). This wording will obviously pro-
voke "continuing duty" arguments in the case of claims against
A/Es, 13 and probably similar contentions, as against contractors, of
a continuing duty to remedy defective work owed up to the time of
practical completion of the work. These difficulties could all have
been avoided had the Act, taking its example from the Defective
Premises Act 1972, stipulated for a fixed long stop period dating
from some more easily ascertainable date, such as the completion
of work.
1·369 (g) The practical value of the 1986 Act has, however, been greatly
reduced in defective building cases by the abolition of the Anns
liability, since the accrual of the cause of action in the surviving
cases of Donoghue v. Stevenson liability for damage to other prop-
erty will usually be immediately apparent upon the accidental
structural failure giving rise to the liability. 14 It should be noted, too,
12 London Congregation Union Inc. v. Harris & Harriss [1988] 1 All E.R. 15, c;::.J,\.
1J See post, Chap. 2, para. 2·222.
14 Compare the Nitrigin case, illustrated supra, para. 1·360.
SECT.12] LIABILITY IN TORT 223
that in cases of economic loss the extension of time for deliberate
conceahnent or mistake available generally under section 32 of the
1980 Act may often make it unnecessary to rely on the "first knowl-
edge" alternative period available under section 14A (in pro-
fessional liability cases, for example).
(h) There now seems no valid policy reason, it is submitted, why the
discoverability and "long stop" policies of the 1986 Act should not
be extended to liabilities in contract generally, avoiding the necess-
ity to strain principle in order to establish concurrent tort and con-
~act li~bility, or alternatively a Hedley Byrne basis of liability,
simply 1n order to obtain the important limitation advantages of the
1986 Act.
( i) Whether or not this is correct, there is no doubt that the overall
English limitation position in regard to claims for defects in or dam-
age _to build~ngs has become confused and unsatisfactory. The Act,
obviously drrected at claims for latent damage to buildings under
~he Anns principle, is now left with little or no practical application
1n such cases following the abolition of the Anns doctrine while
continuing to apply to far wider classes of economic loss clai~s un-
der the Hedley Byrne principle (still covered by the Act's perhaps
fortuitous expressed application to actions for "damages for negli-
ge~ce")_, ~bile at ~e same time precluded by clear contrary indi-
cations m Its wording from applying to similar or identical claims in
contract. 1s
(9) Consumer Protection Act 1987
This Act was the result of a European Community Product Liability 1·370
?irective, 152 and is concerned to provide an action in tort against the orig-
~nal manufactur~r, or a person branding the product, or a person import-
ing the product mto a Community State from outside the Community.
Unle~s these persons cannot be identified, there is no liability on any other
supplie_rs. 16 Thou.gh the liability is nominally "strict" in the sense of proof
of negligence being unnecessary, it is subject to the "state of the art" or
"development risks" defence, as it is now called, in section 4(1)(e) of the
Act.
. The Act does not seem likely to have much impact on construction pro-
Jects, for a number of reasons. First, the Act is concerned only with the
concept of safety, 17 and to impose a "strict" liability only in respect of dam-
age caused by a defect in a "product" by way of personal injuries or death,
15
Soc. ~o'?Imerciale de R_eassurance v. Eras Ltd. [1990] 2 All E.R. 82. For the anoma]y of its
applicatron to the special Hedley Byrne economic loss duties but not to contractual duties,
see (19~1) 107 L:Q.R. 228, at pp. 246--247, and for its inapplicability to a liability under the
Defective Premises Act 1972, see ibis., at pp. 242-243, noted also supra, Subsection (7),
para.1·363. See also Mullany in (1991) 54M.L.R. 216 and349 and (1993) L.M.C L Q 34
15 • 85/374/EEC July 25, 1985. ' . . . .
16 s.2(2) and 3.
11 s.3.
 r-.
'
224 GENERAL PRINCIPLES OF LAW [CHAP.1
or of physical damage caused to other property. 18 The Act expressly
excludes damage to the product its_elf. 19 Accordingly, economic loss claims
will not be possible under the Act unless resulting directly from personal
injuries or damage to the plaintiff's (other) property.
1·371 Secondly, the Act is intended to benefit only persons whose damaged
property is intended for private use, occupation or consumption, thus
exluding business claims,20 for example, by contractors or subwcontractors
or commercial owners. Indeed, there is a question whether the Act will
apply to conventional building work at all, since it applies expressly only
to "goods or el_ectricity",21 although on the other hand "goods" includes
"things comprised in land by virtue of being attached to it" ,22 and the refer-
ence to "private use, occupation or consumption" in section 5(3), supra,
should also be noted.
The Act has its own special limitation rules, now in section 11 (A} of the
(amended) Limitation Act 1980. Broadly speaking, the primary period is
three years, whether for personal injuries or property damage, subject to
an alternative three-year discoverability extension, but both cases (dif-
fering in this respect from the rules in personal injuries cases under the
1980 Act) are subject to a 10-year Jong stop. That Jong stop, however,
appears to date from the first supply of the product, which could mean that
the cause of action could be extinguished (rather than barred, a further
special characteristic of this long stop) before it had even accrued. 23
(10) Concurrent Liability in Contract and Tort
(a) Generally
1·372 The notion that a defendant might be liable to a plaintiff in both con-
tract and tort simultaneously was virtually unknown to the common law at
the time of the tenth edition. Even in certain well-known relationships or
common callings, such as doctor and patient, where, notwithstanding that
contract was entirely absent, liability in negligence was imposed by law,
the coming into being of a contract between the parties would preclude
any such duty in tort. Thus the liability of an architect to his client was
explicitly held to be in contract and not in tort24 ; similarly liability of a
solicitor,25 along with other professions such as brokers.26 So in 1972 the
Supreme Court.of Canada held that, where a contractual relationship ex-
18 s.3.
19 s.5(1).
20 s.5(3).
21
s.1(2).
n s.45(1).
23
See s.ll(A) of the amended 1980 Act, and the difficult section 4(2) of the 1987 Act, to
which section llA refers.
24
Steljes v. Ingram (1903) 19 D.L.R. 534; Bagot v. Stevens Scanlan [1966] 1 Q.B. 197;
McLaren Mayhew v. Fletcher Developments [1973] 2 N.Z.L.R. 100 (C.A.N.Z.).
i:; Groom v. Crocker [1939] 1 K.B. 194 and see in Canada Schwebel v. Telekes (1967), 61
D.L.R. (3d) 470, C.A., Ontario. ·,:.
26
Jarvis v. Moy, Davies [1936] 1 K.B. 399.
SEcr.12] LIABILITY IN TORT 225
ists between two parties, tort liability is precluded in all but "independent"
torts ( that is, torts arising from situations not governed or contemplated by
the contract).21
The e~ergence, however, of the new Hedley Byrne principle enabling
economic loss to be recovered in tort, often in situations involving infor-
rr.iation or advice given to the plaintiff by professionals or others with spe-
cial knowledge, and similarly the Anns principle, enabling repair costs for
defective buildings to be recovered in tort by house owners from contrac-
tors and A/Es as well as from local housing authorities, increasingly drew
the attention of plaintiffs in these situations to the very important pro-
cedural advantages available in tort and not available in contract. Thus
plaintiffs were inevitably drawn, even if a contract was present with the
defendant, to seek to use the two new torts, rather than contract, to obtain
the much later starting dates of the limitation period in tort permitted as a
perhaps unintended consequence of the traditional wording of early
English limitation statutes.28 Acts using this wording were, of course, to be
found in many other parts of the Commonwealth. Again, defendants
might find it profitable to assert tortious liability, both of themselves and
third parties, in order to secure the rights of contribution then only avail-
able between tortfeasors under the English Law Reform (Married
Women & Tortfeasors) Act 1935,29 or to obtain the right of apportion-
ment, ( that is, reduction of damage) available for contributory negligence
by the plaintiff, under the English Law Reform (Contributory Negli-
gence) Act 1945, also widely copied in the Commonwealth, when sued in
contract and not tort. 30 In the United States the availability of punitive
damage~ in tort enormously hastened the process of concurrent liability,
even ~eing applied to the good faith doctrine in some States, notwith-
standing its original basis in implied covenant.3t
As stated, the Hedley Byrne liability, requiring in any event circum- 1·373
stances close to if not later developing into full contract, might easily
afford the alternative tortious basis of claim and, indeed, this was the basis
of the earliest English case in 1976 suggesting the existence of concurrent
li~?ility.32 S~ in th~ same year the Court of Appeal of Ontario held a super-
vismg A/E liable in both tort and contract to the owner, while on the con-
trary holding that the contractor's liability for his defective work was
limited to contract only, so preventing the A/E from recovering contri-
bution under the Ontario Negligence Act from a contractor, who had him-
·self escaped liability to the plaintiff by reason of the immunity under the
final certificate provision in his contract.33 More recent cases in Canada
have now held even contractors to be concurrently liable in contract and
:n Nunes Diamonds v. Dominion Electric Co. (1972) 26 D.L.R. (3d) 649.
28
See supra, para. 1·347, and see para. 1·307.
29
Succeeded by the English Civil Contribution Act 1978 which now covers contractual liabil·
ity: see paras. 1·380-1 ·382.
JO See infra, paras. 1·379-1·380. ~1 See supra, Section 6(3), para. 1·197.
32
Esso !'~troleum. v. Mardon [1976) Q.B. 801, illustrated supra, Section 5(4) para. l ·154.
33
Dommwn Cham v. Eastern Construction Ltd. (1976) 68 D.L.R. (3d) 385, followed, as
regards the liability of the builder, in Harris v. Demolition Contractors [1979J 2 N.Z.L.R.
166; see also McLaren & Maycroft v. Fletcher Development Ltd. [1973] 2 N.Z.L.R. 100.
 226 GENERAL PRINCIPLES OF LAW [CHAP.1
tort where the contractual duty is one of care.34 In England, almost
immediately following the Anns case,35 the Court of Appeal in 1978 held a
developer liable in both tort and contract to a purchaser for negligence in
selecting a site liable to landslip.35 In the case of professional relationships,
Oliver J. in 1979, in probably the most authoritatively researched case,
held a solicitor liable in tort under the Hedley Byrne principle as well as in
contract.37 This was still not, however, the law in New Zealand in 1980.38 If
these decisions are upheld, they suggest that virtually all professional con-
tracts will involve a concurrent obligation in tort which, being Hedley
Byrne based, will support claims for financial loss without physical
damage. 39
1·374 In all these cases, however, it is hard to discern any considered state-
ment of principle or policy in the judgments, other than a plaintiff-orien-
tated desire to secure the limitation or procedural advantages of tort,
which might perhaps have been better served by legislatures remedying
the procedural disadvantages of contract rather than by the judiciary
straining principle in order to provide alternative remedies in tort. In par-
ticular, the concept of concurrent liability in tort becomes almost imposs-
ible to apply satisfactorily in any situation without reference to the details
of the particular contract in question, so that priority of the contract has to
be accorded in order to avoid injustice. In addition, in construction cases
the introduction of tortious liability may frequently be at variance with the
carefully calculated division· of risk between the parties and the express
indemnities, balanced if necessary by price or by voluntary or compulsory
insurance, which have been agreed between them - referred to in the
cases as "the contract structure" or "the contract setting. " 39•
More recently, however, there are clear signs that the difficulties
inherent in working out liabilities in tort where contract is also present
(other than the obvious case of fully independent torts, which are not re-
ally cases of concurrent liability at all, since the existence of the contract is
accidental and irrelevant to the cause of action) appear to be inducing a
new reluctance to permit concurrent actions in tort. Thus in Australia it
would seem that by 1987 concurrent liability was now considered to be
limited to cases of employer and employee40 or to professional or "skilled
l4 See the important Ontario Court of Appeal decision in Consumer's Glass Co. v. Foun-
dation Co. (1985) 20 D.L.R. (4th) 126, which reviews the authorities; and see further on
this, in the context of limitation, post, Chap. 4, Section 3(7), para. 4·283 et seq.
35 As predicted in C.C.P.P'., para. 2-19 (reproducing (1978) 94 L.Q.R. 60, at p. 72) when
commenting on Anns.
36 Batty v. Metropolitan Realisations Ltd. [1978] Q.B. 554, analysed in C.C.P.P., Chap. 3 (94
L.Q.R. 331).
37 Midland Bank Trust Co. Ltd. v. Hett Stubbs & Kemp [1979] Ch. 384: see also Forster v.
Outred [1982] 1 W.L.R. 86, C.A. . (1) whatever the legal logic, the fact that claims in contract and in tort
ia Rowe v. Turner Hopkins & Partners [1980] 2 N.Z.L.R. 550, per Sumner J., followmg
Maclaren & Maycroftv. Fletcher Development Ltd., supra, but see the position left open by
the New Zealand Court of Appeal, [1982] 1 N.Z.L.R. 178.
39 See, in the·context of an engineer's design liability, Lord Keith's discussion in M_urphy v.
Brentwood District Council [1991] A.C. 398, 466, and see in Ontario John Man yon Inter-
national Ltd. v. New Brunswick Telephone Co. (1982) 141 D.L.R. (3d) 193,,C.A.
39•Seesupra,para.1·325. -,:-
40 Compare Matthews v. Kuwait Bechtel Corporation [1959) 2 Q.B. 57.
SECT.12] LIABILITY IN TORT 227
calling" relationships. 41 In England the potential decline of the Anns prin-
ciple would now seem to leave room ( apart from independent tort cases)
for concurrent liability only in Hedley Byrne situations, certainly in the
construction field, and it may well be only in client and professional
relationships. All courts in all jurisdictions, in any event, appear to be
united in holding that a liability in tort cannot exceed any relevant con-
tractual liability between the same parties. Moreover, a strong hint from
the Privy Council in 1986 suggests that liability in tort should be excluded
altogether where a contractual liability exists:
"Their Lordships do not believe that there is anything to the advantage of the 1°375
law's development in searching for a liability in contract where the parties are
in contractual relationship ... Their Lordships believe it to be correct in prin-
ciple and necessary for the avoidance of confusion in the law to adhere to the
contractual analysis; on principle because it is a relationship in which the
parties have the right to determine their obligations to each other, and for the
avoidance ofconfusion because different consequences do follow according to
whether the liability arises from contract or tort, e.g. in the limitation of
action. "42
The emphasised passage, by its reference to limitation, clearly suggests
no tortious liability whatever, as opposed to a subordinate concurrent
liability in tort, it is submitted.
It would seem that in England the principle of concurrent liability was
accepted without any real consideration of principle and made freely
available without question in nearly all cases following firstly, the devel-
opment of the Hedley Byrne principle, and then the Anns principle.
though the two are not directly connected. The subsequent trend in the
Commonwealth has been to emphasise the difficulties created by the
application of a concurrent liability in tort, reinforced by the substantial
reduction in the procedural anomalies of contract which has been effected
by legislation similar to the Civil Contribution Acts in England. It seems
quite possible that, as in the case of theAnns principle, concurrent liability
may soon be abrogated altogether, although at present that stage does not
appear to have been reached.
A particularly percipient analysis of this trend was made by Mustill L.J. 1·376
when delivering a judgment of the Court of Appeal holding that the
·Latent Damage Act 1986 did not apply to claims for latent damage to
property based on breach of a contractual duty of care:
"The different treatment for limitation purposes of claims in contract and in
tort is already unsatisfactory because:
between the parties arising out of the same facts became time-barred
on dates which may well be years apart offends common sense;
4
' See the full Court of Victoria in Macpherson v. Prunty [1983] V.R. 573, cited and followed
by Kelly J. in Neilsen (Canberra) Pty. Ltd. v. PDCConstructions (1987) B. &C. ConstLJ.
387. .
42
TaiHingCottonMillv. Liu Chong Hing Bank [1986] lA.C. 80atp.107,perLordScarman.
 228 GENERAL PRINCIPLES OF LAW [CHAP.1
(2) the existence of different rules for what may really be the same claims
forces the law into unnatural complications. Whatever the historical
justification for holding that there are concurrent rights of acti?n _in
contract and tort, nobody we believe would trouble nowadays to 1ns1st
on the difference, but for the fact that one form of claim (usually the
one in tort) offers procedural advantages. This is not a sound basis for
the development of a practical and self-consistent law of negligence;
(3) so far as limitation is concerned the rules regarding the accrual of the
cause of the action tend to push the evolution of substantive law in the
wrong direction.
In most if not all cases a plaintiff will be better off by framing his action in tort,
whereas, in our judgment, if a contract is in existence this is the natural
vehicle for recourse. Whilst these features are firmly embedded in the law, at
least so far as this court is concerned, we have no enthusiasm for attributing
to section 14A a meaning which, if the respondents are right, will enhance the
practical attraction of a claim in tort. Nevertheless we find it impossible to
resist [that] conclusion .... "43
(b) Contributory negligence
1·377 At common law, contributory negligence of a plaintiff (used in its caus-
ation sense) was a complete answer and defeated an action in tort alto-
gether ( as where a factory workman removed the guard from his machine
to make production easier, or a plaintiff was partly to blame for a motor
accident). In England the Law Reform (Contributory Negligence) Act
1945 abolished this more extreme aspect of the defence, by enabling the
court instead to reduce the plaintiff's claim proportionately to his degree
of responsibility. This Act, despite the considerable difficulties of its
draftsmanship, was rapidly duplicated in many parts of the Common-
wealth. In the context of construction contracts, the principal problem,
arising from the strange definition of "fault" in section 4 of the Act, made
it necessary to decide whether the Act applied to claims brought in con-
tract at all. In 1985 Neil L.J., sitting in first instance, had held that it did not,
and the same view has been adopted in Australia. 44 Subsequently, how-
ever, in Forsikringsaktieselskapet Vesta v. Butcher 45 the Court of Appeal,
affirming obiter Hobhouse J. and following Pritchard J. in New Zealand46
held that the words "negligence breach of statutory duty or other act or
omission which gives rise to a liability in tort", when applied to the plain-
tiff's cause of action against the defendant, would include a case where
there was a concurrent liability of the defendant in tort notwithstanding
that the action itself was brought in contract.47 In so doing, Hobhouse J. in
first instance described three categories of liability in contract, namely:
4J Soc. Commerciale de Reassurance v. Eras Ltd. [1992] 2 All E.R. 82, at p. 85.
44 A. B. Marintrans v. Comet Shipping Co. Ltd. [1985] 1 W.L.R. 1270; see also the well-
researchedjudgment of Mcinerney J. in lames Pty. Ltd. v. Duncan [1970] V.R. 705.
4.1 [1989] A.C. 852, C.A. and H.L.; [1986} 2 All E.R. 488,per Hobhouse J.
4~ In Rowe v. Turner Hopkins Partners [1980) 2 N.Z.L.R. 550. ~ ;·'
•1 The Law Commission (Working Paper 114, para. 3.32, considers the Court bf Appeal's
reasoning unsatisfactory and, in any event, obiter.
SECT.12] LIABILITY IN TORT 229
(1) under a contractual provision not dependent on negligence;
(2) under a contractual provision imposing a "best endeavours" or duty of
care obligation not corresponding to any common law duty of care; and
(3) under a contractual obligation imposing the same duty of care as in tort.48
On this view, a category (2) type of duty in an economic loss case could 1·378
only give rise to a concurrent liability in tort, and so bring the Act into
operation, if there was a Hedley Byrne or professional relationship pre-
sent; in all other cases it would ne"ed to be a category (3) contractual obli-
gation which would do so.
It will be seen that the above reasoning as to the application of the Act
depends entirely upon the survival of the concept of concurrent liability,
and that should that concept be restricted or rejected in the future, as
hinted at in the Tai Hing Cotton Mill case quoted supra, then so, too,
would be the application of the 1945 Act, unless it was amended.
It appears that in Canada in some provinces,. in the absence of legis~
lation pennitting claims for contribution between wrongdoers sued in
respect of the same damage, or of any duty of care owed by a superivising
A/E to the contractor, there have been a number of cases where it has
been suggested that contractors could use the contributory negligence
legislation, when sued for defective work by an owner, to reduce the claim
on the basis of the owner's liability as principal for the negligent super-
vision of his NE. 4!1 While this may be acceptable in cases of some positive
action or intervention by the NE which can be shown to have been an
effective contributory cause of damage which would not otherwise have
occurred, in other cases it seems as inappropriate, it is submitted, as the
cases attempting to allege an affirmative duty of care owed to a contractor
by the A/E owner's when supervising.
A more understandable example of this occurred in England when an
architect, successfully sued in tort by his owner/client under the then Anns
principle for negligent supervision which resulted in a dangerous structure
requiring repair, succeeded in reducing the claim by 20 per cent. due to the
owner's clerk of works' negligence in failing to report matters to him.50
In England the Law Commission published a working paper in 1990 1·378A
which recommended that a plaintiff's contributory negligence should be a
defence in contract. This was followed in December 1993, by their Com-
mand Paper "Contributory Negligence as Defence in Contract" [Law
Com. 219) which formally recommended contributory negligence as a
defence in reduction of recoverable damages where a defendant "by vir-
tue of an express or implied term of a contract is under a duty to exercise
reasonable care or exercise reasonable skill or both in the performance of
48
[1986] 2 All E.R. 488, at p. 508.
49
See, e.g. Yemen Salt Mining Corporation v. Rhodes Vaughan (1977) 10 A.R. 501 and West
Coast Transmission v. lpoco (1985) (unreported,per McLaughlin J.), cited by Singleton J.
in (1986) 2 Const. L.J. 90-91.
XI Kensington Area Health Authority v. Wettern Composites (1984) 31 BLR 62, per Judge
Smout Q.C. See also Lindenberg v. Canning (1992) 62 BLR 47, Judge Newey Q.C.
 230 GENERAL PRINCIPLES OF LAW [CHAP.1
the contract" and the damage is due partly to the plaintiff's "own failure to
take reasonable care for the protection of his own interests. "-see Section
1(1) of the Draft Bill. The Act therefore appears to adopt and extend the
remedy to one of the classifications of Hobhouse J. in the Vesta, see supra.
If enacted, it can be anticipated that this wording will create a major
proliferation of multi·party litigation in construction contracts in cases
where defective work by contractors is proved or admitted, but reduction
of the damages recoverable is claimed on the ground of alleged failures of
supervision by the owner or his A/E (which on the propos~d wording
might include cases where an owner had made no or alleg~dl~ ma~eq1;1ate
arrangements for supervision). Quite apart from the policy tmphcations
of reducing the sanction in damages if defective work is discovered, the
application of the Act would seem to depend on whether defective work
results from a breach of the contract's express requirements and descrip-
tions in the drawings or specification ( where the Act would seem not to
apply, since they will be independ~nt of fault) on the one hand, or on ~he
implied terms of good workmanship and perhaps also of proper matenals
(where the Act may arguably apply).
1·378B Thus if concrete is, for any reason including carelessness, not in accord-
ance with the specified mix, the Act will not apply; whereas if it is honey-
combed due to rushed or slipshod mixing or placing techniques not
expressly detailed in the specification, or inadequate vibrating or tamping,
the Act would seem to apply. There does not seem to be any logic to this
distinction.
' A further consequence of such an Act will be a very substantial increase
in litigation against supervising A/Es by their clients in cases where, b~t
for the Act, their clients would have been quite content to pursue their
remedies against the contractor.
Apparently it is intended that the proposed Act may be excluded by
contract (see Section 1(2)). It will be interesting to see if the standard
forms take this essential step on behalf of the owner (and indirectly, for
the reasons stated, on behalf of supervising professionals) as the Law
Commission's Paper suggests will happen. 50•.
(c) Contributions between defendants
1·379 Liability by two or more persons for the same damage can arise in a
number of ways in construction projects. Such liability can in law be joint
or several. In contract, joint liability can only arise where two or more
persons join together to sign the contract on one side or the other; in other
words, partners in a joint venture. In tort, it will arise in cases of master and
servant, principal and agent (including vic~rio~s liab!lity for. ~dependent
contractors), and also in cases where an action 1s earned out Jointly as part
of a common purpose. It will be seen that cases of true joint liability,
whether in tort or contract, are comparatively rare.
Far more commonly in construction projects, two or more persons may
be independently liable, whether in contract or tort, for the ~am_e_ (or simi-
lar) damage. A classic example in contract would be the liability of the
so, See the editor's note in (1994) 111 L.Q.R. criticising the proposed Draft Bill.
SEcr.12] LIABILITY IN TORT 231
contractor to the owner for defective work, and of the A/E for a failure to
detect or prevent it while supervising.51 The causes of action are separate
and independent, and in some cases, including the above, the measure of
damage may be very different. Claims in contract and tort might be
involved in an owner's claim for damage to property against a contractor
and negligent sub-contractor, and independent torts in a similar claim by
an adjoining occupier. The possibility of such several or independent con-
tract and tort claims in construction projects was naturally greatly
increased by the new Hedley Byrne and Anns liabilities for economic loss
in tort.
In the case of both joint and several contract claims, the remedies at 1·380
common law were extremely primitive. No right of contribution (other
than any express or implied right inter se agreed between the joint con-
tractors) existed. Judgment against or release of one joint contractor ( or
indeed joint tortfeasor) would release the rest. Individual several defend-
ants in contract would be liable to judgment for the whole loss, whether
sued separately or not, and such a party's only defence, either at trial or on
execution of judgment, was to prove that the plaintiff had already
"realised" or satisfied his judgment through payment by or execution
against the other party. 52
In the case of joint ( as opposed to independent) tortfeasors, there could
be only one action, judgment in which would preclude any later action
against another tortfeasor, and judgment would be for the whole of the
damage even if the individual joint defendant had contributed only a small
part of it. Whether joint or independent, there was no right of contribution
in tort.
Major reforms were effected by the English Law Reform (Married
Women & Tortfeasors) Act 1935. This was adopted rapidly in Australia
and New Zealand but only in some, and usually the smaller, provinces of
Canada. This Act permitted successive actions in tort against different
joint tortfeasors, so that judgments against one would no longer operate as
a bar. In addition, it conferred rights of contribution and joinder inter se
between tortfeasors, whether joint or indepen_dent, though this did not
affect the principle of 100 per cent. liablity (in solid um) by each defendant
as against the plaintiff.
Nevertheless the 1935 Act produced a number of intransigent prob- 1·381
lems. 53 Apart from the fact that it applied only to tortfeasors and did not
apply to "same damage" contract claims, it was not certain whether it
applied to cases which had been settled by a tortfeasor claiming contri-
bution, whether before or after coming to Court, though there were some
cases to this effect. Nor was it clear if a right to contribution existed against
a second tortfeasor whose claim had been extinguished by some reason
si See, for an early case in Canada, Campbell Flour Mills v. Bowes & Ellis (1914) 32 O.LR.
276, and see Alberta Caters Ltd. v. Vollan Construction (1977) 10 A.R. 501.
si See the Campbell Flour Mills case, supra.
53
See Williams,Joint Torts & Contributory Negligence (1951), Chap. 6.
 ('
232 GENERAL PRINCIPLES OF LAW [CttAP.1
peculiar to himself, such as a shorter period of limitation. These two points
were dealt with in England by the Civil Liability ( Contribution) Act 1978.
This comparatively radical measure extended the broad effect of the
1935 Act to actions in contract, or for breach of trust, as well as in tort. 54
The 1978 Act also expressly and in some detail (although not, perhaps,
entirely successfully}55 conferred a right of contribution where a claim had
been settled, whether before or after proceedings had been commenced
against the settlor, and whether or not the claim was justified, provided
that the settlor would have been liable had the facts alleged against him
been established and the settlement was bona fide. 56
The Act also permits contribution to be obtained against a person
whose liability has already been extinguished since the damage occurred,
for example, by limitation.57
1·382 Under the 1935 Act, it had been thought that the Act conferred a fur-
ther six-year period of limitation arising when the right to contribution
became effective, but now, by Section 10 of the Limitation Act 1980, the
period is reduced to two years from the original judgment or award
(excluding for this purposes appeals) or, in the case of a settlement, from
the date of agreeing its amount.
The Act and its detailed provisions can be extraordinarily complicated
and provokes considerable difficulties of analysis. However, its basic
objective in extending liability for contribution to claims in contract is, in
the context of construction projects, very welcome. Thus it would obvi-
ously be unacceptable for a supervising AIE to be held liable to the owner
in contract for failing to detect or prevent defective work and yet have no
right of contribution, or indemnity against the wrongdoing contractor.58
There are at least three possible areas where the Act may, however, give
rise to special difficulty or policy anomalies in construction projects.
(i) A/Es' supervision
1·383 In the first place, there has undoubtedly been a failure by the courts
throughout the Commonwealth to distinguish carefully between an AIE's
general supervisory function in regard to detecting defective work on the
one hand, and his more positive functions such as design, or instructions
and interventions when supervising on the other. The actual definition
governing the right to contribution against a defendant which was
adopted by the Acts required it to be "just and equitable having regard to
the extent of that person's responsibility for the damage". The Acts, how-
ever, also provide expressly that where it is just and equitable to do so, the
Court may award a contribution amounting to a complete indemnity, or
conversely exempt a person altogether from liability to make contri-
54
S.6(1).
51 See Clerk & Lindsell op. cit. at para. 2-59.
s6 s.1(4).
51 S.1(3), overruling George Wimpey Ltd. v. B.0.A.C. [1955J A.C. 169.
s8 Compare the Dominion Chain case, supra, paras. 1·373-1 ·374.
SECT.12] LIABILITY IN TORT 233
bution. 59 The Acts were concerned primarily with the case of independent
torts and persons contributing in a direct causative sense to the damage,
such as the negligent drivers of two cars in collision injuring a passenger or
passer-by. They were not so concerned with obtaining a contribution from
a policeman who negligently failed to stop one of the cars for excessive
speeding immediately prior to the accident, let alone for negligently fail-
ing to obtain help after the accident. It is submitted that where an AIE has
done nothing positive himself to cause or increase the risk of the damage,
this is precisely the situation at which section 2(2) is aimed. Moreover, it
would not be just and equitable, on the contrary it would be bad public
policy, to lead prospective contract-breakers or wrongdoers and their
insurers to expect to recover a part of their loss from persons engaged by
third parties to supervise their work. This might well apply to persons in
charge of young and mischievous children on a highway, and indeed a full
duty was applied to prison officers in regard to escaping Borstal boys in the
Dorset Yacht case, 60 but these situations offer no useful analogies, it is sub-
mitted, when considering building contractors as a class. Effectively the
decision to grant contribution means that the A/E becomes at least in part
a supervisor for the benefit of the contractor, thereby reducing still further
any incentive for the contractor to provide responsible and competent
supervisory staff of his own. The language of Fauteux C.J. in the Supreme
Court of Canada61 was fully justified when rejecting contribution claimed
by a supplier of defective concrete and granting a full indemnity to the
inspector of concrete in Bilodeau v. Bergeron, in the absence of a much
more positive contribution to the damage by the A/E.62
Nevertheless, it must be conceded that, during the period in which the 1·384
new Anns liability spread throughout the Commonwealth, it has become a
virtual rule of thumb in all jurisdictions to exact a contribution at or near
25 per cent. against local authority building inspectors and AIEs alike,
with little disposition to analyse precisely the specific failure alleged
against them, in particular in cases of breach of an effective affirmative
duty of care, or indeed to note the very different r6les of the private AJE
supervisor and that of a building inspector under housing legislation while
the Anns liability survived. 63
Thus, in what was in many respects not a typical case, a developer
pressed his architects and builders to reduce their proposed depths of strip
foundations to save money. They both then agreed to the contract speci-
fying reduced depths. The building inspector, however, ordered the foun-
dations to be taken to still greater depths than those originally proposed
Sl>1978 Act, s.2(2). ·
00
See Dorset Yacht Co. Ltd. v. Home Office [1970J A.C. 1004.
6i See supra, paras.1·297-1·298.
62
See the fuller discussion in the context of an alleged duty of care by the A/E in favour of
contractors,supra, Section 12(2)(d), and see also post, Chap. 2, Section 6(2)(k), and Chap.
5, Section 1(6). -
61
See as examples Worlockv. SAWS (a firm) (1982) 22B.L.R.66, C.A.; and in New Zealand
Mount Albert Borough Councilv. Johnson [1979] 2 N.Z.L.R. 234, C.A. (both local auth-
ority cases), and see the editor's "Defective Work: The New Flavours" in (1990) 6 Const.
L.J.87.
 ,-.
'
234 GENERAL PRINCIPLES OF LAW [CHAP.1
by the architects. The buildings nevertheless moved, and the developer
sued his architects in tort and contract and the local authority in tort for his
repair costs. The Court of Appeal upheld the trial judge (who had found
the local authority 25 per cent. to blame) and rejected the "policing" argu-
ments of the local authority that their responsibility should be nominal
only and that the effective negligence was that of the architect. It should,
however, be noted that this was a design case, where the building inspector
had himself intervened to stipulate the final design depths. (The case was
itself, and not surprisingly; subsequently disapproved in a later House of
Lords case on the ground that a local authority owed no duty whatever to a
developer.)64
1·385 On the other hand, in Anns itself, and many other cases,65 the building
inspector had simply failed to note defective work by the builder in not
carrying the foundations down to the required design depths. These were
at best breaches of an affirmative duty of care, that is, a failure or omission
to take positive steps to prevent a third party's wrongdoing. 66 In these
cases, therefore, no element of intervention was involved, nor of action
creating or increasing the danger, and the complaint against the inspector
was for practical purposes identical to an owner's complaint against an
A/E for failure to detect or prevent defective work when supervising.
Moreover, it is submitted that, by imposing a contribution by supervis-
ing A/Es in such circumstances, the courts will be effectively, although
admittedly only partially, imposing a duty owed to the contractor by the
owner or his A/E, where the overwhelming weight of authority has been
that there is no such duty. 67 Again, it is relevant to note the warning of
Lord Keith of Kinkel as to the danger of overkill in permitting duties of
care in novel situations, where he pointed out the emergent undesirable
economic consequences of the imposition of liabilities on building inspec-
tors under the Anns principle.68 As previously explained,69 a contractor is
in sole control of the site, and in major projects has equal or greater experi-
ence in methods of working and far greater opportunities for providing
thorough supervision than a visiting A/E,~and it is in these areas of site
management and control that his superior expertise will be the essential
ingredient of his own commercial tendering and pricing success as against
his less efficient competitors. That advantage will be blunted if less com-
petent or trustworthy contractors are financially rescued, whether wholly
by a duty or partly by contribution, from the consequences of their own
incompetence or scamped construction techniques by a transfer of some
M See Acreerest v. f{attrell [1983] Q.B. 260, C.A., overruled by Governors of the Peabody
Donation Fund v. Sir Lindsay Parkinson [1985] A.C. 210.
65 See also the landmark decision of the High Court of Australia in Shire of Sutherland v.
Heman (1985) 59 A.L.J.R. 564.
M See C.C.P.P., Chap. 7 for an analysis of the Heyman case, and see also, for the affirmative
nature of the duty, (1989) 105 L.Q.R. 46-51.
67 See the discussion and cases supra, Section 12(2)(d), para. 1·293 et seq.
oa Rowling v. Takara Properties [1988] 1 A.C. 473, at p. 502C-502D, quote~·!upra, paras.
1·300-1·301. ,,.
69 See supra, Section 12(2), paras. 1·293-1·301, and see post, Chap. 2, para. 2·183 et seq.
SEcr.12] LIABILITY IN TORT 235
or all of the financial consequences to the owner's NE or the owner him-
self. The fact that it is by such practices that contractors can maximise their
profits and obtain direct financial advantage appears to be overlooked by
judiciaries influenced by unrealistic "captain of the ship" attitudes to
supervising professionals.69a
(ii) The "contract setting" or "contract structure"70
A further consideration which, it is submitted, should militate against 1·386
ordering contribution in many of the disputes which arise in construction
projects is that the contracts themselves will almost invariably contain a
carefully balanced allocation of risks, including that of claims by third par-
ties. This is achieved by providing for full accepted responsibility by one
party in defined areas of risk, including express indemnities directed to
that end, balanced on the other side of the table by either compulsory or
voluntary insurance, or else by pricing for the risk. Except in the very rare
case of joint contracting, commercial parties seldom if ever wish to or do
provide for contribution by apportionment between themselves, with all
its attendant uncertainties of application and of quantum. If a judiciary,
not fully aware of these carefully worked out and balanced considerations
of price, insurance and indemnity between the parties, then intervenes to
redistribute damage between them on the basis of a well-intentioned but
inevitably moralistic or philosophical assessment of degrees of responsi-
bility, the results can defeat the expectations of the parties by conferring
an uncovenanted benefit on one party or by imposing an uncovenanted
penalty on the other, with the benefit likely to be enjoyed in practice by
sureties or insurers rather than by the parties themselves, or, worse still,
where specifications are breached as a matter of policy. The Act does also
expressly reserve the enforceability of contractual or other rights to
indemnity71 but indemnity clauses are treated for purposes of interpret-
ation as exemption clauses72 and have frequently been set aside by the
courts on highly technical grounds.73 If so, recourse to section 2(2)
becomes necessary.
(11) Vicarious Liability and Independent Contracts
A contracting party will always, in the absence of express provision, be 1·387
liable in contract to the other party for the acts or omissions of his servants
or independent contractor agents while acting within the scope of their
employment or authority respectively. In tort,however, while a defendant
without personal negligence will be vicariously liable for the negligent acts
or omissions of his servants while acting within the scope of their employ-
ment, the general rule is that he will not be vicariously liable in this way for
o!laSee for the problems of defective work generally, the editor in (1990) 6 Const. L.J. 87.
70
See, for the effect of this on tortious liability generally, Supra, Sections 12(2)(d) a,nd
12(3)(d).
71
s.7(3) of the 1978 ACt.
72
See supra, Section 9(5), and post; Chap. 15, Section 2(3).
73 See, e.g. A.M.F. lnterrwtional v. Magnet Bowling Ltd. [1968J 1 W.L.R. 1028, supra,
paras. 1·234-1-235, and see para. 1·335.
 236 GENERAL PRINCIPLES OF LAW [CHAP. l
those of an independent contractor agent while the latter is performing his
contract. There are, however, a number of cases where this is not so, and
where the employer of the independent contractor will nevertheless be
liable in tort. It is in fact difficult to rationalise these apparent exceptions,
except perhaps in terms of social policy. It has been suggested that they
depend on a finding that in such cases the employer is himself in breach of
a "non-delegable" duty personally owed by him to the plaintiff, but this
seems a largely semantic distinction.74 Examples where the principal is not
liable include the employment of competent motor engineers to repair a
lorry,75 re-wiring of premises by a competent electrician,76 and removal of
a tree adjoining a highway by a competent tree-feller. 77
On the other hand "inherently dangerous" processes or projects, such
as the burning of scrub, or the thawing out of pipes with blow-torches,
have been held to be non-delegable,78 as also roofing work at the dividing
line of a roof ever adjoining houses,79 and main contractors may be liable
for sub-contractors where danger to third parties from their operations is
foreseeable (obstruction by sub-contractor's beiim to highway users).80
1·388 Some statutory duties will, depending on the construction of the statute,
be non-delegable, as are also some liabilities in trespass or nuisance to
adjoining occupiers.81 In many cases of statutory duty, or of the exercise of
a statutory power, there may be what has been described as a parallel
common law duty of due care to avoid damage to property or person owed
to third parties, and it may be a difficult question whether that common
law duty is to be regarded as non-delegable; in other words. a duty to
"ensure that care is taken, as opposed to a more personal duty to take
care.82 Thus, in general in the construction context, owners will not be
liable in tort for the negligence of main contractors ( other, than perhaps in
the various cases of strict liability for nuisance or damage to adjoining
land83), nor will main contractors similarly be liable in tort for the acts or
omissions of their sub-contractors. The above statements relate, however,
to cases where there is no negligence whatever on the part of the principal,
either in the selection of an appropriately competent independent con-
tractor, or in his control or supervision over him. This may pose a special
problem in the case of main contractors, who can be expected to exercise a
high degree of control on site over at least those more traditional trades
whose work can be expected to be within the area of expertise of the main
1• See Clerk and Lind.sell Op. Cit. at para. 3-35.
15 Phillipps v. Britannia Laundry [1923] 1 K.B. 539.
16 Green v. Fibreglass Ltd. [1958} 2 Q.B. 245.
11 Salsbury v. Woodland [1970] 1 Q.B. 324 illustrated supra, para. 1·320.
18 Blackv. Christchurch Finance [1894] A.C. 48; Balfourv.Barty King [1957] 1 Q.B. 496. See
also Honeywill and Stein v. Larkin [1934] 1 K.B. 91.
~ Alcock v. Wraith (1991) 59 BLR 16, C.A.
80 Langley Fox Building Partnership v. De Valence [1991] S.A. 1, A.D., South Africa.
s1 See Clerk and Lindsell Op. Cit. at paras. 3-41 to 3-42. See also Alcock v. Wraith, supra,
n.68.
82 See Murphy v. Brentwood District Council [1991] 1 A.C. 398.
83 See supra, Subsection (5), and post, Chap. 15, Section 2(3).
SEcr.12] LIABILITY IN TORT 237
contractor's supervisory staff. In addition to the cases below, the cases
illustrated supra, Subsection (3)( b) should also be considered.
ILLUSTRATIONS
(1) A developer who was also a builder acquired land and sub-divided it
into plots and then built upon it, engaging a partnership, which he did not
himself join, as his builders. There was a close relationship at all times
between him and the partners. A ho~se was built on inadequate foundations
which were in breach of the by-laws and the owner sued the developer, the
builders and the local authority for the cost of repairs under the Anns princi-
pal. Held, by the Court of Appeal of New Zealand, that there was a duty of
care to avoid economic loss owed to subsequent occupiers under the Anns
principal, and the developer could be treated as jointly liable in negligence
with the building partnership, but additionally the duty of care owed by him
was in any event nonNdelegable to an independent contractor such as the
building partnership. Mount Albert Borough v. Johnson (1979).84
(2) A small firm of self-employed plasterers were engaged by main con- 1 ·389
tractors for a large luxury flat development. The plasterers deliberately
departed from manufacturers' instructions by inserting an additional coat of
browning plaster, and some years later plaster fell and large areas of danger-
ous hollow plaster were also found. The flat owners sued the main contractor
for the cost of repairs under the Anns principle. There was a finding that the
main contractors' supervisors ought to have known that there had been a
departure from the specification. The plasterers were not worth suing, and the
flat owners sued the main contractor. Held, by the House of Lords, affirming
the Court of Appeal and not following the Mount Albert case, that in the
absence of knowledge of the specification departure, the main contractors
were not liable. D. & F. Estates v. Church Commissioners (1989).85
[Note: the House of Lords had also, however, held that no Anns duty was
owed in any event by persons other than local authorities in respect of econ-
omic loss of the kind claimed, and this may have influenced Lord Bridge's
reasoning. The case in the Court of Appeal was criticised by the editor on this
point,86 on the ground that negligence by the main contractors themselves had
been found to be present, but also based on the high degree of control to be
expected by main contractors over the simpler types of construction work as
well as on the unreality of treating self-employed building craftsmen, engaged
as such primarily for taxation purposes under the "lump" system in England,
as enjoying an independent contractor status sufficient to discharge the main
contractor's responsibilities in tort.]
(3) The plaintiff and the defendants lived in adjoining terraced houses. The
defendants engaged a contractor to re-roof their house, where their new tiles
would overlap with the plaintiff's roof. Later damp appeared in the plaintiff's
house due to some of the slates on his roof being removed and the joint
between his slates and the new tiles being inadequately made. After the con-
tractor had become bankrupt the plaintiff sued the defendants for the cost of
remedial work. Held, by the Court of Appeal, that although the defendants
had the right to interfere with the joint between the two roofs and to intrude
114 [1979]"2 N.Z.L.R. 234, at p. 240.
S.1 [1989] A.C. 177, at p. 208, affirming the Court of Appeal.
811
In (1988) 3 Const.LJ. 100.
 / ""
238 GENERAL PRINCIPLES OF LAW [CHAP. l
slightly on their neighbour's roof, they must exercise reasonable skill and care
in so doing, and this duty could not be delegated to an independent contract-
or, since the work involved a risk of damage to that property: Alcock v. Wraith
(1991).~
SECTION 13. ECONOMIC DURESS
1·390 This subject would perhaps be more appropriately discussed supra, under
Void and Voidable Contracts, since it goes to the question of consent. In
recent years the English Courts have expressly recognised the principle
that economic pressure exploited by one.party so as to force the other into
an agreement into which he would not otherwise have entered will invali-
date that agreement if the facts show a coercion of will sufficient to vitiate
consent.88
The principle is unlikely to apply on the facts of most original construc-
tion contracts of sub-contracts entered into by the parties, but may well be
relevant in cases where a new contract or sub-contract is made in replace-
ment of one not yet fully performed, and it can be shown that the promisee
was already bound by the earlier contract and that the promiser, usually
the owner or in a sub-contract the main contractor, had been forced
unwillingly into making additional promises or concessions in order to
secure due performance.89 Clearly the dividing line between legitimate
competitiveness and unacceptable coercion may be a fine one over which
opinions may differ. The principle is of relatively longer-standing in the
United States,90 and was apparently already developing in 1950.91
81 59 BLR 16 applying dicta of Lord Blackburn in Hughes v. Percival (1883) 8 App. Cas. 443,
at pp. 445-446.
!l8 North Ocean Shipping Ltd. v. Hyundai Construction Co. [1971] 1 Q.B. 705 (Mocatta J.);
Pao On v. Lau Yiu Long [1980] A.C. 614, and Moyes & Groves Ltd. v. Radiation New
Zealand Ltd. [1982] 1 N.Z.L.R 368, N.Z.C.A. although in all these cases the claims in the
event failed; contrast Universe Tank Ships of Monrovia v. International TransPort Workers
Federation [1983] 1 A.C. 366, where the claim was successful.
59
See D & C Builders Ltd. v. Rees, illustrated supra, para. 1·075, as explained in Chitty (26th
ed.) op cit., paras. 197-198 and 227. See also Chitty (26th ed.) paras. 501, 505-507. See also
Williams v. Roffey Bros. illustrated supra, para. 1·069, where economic duress was not in
fact pleaded and an appeal- not proceeded with.
90 See,e.g. Fruehauf Garment Co. v. U.S.111F.Supp. 945 (l953);JohnsonDrakev, lf.S. 531F.
2nd 1037, 1042-3 (Ct. Cl. 1976); LoUisiana-Pacijic Corp. v. U.S. 656 F. 2nd 650 (1981).
9, See Corbin on Contracts Vol. 1 (1952) para. 171.
CHAPTER2
ARCHITECTS, ENGINEERS AND SURVEYORS
Section 1. Need for Employment.................. .
Section 2. Definitions and Qualifications
(1) Architects........................................................................................ 2·006
(2) Engineers..................................................................... 2·016
(3) "In House" or "Associate" Architects and Engineers............... 2·020
(4) Professional Assistants and Clerks of Works.............................. 2·023
(5) Quantity Surveyors.................... 2·031
(6) Structural Engineers.............. 2·035
(7) Project Managers........................................................................... 2·037
Section 3. Contract of Employment
(1) Generally.................................................................................. 2·041
(2) Form of Appointment.................................................................... 2·043
(3) Conditions of Appointment....................................................... 2·044
(4) Duration and Termination of Appointment............................... 2·049
(5) Death, Bankruptcy or Inability to Act of the Architect or
Engineer............................................................................ 2·054
(6) Death or Bankruptcy of Building Owner.................................... 2·056
Section 4. Authority of the Architect and Engineer
(1) Generally......................................................................................... 2·057
(2) As to Waiver of Contractual Requirements of Building
Contract..................... 2·058
(3) As to Contract or Variations......................................................... 2·061
(4) As to Taking out Bills of Quantities............................................ 2·069
(5) As to Measurement and Valuation of Variations..................... 2·072
(6) As to Employment of Engineering or Other Consultants........ 2·074
(7) Express Powers under Building and Engineering Contracts.... 2·078
(8) Effect of Restrictions as between Owner and Architect........... 2·079
Section 5. Rights of Contractor when Architect or Engineer Exceeds Authority
(1) Warranty of Authority................................................................... 2·080
(2) Measure of Damages for Breach of Warranty............................ 2·081
Section 6. Duties and Liabilities of Architects and Engineers to Employer
(1) Generally
(a) Nature of duty. 2·083
(b) Standard of care......... 2·086
(2) Duties in Detail
(a) Design
(i) Degree of care. 2·099
(ii) Continuing duty and limitation ............................... 2-108
(iii) Measure of damage .................. . 2·111
(iv) Delegation............................................. . 2·114
(b) Examination of site.......................................................... .. 2·124
(c) Delivery of drawings, infonnation and instructions in
time....................................................................................... 2·130
(d) Instructions as to methods of working and temporary
works.................................................................................... 2·138
(e) Special duties in regard to nominations........................... 2·144
(f) Knowledge of legislation, building regulations, by~laws
and rights of adjoining owners.......................................... 2· 146
(g) Excess of cost over estimates..................................... 2· 156
239
 240 ARCHI'IECTS, ENGINEERS AND SURVEYORS [CHAP.2 SECT. l] NEED FOR EMPLOYMENT 241
(h) Preparation of quantities.................................................. . 2·16i or engineering contracts will be placed by an owner with a contractor upon
(i) Recommending builders................................................... . 2·165
G) Recommending form of contract. 2·167
designs and specifications prepared by or on behalf of the contractor with-
(k) Supervision......................................................................... . 2·182 out any professional advice being taken by the owner on his own behalf.
(I) Administration of contract. ............................................. .. 2·198 Such contracts, described in this book as "turnkey" or "design-and- 2-00;
(m) Comprehensive design................................................... . 2·202
(n) Surveys build" contracts,1 are more likely to be used in high technology industrial
(i) Liability .................................................................... .. 2·203 plant or mechanical plant projects, where the construction or erection
(ii) Measure of dainage .................................................. . 2·205 element, as opposed to manufacture and supply of plant, may be compl,lra-
(3) Quasi~Judicial Duties.................................................................... . 2·214
(4) Negligence in Certifying............................................................... . 2·218 tively small, and where independent consultant or design advice may not
(5) Limitation ...................................................................................... .. 2·222 be readily available to owners.2 However, their use in the case of more
Section 7. Duties and Liabilities of Quantity Surveyors
(1) Bills of Quantities Defined ................ . 2·223
conventional construction projects has also been advocated by major con-
(2) Preparation of Bills and Other Duties........................................ . 2·228 tractors or project managers-both domestically and internationally-
Section 8. Fraud and Bribery and also by some foreign governments under earlier Japanese influence in
(1) Fraud .. 2·232
(2) Bribes and Secret Commissions.................... . 2·233 the Pacific Basin,· althou·gh international Japanese contractors now
Section 9. Remuneration of Architects, Engineers and Quantity Surveyors appear increasingly to find measured contracts attractive, like their West-
(1) For Completed Services ern counterparts, and have not been slow to exploit the opportunities for
(a) By special contract.. ..... . 2·237
(i) The size of the total percentage fee itself. ............. . 2·239 claims on measurement which they afford. 3 These contracts have a num-
(ii) The degree of"front-loading" of the earlier instal- ber of inherent disadvantages for owners which need careful consider-
ments.......................................................................... . 2·240 ation before deciding on their use in all but high technology industrial
(iii) Total cost on which the percentage fee is calcu-
lated ........................................................................... . 2·241 plant contracts, where there may be no practical alternative. In lower
(iv) Consultants ............................................................... . 2·242 technology, more conventional, projects where these contracts are used,
(v) Specialist sub-contractors or suppliers responsible
for design ................................................................... . 2·243
the owner will often employ A/E professional advisers for the purpose of
(vi) Supervision generally............................................... . 2·244 preparing his own initial outline specifications, giving the necessary indi-
(b) Implication of reasonable remuneration........................ . 2·247 cations of his requirements to prospective turnkey contractors, as well as
(c) Work done on approval and probationary drawings .... . 2·249
(d) Competition drawings....................................................... . 2·251 for the purpose of comparing and advising on competing designs which
(e) Amount of reasonable remuneration............................. .. 2·255 may be submitted by tenderers, and possibly for the supervision and
(2) For Uncompleted Services ........... . 2·260 administration of the construction contracts themselves. A number of the
(3) By Whom Remuneration Payable............................................... . 2·265
(4) Services Outside Building Contracts...................... . 2·266 inherent disadvantages referred to will in fact make the satisfactory dis-
(5) Charges for Settling Builders' Accounts ..................................... . 2·268 charge of these services much more difficult for an AJE than in a conven-
(6) When the Right to Payment Arises.............. . 2·269 tional project designed by the A/E himself. Accurate comparison of
(7) Retention of Plans and Documents ............................................. . 2·270
(8) Ownership and Copyright of Plans and Documents tenders is also very difficult.
(a) Ownership.......................................................................... . 2·272 This chapter is, however, primarily concerned with the role of archi- :Z.00,
(b) Copyright. .. . 2·273
(i) Copyright of the buildings themselves.................. . 2·274
tects, engineers and surveyors in the more conventional owner-designed
(ii) Copyright of the plans and drawings of a building 2·275 project which.judging from the contents of the law reports, still appears to
(9) Remuneration of Quantity Surveyors......................................... . 2·283 constitute the great majority of construction contracts in the building and
Section 10. Liability for Quantity Surveyor's Fees
(1) Liability to Pay for Preparing Bills .............................................. . 2·286 civil engineering fields in most Commonwealth countries.
(2) Liability for Measuring Up........................................................... . 2·288 Under the traditional arrangements, Whi~h still obtain in the United
Kingdom in the great majori_ty of cases _where substantial building or
engineering works are pfojected, the owner, before he enters into a con-
SECTION 1. NEED FOR EMPLOYMENT
tract at all, will seek professional advice upon the design of the works and
also upon the preparation of the contract under which they are to be car-
2-001 In some cases a building contract can of course be constituted without the
owner engaging any professional adviser to guide him. Thus, numerous 1
See Chap-. 1, "Definitions", supra, para. 1·004 and.1·010.
2
small building contracts are placed by owners for the repair and mainten- For industrial plant contracts, see C.C.P.P., Chap. 24, and for tum key contracts in general,
See post, Chap. 3, paras. 3·026-3·032, and see C.C.P.P., paras. 23-05 to 23-11, 24-04 to
ance of structures, and even for the construction of buildings, in which the 24-14, 24-18 and Chap. 25.
owner relies upon the contractor to guide him as to what shouldJ;e done. J See, e.g. the Privy Council case of Mitsui Construction· Co. Ltd. v. A.-G. of Hong Kong

On the other hand, it will be only in exceptional cases that larger building (1986) ~3 BLR 1, analysed in detail by the editor, (1987) 3 Const. L.J. 3.
 242 ARCHITECTS, ENGINEERS AND SURVEYORS [CHAP.2
ried out. The professional advice available to the owner in building cases
in this respect is normally that of an architect, structural engineer or quan-
tity surveyor, and very frequently a combination of all three under the
overall control of the architect, or more rarely of a chartered surveyor.
These persons may either practise independently or "in house" under the
direct employment of the owner. But even in cases where the owner has a
staff professionally competent to advise him, as in the case of local author-
ities, he may often choose to employ indepen_dent advisers or firms on
projects of importance.
In the civil engineering industry, the owner will usually only look to the
consulting engineer, whose firms normally undertake all ancillary pro-
fessional services such as quantity surveying and the preparation of bills of
quantities, for initial advice, feasibility studies and recommendations.
2·004 The advice sought by an owner from bis architect or engineer may, in
the first instance, be concerned solely with the practicability and suit-
ability of the works which the owner may be minded to construct, necessi-
tating at that stage little more than a report, though this stage may also
involve the preparation of preliminary drawings and cost estimates of the
project together with sketch designs of the works to be carried out. With
modern large buildings this may involve the intervention at this or a later
stage of the structural engineer, employed either directly by the building
owner, or indirectly by the architect. Many architect's firms in fact now
include partners with structural engineering qualifications. Only when the
owner is satisfied that he wishes the project to proceed and all necessary
planning and other consents have been obtained will contract drawings
and specifications or bills of quantities (which under the standard forms of
building contract in the United Kingdom include the specification, and
which will be needed if a measured contract is to be used} require to be
prepared and a building contract put out to tender or otherwise placed
with a contractor. It is usually the practice in the building industry in the
United Kingdom for the contract drawings to be of a fairly general charac-
ter, their primary purpose being to enable prices to be obtained, and the
standard forms all contemplate the issue, after the contract is signed, of
further drawings and details-called in the industry working drawings-
which will be needed whether or not the work is varied. The more usual
practice, prior to metrication, was for complete one-eighth inch scale
architectural drawings to be available at the tender stage, but it is
extremely rare to find engineering drawings (for example, for reinforce-
ment steel in concrete buildings) available at this stage, and the evolution
of working drawings may involve modification of the earlier contract
drawings, but in fact rarely seems to do so. In addition one-quarter inch or
one-half inch details of points of difficulty (that is, working drawings) may
or may not (usually not) be available at the tender stage, but will be
needed before the relevant work can proceed.
2·005 Usually the architect or engineer will also be required by his employer
to supervise the execution of the works and to certify the paymetttS due to
the contractor; and to enable him to do so effectively the construction
NEED FOR EMPLOYMENT 243
contract should define his powers with some precision, which many con-
struction contracts do not do, particularly in regard to defective work,
temporary works and methods of working. But it should not be forgotten
that the building contract is made between the owner and the contractor,
while the duties owed by the architect to the owner will depend upon his
own contract, express or implied, with the owner, often concluded a con-
siderable time before the building contract is let or its terms and con-
ditions necessarily known. It is 'Yith these contracts of employment of the
professional advisers of the owner that this chapter is concerned, in par-
ticular those of the architect, engineer and quantity surveyor. Neverthe-
less, these contracts of employment are frequently much less informative
on the subject of the A/E's powers and duties, and there is no doubt that
the courts will pay considerable regard to the provisions of the construc-
tion contracts which the A/E has agreed to supervise and administer (if he
has not actually recommended their use by the owner) in order to ascer-
tain the duties owed by the A/E to his client. Since 1976 the professional
body in the United States appears to have adopted a remarkably frank
policy of inserting express limitations or exemptions of liability for the
architect, as against his client as well as the contractor, even in the con-
struction contracts themselves: see Clauses 2.2, 2.24 and 3.3.6 of the 1976
AIA contract. This has not as yet happened in the Commonwealth where,
however, the courts have not imposed such wide-ranging and unrealistic
liabilities in tort and contract on professionalA/Es.4 It is with the contracts
of employment of the professional advisers of the owner that this chapter
is concerned, in particular those of the architect, engineer and quantity
surveyor.
SECTION 2. DEFINITIONS AND QUALIFICATIONS
(1) Architects
An architect is a person who professes skill in the art of designing build- 2·006
ings to meet his client's needs, in the organisation of the contractual
arrangements for their construction, and in the supervision of work and
contractual administration until final completion. So a major part of an
architect's activities will be concerned with the preparation of contracts,
the obtaining and recommending for acceptance of estimates from build-
ers, the selection of specialist contractors, the inspection of work carried
out, the solution of difficulties encountered during the course of erecting
the building, condemning and dealing with defective work, the issue of
certificates under the terms of the contract and advising or ruling on dis-
putes between the owner and the contractor. Thus it will be seen that
4
See as to this C.C.P.P., Chap. 5. See, however, ante, Chap. 1, paras.1 ·301, 1·311-1 ·313, 1·319
and 1:383-1 ·385 J?-oting a tendency to place an unreasonable burden of responsibility on
A/Es m the exercise of their supervisory duties, in particular in very recent Canadian cases,
see ante, para. 1·306A.
 244 ARCHITECTS, ENGINEERS AND SURVEYORS [CHAP. 2
although it is the primary and vital function of the architect to create new
ideas of amenity and design and to set down those ideas on a drawing-
board, his duties extend far into other fields of technical knowledge and
business management. On the other hand, while he will remain primarily
responsible to the owner for all matters of design, modem techniques of
construction and specialised building products and processes in fact
demand expertise and skill for which he will inevitably not always be per-
sonally qualified. The employment of outside consultants or the less satis-
factory (from the legal point of view if the employer's interest is to be
properly protected) device of delegating important design functions to
specialist sub-contractors and suppliers, are therefore a frequent and
inevitable accompaniment of many major building projects but, as will be
seen, the architect is the "captain of the ship" and will be the person to
whom the owner will normally look if a design failure occurs, though in
some, but not all, cases he will adequately discharge his own overall
responsibility if he exercises due professional care in referring matters
outside his own expertise to a consultant or specialist supplier or con-
tractor, particularly if these latter are engaged on behalf of the owner and
not by the architect himself.
2·007 The Architects' Registration Tribunal have formulated a definition
which was cited by the Divisional Court in R. v. Architects' Registration
Tribunal, exp. Jaggar5:
"An architect is one who possesses, with due regard to aesthetic as well as
practical considerations, adequate skill and knowledge to enable him (i) to
originate, (ii) to design and plan, (iii) to arrange for and supervise the erec-
tion of such buildings or other works calling for skill in design and planning as
he might in the course of his business reasonably be asked to carry out or in
respect of which he offers his services as a specialist."
2·008 As stated, the architect does not merely design and supervise the erec-
tion of buildings, but also gives prospective building owners preliminary
advice on the type of building to be erected and the cost of erection. Since
it is obvious that a design is wasted which will only produce a building
costing considerably more than the owner's resources or the sums allo-
cated by him to the project, the architect must possess at least sufficient
knowledge of the cost at current prices of buildings or other works which
he may design, so that the cost of carrying out his designs will come within
a reasonable distance of the owner's requirements in so far as these have
been made known to him.6 In England, quantity surveyors usually profess
a higher degree of skill in this area, however, and an architect will usually
defer to their judgment in a matter of valuation, although where no
quantity surveyor is consulted an architect will undoubtedly remain liable
to his client for negligent estimates of cost, although the required
standard may not be so high. For the same reason, an architect will need to
l [1945] 2 All E.R. 131.
6
See infra, paras. 2·156-2·160.
SECT. 2] DEFINITIONS AND QUALIFICATIONS 245
know enough about building techniques to avoid designing buildings
which can only be constructed above the budget communicated to him by
his client or at unreasonable cost, and also to carry out his supervisory
functions satisfactorily.
Where construction techniques are concerned, the structural engineer
will again have greater expertise than the architect, certainly in the United
Kingdom, and so too, it is suggested, will building surveyors ( a special
class of surveyors primarily concerned with the maintenance, repair,
refurbishment or conversion of buildings) in their own particular field. In
addition, quantity surveyors as a profession increasingly appear to profess
at least as great if not greater skill than architects in regard to building
methods and techniques, which it is certainly their professional function to
analyse and break down into their component parts for pricing purposes.
A certain lobby, though certainly not all, of the quantity surveying pro-
fession also profess equal or superior expertise in the interpretation and
administration of the standard forms of contract in the United Kingdom,
and an increasing number of their profession in fact now practice as
"claims consultants" advising both owners and contractors with regard to
the presentation of claims for additional payment.
It should in justice to architects be emphasised that their primary design 2-009
function and training relates to the provision of final permanent work in
place which is not only structurally sound and with the necessary degree of
durability and ease of maintenance but, which is at least of equal import-
ance, will also be best suited to the amenity needs of their client. By con-
trast, the expertise of successful and competent contractors in choice of
temporary works or methods of work (that is, in the "buildability" of the
design and the "hows" of construction) can be reasonably expected to
equal or exceed that of the architect.7 However, the value and importance
to the client of a well-designed building from the amenity point of view
may not be immediately apparent and can easily be under-estimated, and
it is suggested fully justifies the architect's traditional role as "captain of
the ship" in a building contract against the claims of other professionals.8
On most major projects if a measur.ed contract has been decided on the 2-010
architect in the United Kingdom collaborates with quantity surveyors,
whose function it is to prepare the bills of quantities upon which con-
tractors will be asked to tender, and who will also carry out all the work of
valuation for purposes of_ interim and final payment if. valuation, as
opposed to stage payments, has been chosen as the basis of interim pay-
ment (though the practice is that actual certification is carried out by the
architect, to whom the quantity surveyors refer matters of principle or
disputed items, while making their recommendations on pure matters of
valuation or of adjustment of the contract sum including, for example,
7
See ante, Chap. 1, Section 12(2)(d), paras. 1·295-1·296 and Section 12(9)(c)(i), paras.
1·383-1 ·385, where this is again emphasised.
8
See C.C.P.P., para. 24--15 (p. 419), where the claims of a certain lobby of quantity surveyors
in this respect are considered.
 246 ARCHITECTS, ENGINEERS AND SURVEYORS [CHAP. 2
variations, fluctuations and adjustment of PC and provisional sums). The
commonest consultants encountered in practice are structural engineers
(foundation design and steel and reinforced or precast concrete frames
and structures) and heating engineers (heating and ventilation) and, in
civil engineering contracts, mechanical or electrical engineers (for plant
and machinery) and soil mechanics specialists.
2-011 The profession of architects in England is subject to the overall control
of the Architects' Registration Council acting under the Architects Regis-
tration Acts of 1931, 1938 and 1969. 9 The main practical effect is that no
one may practice or carry on business under any name, style or title con-
taining the word "architect" unless he is a person registered by the Archi-
tects' Registration Council. 10 A person may, however, use the designation
"naval architect", "landscape architect" or "golf course architect" without
any such registration. 11 The validity of any building contract in customary
form is unaffected by the prohibition against the use of the word "archi-
tect" by unregistered persons, 12 although it would appear that an unregis-
tered person who describes himself as an architect when preparing a
building contract is contravening the statute. (There are, however, certain
exceptions to the requirement of registration in the case of employees of
local authorities.) It is also possible for a body corporate, firm or partner-
ship to carry on business under the style or title of "architect", provided
that certain conditions are fulfilled as to the business being under the con-
trol and management of a registered archite_ct. 13 The offence under the
Act, however, involves the actual use of the word "architect".
ILLUSTRATION
2-012 On the appellants' notepaper appeared their names and under each name
the letters "DipI. Ing. Arch." Held, by the Divisional Court, that the appel-
lants were not practising and carrying on business under a name, style or title
containing the word "architect", as that word was not used: Jacobowicz v.
Wicks (1956). 14
The phrase "practising as an architect" was considered in R. v. Archi-
tects' Registration Tribunal,exp. Jaggar,15 whereithad been defined by the
Registration Tribunal as: "holding out f6r reward to act in a professional
capacity in activities which form at least a material part of his business. A
man is not practising who operates incidentally, occasionally, in an admin-
istrative capacity, or in pursuit of a hobby".
9
For a full account of the Acts and Regulations see Halsbury's Laws of England (4th ed.),
Vol. 4, paras. 1302 to 1312.
·~ s.1 of 1938 Act.
ll/bid.
12
/bid.
13
1931 Act, s.17, and 1938 Act, s.1(3).
14
[1956] Crim.LR. 697.
11
[1945] 2 All E.R. 131.
SECT. 2] DEFINITIONS AND QUALIFICATIONS 247
However, for an unqualified person to purport to be an architect when
charging money for his services is also an offence under the Trades
Description Act 1968.
ILLUSTRATION
An architectural student who had passed his intermediate examination 2·013
listed himself in the Yellow Pages directory under "architect" and described
himself as an ARIBA in the ordinary directory. He provided drawings for an
owner making alterations to his house who answered the advertisement.
Held, by the Court of Appeal, he had been rightly convicted of an offence
under section 19{1)(a) of the Trades Description Act 1968. The Court left
open whether there would have been an offence under the Act had he had a
full qualification: R. v. Breeze (1973). 16
The Council have power under the 1931 Act to remove from the register
the name of any person convicted of a criminal offence or found guilty by
the Council's Discipline Committee of conduct disgraceful to him in his
capacity as an architect. "Criminal offence" includes disobedience to a
by-law. 17 Any person aggrieved by the removal of his name from the regis-
ter or by a determination that he be disqualified for registration during any
period has a right of appeal to the High Court. 1s The Court has power to
decide, upon the hearing of such an appeal, whether the appellant was
guilty of disgraceful conduct, and has the same powers as the Court of
Appeal on appeal from a judge of first instance. 19
The majority of architects, in addition to being registered, also belong 2-014
to one of the professional institutions, of which the most important is the
Royal Institute of British Architects. The RIBA publishes a code of con-
duct of its own for its members, the ultimate sanction for which is presum-
ably the power to expel a member, but such expulsion would not affect the
individual's right to practise as an architect once admitted to the register.
The Registration Council also publishes a broadly similar code for the
guidance of the profession, in the form of a series of principles and exam-
ples under those principles, and also publishes concise reports of its
decisions to the profession. This code is clearly desirable as giving the pro-
fession an indication of the sort of conduct of which the Council is likely to
disapprove in proceedings for removal of an architect from the register,
but it cannot be regarded as a conclusive determination of what is or is not
disgraceful conduct, since the statute does not delegate to the Council the
power to make rules for the conduct of the profession or to enforce them,
and since the only offence for which an architect can be removed from the
16
[1973] 1 W.L.R. 994.
17
Mel/orv. Denham (1880) 5 Q.B.D. 467.
18
1931 Act, s.9.
19
Hughes v. Architects' Registration Council [1957] 2 Q.B. 550, infra.
 248 ARCHITECTS, ENGINEERS AND SURVEYORS [CHAP. 2
register is disgraceful conduct in his capacity as an architect. It seems clear
that it is not sufficient merely to prove a breach of the code, whether of the
RIBA or of the Council, and indeed this follows from the reasoning and
judgments in the case below. Since, however, evidence would no doubt in
most cases be available to the effect that the great majority of members of
the profession faithfully follow the code, then if in any case an architect
obtained some advantage over his fellows by deliberately breaking the
code, particularly if it was not done openly, that would be at least some
evidence of disgraceful conduct. 20
ILLUSTRATION
2-015 An architect was in practice as an architect and estate agent since 1922. He
became registered under the Act of 1931 in 1934. In 1936 the Registration
Council published the first code of professional conduct, which prohibited the
practising of an estate agent's business by architects, but resolved not to take
action against architects so practising at the time of their registration. In 1949
the Council amended their code, withdrawing the 1936 concession as from
January 1, 1956. The architect discussed his position with the registrar of the
Council in 1955, but continued to practise after January 1, 1956. The Council
disqualified him from practice for two years. Held, by the Divisional Court,
that, in the particular case of this architect, practising as an estate agent did
not amount to disgraceful conduct. Per DevlinJ.: "It is not of itself disgraceful
to disagree with a majority view and to act accordingly. It is only if a man has
bound himself in honour to accept that view and to act according to the code
that a deliberate breach of the code for his own profit can be called disgrace-
ful": Hughes v. Architects' Registration Council (1957). 21
The Acts also set up a board of architectural education composed of
representatives of various schools of architecture and other institutions,
associations, professional and trade organisations concerned with archi-
tecture. This board has the duty of advising the Registration Council upon
examinations and also of itself holding examinations.22
(2) Engineers
2-016 The word "engineer" is a loose term equally applicable to the engine
maker, engine driver and the engineer employed in the design and super-
vision of constructional works. In this book the expression "engineer" is
used in the latter sense, and is more fully, perhaps, described as a "civil
engineer". This expression has been defined as one who professes know-
ledge of the design and construction of works such as bridges, docks, bar-
20
See,per Devlin J. in Hughes' case, supra, at pp. 561-562.
21. [1957] 2 Q.B. 550.
22
1931 Act, s.5(2): see also the 1969 Act.
SECT. 2] DEFINITIONS AND QUALIFICATIONS 249
bours, canals, railways, roads, embankments, water, drainage and gas
works, and factories. 23
In the light of modem technological developments, specialist engineers
are now widely concerned with the design of the foundations and struc-
tures of buildings, as well as their heating, ventilating, electrical, mechan-
ical and other modern services. In this connection, they are often called in
to advise and collaborate with the architect. 24
The Institution of Civil Engineers has described the profession of civil
engineer as "the art of directing the great sources of power in nature for
the use and convenience of man". It is in fact doubtful if there is any single
definition which is satisfactory, other than the rather compendious list of
works already given. The basic characteristic of classical civil engineering
work ( as opposed to civil engineering work associated with superstruc-
tures of buildings) is that (with the exception of certain special superstruc-
tures such as bridges and darns) much of the work is concerned with
construction at or below ground or water level. By comparison with build-
ing work, therefore, it is in general more attended by unexpected factors
unpredictable quantities of work which may affect its economics.
The civil engineer's function in relation to design and supervision is 2·017
similar to that of the architect. Unlike an architect, however, he may on
occasion design not only the final permanent works in place, but also tem-
porary works ancillary to their construction. Thus, where a complex
engineering project will clearly require temporary works to be con-
structed before the main work can be carried out, such as a coffer dam at
the entrance to a proposed dry dock or outfall, or temporary diversions of
existing roads to maintain traffic flow during major new road works, or
special access roads, the engineer may or may not choose to design such
temporary works and include them as part of the contract. Even where an
engineer does not actually design temporary works, some engineering
contracts, including the ICE conditions, tend to confer rather more power
on the engineer to intervene in or at least question contractors' methods of
working, 25 which may give rise to difficulties in deciding precisely what is
included in the contract price,26 and clearly may have the effect of extend-
ing his own or the owner's liability in tort to third persons suffering injuries
or damage as a consequence of the work being carried out.27 In general,
however, most construction contracts are seriously lacking in precision
in this area, in particular in failing to define the circumstances in
)' 23
0. Masselin, Responsibiliti des Architects (1879), s.38: see also the closely similar list in the
I Oxford English Dictionary.
I
24
For structural engineers, see infra, Subsection (6), paras. 2·025-2·036, and for consultants
generally see further infra, paras. 2·020---2·021.
25
See, e.g., Oause 14 of the ICE fifth edition conditions.
l
26
See post, Chap 7, Section 1(2)(g), and the case of Neodox Ltd. v. Swinton and Pendle bury
Borough Council there referred to.
27
See ante, Chap. 1, paras. 1·311-1·313, where the extent of the architect's duty to third per-
sons suffering damage from building operations under his supervision is considered.
t
i
 250 ARCHITECTS, ENGINEERS AND SURVEYORS
which additional payment will or will nOt be due as a result of an NEs
intervention or instruction in such matters. 28
2-018 There are many special classes of civil engineers, for example, mining
engineers, whose profession it is to plan and superintend mining oper-
ations, soils engineers, sanitary engineers and firms specialising in hydro-
logical and tidal work, waste disposal, and oil rig design, and as industrial
progress continues, new sub-divisions of specialisation are constantly
arising.
Unlike the profession of architect, there is no restriction upon persons
styling themselves "engineers" or "civil engineers". Practising civil engin-
eers are, however, usually members of one of the professional bodies, of
which the Institution of Civil Engineers is the most important. Member-
ship of this institution is only granted upon obtaining certain professional
qualifications. The nature of this institution was discussed in Institution of
Civil Engineers v. IRC. 29 Constituted by successive Charters of 1818, 1876,
1896 and 1922, its purpose under its founding. Charter was "the general
advancement of mechanical science and more particularly for promoting
the acquisition of the special knowledge which constitutes the profession
of civil engineer". It is interesting to note that in 1932 the President's evi-
dence (admittedly in the context of seeking charitable status for tax pur-
poses) was that at that date many eminent civil engineers were not
2·019
members, citing as examples the chief engineers of one ministry and of
three cities, and that the main object of the Institution was the advance-
ment of mechanical science and that securing the professional advantage
of its members was neither a substantial nor collateral object.
While there is no educational or professional qualification required for
practice as a civil engineer, a chartered civil engineer must be a member of
the Institute, which does prescribe educational and other qualifications
for membership, and no doubt, an injunction would lie to prevent him
from.so describing himself. Also, under the principle of R. v. Breeze,
supra, it would no doubt be an offence under the Trades Description Act
1968 to practice for reward under that description.
It should perhaps be mentjoned that a high proportion of civil engineer-
ing contractors' supervisory staff are fully qualified chartered civil engin-
eers, and that a greater degree of movement and "cross-fertilisation"
between the two sides of the industry occurs than in the building industry,
although a growing number of qualified architects are noW to be found on
the staffs of the larger national building contractors. Civil engineers in
private practice are usually known as "consulting engineers".
(3) "In House" or "Associate" Architects or Engineers
2·020 It has not been uncommon in the past for hospital boards, new towns and
other statutory corporations, and for some local authorities or substantial
28
See Clauses 1(3) and 2 of the Singapore SIA building contract, C.C.P.P., pp. 554.,-?.56, 625-
626, which does attempt to do so.
i9 [1932] 1 K.B. 149, C.A.
[CHAP. 2 SECT. 2] DEFINITIONS AND QUALIFICATIONS 251
companies with their own architectural or civil engineering departments,
nevertheless, to employ "private" or "project" firms of architects or engin-
eers to act on their behalf in relation to specific projects. While the "in
house" architect may be the named architect in the construction contract,
it has also been common for the subordinate private finn to be the named
architeCts, and, to find in the contract documents the name of the perma-
nent salaried architect or engineer of the owner described as the "consult-
ant" or "associate" architect or engineer in charge, and wording such as
"under the direction and overall control of" suggesting that their status is
superior to that of the named architect or engineer.
These expressions may reflect the fact that, as with an ordinary owner, 2·021
the architect is to receive his instructions from the person concerned as the
owner's servant or agent; but will rarely accord with reality as between the
contractor and the owner, since they are nearly always used when the real
burden and responsibility of the task of designing and supervising the con-
tract work is to be discharged by the private "named" firm. This type of
arrangement is unwise because it can only have the effect of affording the
independent firm an argument for diminishing its own professional
responsibility in the event of design or other failures of administration. It
can also cause serious misunderstanding and legal and practical difficult-
ies in the administration of the contract in the event of the "consultant" or
If "associate" seeking to deal directly with the contractor in any way, since
an important objective of most building contracts is to avoid this very con-
fusion and provide for one person only, that is to say the named architect,
to whom the contractor can look for instructions and with whom he can
I deal. In fact the vast majority of such "consultants" or "associates" are no
more than the owner's representatives for the purposes of communicating
I his wishes and requirements to the independent architects in a rather
more informed way than a technically unqualified owner or representa-
! tive might do, but their interposition vis-d-vis the contractor offends
I against the basic rule that the owner should always avoid dealing directly
with the builder, and only do so through the architect named in the
contract.
An example of the dangers for the owner of this practice is to be seen in 2·022
the case of AMF International Ltd. v. Magnet Bowling Ltd. 30 where the
owner was, largely for this reason, held unable to rely on section 2(4 )(b) of
the Occupiers' Liability Act 1957 (which would have afforded him a
defence had he employed his private architects in the normal way without
seeking to place them under some undefined control by his own salaried
architect) and so avoid liability under that Act to a specialist direct con-
tractor whose work had been damaged by the main contractor's failure
properly to protect the works. If a "two-tier" NE arrangement is indeed
contemplated by the owner, the construction contract should deal
expressly with any division of responsibilities ( compare Clause 2 of the
ICE contracts with regard to the r6le of the resident engineer) and to use a
30
[1968] 1 W.L.R. 1028, illustrated ante, Chap. 1, paras. 1·334-1·336.
 252 ARCHITEcrS, ENGINEERS AND SURVEYORS [CHAP. 2
standard form unamended will be an invitation to trouble and difficulty.
The expression "consultant" is, of course,·used in this discussion in a
sense different from genuine consultants in charge of a specialist part of a
project, or the title "consulting engineer" which is often used by civil
engineers in effective charge of an engineering project in the traditional
way. Genuine consultants are discussed infra, Section 4(6), and where
employed by the owner in an area outside his normal A/E's competence
will, to that extent, reduce the A/E's own responsibility to his client.30a
(4) Professional AssistanJs and Clerks of Works
2·023 In contracts of any magnitude it is obviously necessary for architects or
engineers to delegate a part of their functions, in particular with regard to
the supervision and administration of the contract. Engineering contracts,
by reason of their magnitude, the fact that many firms of civil engineers
are centrally located in London rather than in the area of a specific project,
and indeed that many engineering works are carried out abroad, fre-
quently contain specific recognition of this fact in the contract documents,
in that provision is made for the delegation of duties to a resident engin-
eer, who in major contracts is usually a fully qualified engineer. The resi-
dent engineer is usually found by the consulting engineers either by
advertisement or sometimes, in very important contracts, from their own
staff. In the majority of cases he is employed and paid by the owner under
the contract and, when this is so, he has been held to be a servant and not
an independent contractor.31 In building contracts, while the use of quali-
fied architectural assistants, who are permanent employees of the archi-
tect's firm, is widespread in larger contracts, it is unusual to find their
status in any way regulated by the contract documents, and they normally
function merely as agents of the architect, though without any power vis-
ll-vis the contractor to discharge or carry out his many certifying or other
administrative duties under the contract.32 Resident engineers, on the
2·024
other hand, frequently are so empowered in a greater or less degree by the
contract documents, usually by reason of a provision permitting some del-
egation of the engineer's powers.33
Clerks of works are usually employed for a specific project, in many
cases on the i:econunendation of the architect, though it is not unusual for
building owners with their own building departments or organisations to
put forward one of their own employees. They are almost invariably
employed and paid for by the building owner. (Clause 1.18 of the 1966
RIBA scales, and subsequent RIBA conditions of engagement, provide
that the clerk of works shall be nominated or approved by the architect,
JO>See infra, Section 6(l)(b), para. 2·093.
31 Morren v. Swinton and Pendlebury Borough Council [1965] 1 W.L.R. 576.
32 See post, Chap. 6, Section 6(5).
33 See, e.g. Oause 2 of the ICE standard forms.
Secr.2] DEFINITIONS AND QUALIFICATIONS 253
and b~ under his dire~tion and control, but shall be appointed and paid by
the client or alternatively employed by the architect who shall be reim-
bur~ed f?r his wages. 34 Their use is more common in building than in
eng1neenng contract~, an~ t~eir position is frequently regulated by the
contract documents 1n bu1ldmg contracts, rarely if ever in the case of
en~neering contracts. Their qualifications may vary from those of a
:etired tradesman or foreman to a fully qualified architct or engineer but
m general their position is considerably inferior to that of a resident e~gin-
eer, and the extent of their authority much more rigorously circumscribed
by the contract documents-thus, under the RIB A/JCT forms of contract
the clerk of wor~s is ?nly the owner's agent for the purpose of inspection:
though :erbal duecti~ns of the clerk of works, if confirmed in writing to
the architect and not dissented from, may attain the status of an architect's
instruction under that form of contract. Tbis last power has been circum-
scribed to the point of extinction (probably uuintentionally) by Clause 10
ohhe 1%3 and 1980 standard forms respectively, which deny any auth-
onty until (and not retrospectively) confirmed by the architect in writing
(when they would have authority in any event for that reason).
The clerk of works, tho_ugh usually, as stated, employed and paid by the 2,025
owner,. I~ intended to assist the architect in the discharge of his duties of
superv1S1on and control of the work, and, since he is likely to be the only
person pe:manen~ly pre~ent on the site, his work is of the utmost import-
ance, particularly in the light of the speed with which work can be covered
up between the architect's visits, and the practical limitations of what can
be achieved during a single visit on a major project. Close liaison with and
careful briefing by. ~e architect will be needed to achieve a satisfactory
stand.ard o~ superv1:51~n. Nevertheless, an architect employed to supervise
a proJect will r~~~m ~n the last resort personally responsible, and cannot
evade respons1b1hty, 1f a matter is of such importance that he should have
seen to it himself, by delegating or leaving it to the clerk of works.
I ILLUSTRATION
A clerk of wo~ks fraudulently permitted a floor to be laid differently from
~he method specified and without the precautions against damp provided for
f 1n ~e contract. The architect had failed to see for himself that this part of his
design was .a~hered to. Held, the architect was personally responsible for the
damage anstng from dry-rot in the floor: Leicester Board of Guardians v
Trollope (1911).35 ·
,i See Kensington Area Health Authority v. Wettem Composites (1984) 31 BLR 57 at pp
85-87, illustrated infra. ' ·
35
Hudson, Building Contracts (4thed), Vol 2, p. 419. (For this case illustrated more fully
and for other cases on clerk~.of wor~ ?nd delegation of duties generally, see infra, Sectio~
6(2)(k), paras. 2· 186-2·189, Supemsmn", and see also section 6(2)(a)(iv), "Delegation"
paras.2·114etseq. '
 254 ARCHITECTS, ENGINEERS AND SURVEYORS [CHAP.2
2-026 On the other hand, an architect only visits a site at periodic intervals, so
that clerks of works may be in a position to see many things which the
architect would miss. Provided an architect gives proper instructions to a
clerk of works, it is submitted that it would be wrong to impose liability on
an architect for acts or omissions of the clerk of works in regard to matters
which the architect on his own weekly or other visits could not have
reasonably been expected to see to for himself. Moreover, the presence of
a conscientious and experienced clerk of works on site might justify an
architect in visiting less frequently than would otherwise be the case, it is
submitted, just as the presence of a sub-contractor known to have done
work improperly might call for more care in supervision.
ILLUSTRATION
2-027 Engineers warned architects that the fixing of concrete mullions had been
poorly carried out by sub-contractors. Neither the architects nor the clerk of
works subsequently detected or prevented repeated improper postioning of
dowels and cramps and hacking of corbels in an endeavour to make a fit. The
clerk of works was employed, as one of the two alternatives contemplated by
the RIBA conditions of engagement, by the owner, and his position regulated
by Clause 10 of the 1963 RIBA contract as an inspector on behalf of the
owner. The owner sued the architects and the engineers for negligence(in
tort). Held, by JudgeSmout Q.C., that the engineers were not liable for taking
no further action, since that was the responsibility of the architect and they
had other work to do, but, however rapidly the work was covered as new
levels of mullions were placed, the clerk of works, who had been made aware
of the warnings, must have been negligent in failing to see ~e continuous
misalignment of cramps and dowels. The architects had taken no positive
steps after receipt of the engineer's warning to improve supervision. In the
circumstances, the owners had taken no steps to displace their prima fade
responsibility for the contributory negligence of the clerk of works as their
servant, and the architect's liability for the cost of repair would be reduced by
20 per cent. under the contributory negligence legislation: Kensington Area
Health Authority v. Wettern Composites (1984). 36
For further cases on clerks of works, see Section 6(h), "Supervision".37
2·028 The same principles will apply, it is submitted, to the engineer's
responsibility for the acts of the resident engineer where the latter is not
an employee of the engineer's firm or on 16an to the owner from them, as
often happens in important contracts ( depending on the facts, different
considerations might apply in such cases).
Even a resident engineer will have no authority to order variations
unless specifically so empowered by the contract, and no purported
delegation of the power by the engineer will be effective so as to bind
the owner unless the contract expressly so permits. Where the contract
36 31 BLR57.
37
' 1, paras.
Infra, para. 2· 182 et seq. See the discussion of contributory negligence ante, Ctiii.p.
1·377 et seq.
SECT. 2] DEFINITIONS AND QUALIFICATIONS 255
requires or permits a resident engineer to exercise an independent judg-
ment between the contractor and the owner, the same rules apply as in the
case of the engineer himself.38
ILLUSTRATION
B_y a contract for the erection of engineering works in Brazil, a resident 2·02!
engineer, was to be appointed to superintend the work by the chief engineer
w~o was in England. The contractor suffered damage as the result of hones!
m1s!akes 1:1-ade bY_ the resident engineer, who was later overruled by the chief
en~~er, 1n refusing to pass materials submitted to him for approval under a
prov1s1?n to that effect in the specification. The contractor sued the owners.
An arbttator allowed a claim for the delay so caused. Held by the Court of
Appeal, ~he re~ident engineer was not a mere servant or age~t of the owners,
b~t was In a°: independent position, and the owners were not liable for the
mistakes, which were made without any interference by the company: De
Morgan Snell & Co. v. Rio de Janeiro Flour Mills (1892).39
_Equally, approval by the resident engineer will not be taken as satis- 2·03(
fying a provision requiring the approval of the engineer.
ILLUSTRATION
A Canadian contr~ct p~ovi_ded t_h~t buildings should only be erected after
approval of the spec1fication 111 wnt1ng by the company's principal engineer.
Plans were sen! 1~ for apl?roval, but the resident engineer failed to submit
them to the pnnctpal ~ng1neer,. and himself told the builder that he might
proceed. Held, the resident engmeer's approval did not bind the company·
Att.-Gen. v. Briggs (1855). 40 •
It should perhaps be indicated~ that both of the above cases relate to
earl~ contracts where the decisions in question were to be binding on the
parties._ In modern contracts, this will usually not be so, often as a result of
the review powers in the arbitration clause.41
It goes_ with?ut saying that if architects and engineers have no authority
to commit their employers in regard to a particular matter under the terms
of building and civil engineering contracts (see infra, Section 4 ), then it is
even more the case that persons of inferior status such as resident engin-
: For these rules see infra, paras. 2·214--2-215 and see post, Chap. -6, Section·3.
40
8 T.L.R. 292, C.A.; Hudson, Building Contracts (4th ed.), Vol. 2, p. 185.
1 Jur.(N.S.) 1084. More fully illustrated post, Chap. 6, Section 6(5).
41
See post, Chap. 6, Section 4.
 256 ARCHITECTS, ENGINEERS AND SURVEYORS [CHAP. 2
eers and clerks of works cannot, by their acts or omissions, prevent
an owner from exercising his full remedies against the contractor, for
example, for defective work, or in resisting claims for variations if these
are not justified on a true view of the contract documents. 42
(5) Quantity Surveyors
2·031 The word surveyor covers a wide field. On the one hand it is a word used
under the Public Health Acts to embrace the chief officer of a local authM
ority in charge of the construction of public utility work, who is now often
a civil engineer, and, at the other extreme, a surveyor and valuer of land in
private practice.
The quantity surveyor's function is highly specialised, and received
judicial interpretation in the nineteenth century as being that of a person
"whose business consists in taking oil.t in detail the measurements and
quantities from plans prepared by an architect for the purpose of enabling
builders to calculate the amounts for which they would execute the
plans". 43 (This definition, while perfectly correct, was given at a time when
the quantity surveyor's status was very different, and his employers were
in reality the general body of tendering contractors on a particular pro-
ject.44) From these measurements and quantities, and also from the speci-
fication (which the architect should produce but for which some architects
place excessive reliance on the quantity surveyor), what is called a bill or
bills of quantities are prepared. This is a detailed schedule of the quanti-
ties and items of work which it is anticipated will be carried out. The con-
tractor tenders upon this document by inserting alongside each item a rate
for each unit of measurement used by the quantity surveyor, together with
the total grossed-up amount to be charged for carrying out the whole
quantity of that item shown in the bill.45
2·032 Other services performed by the quantity surveyor at the preparatory
stage of building contracts include making estimates of the cost of the
works, preparing schedules to be priced by tenderers for the purpose of
valuing variations in lump sum contracts (usually referred to as schedules
of prices or rates), and assisting in the negotiating and obtaining of quo-
tations for work to be carried out by specialists. During the performance
of the works the quantity surveyor may perform important further ser-
vices which substantially lighten the burden of work on architects in the
42 See also post, Chap. 5 (Defects), and Chap. 7 (Variations).
43 Taylorv. Hall (1870) LR. 4 C.L. 467, at p. 416,per Morris J.
44 See infra, Section 10, and see C.C.P.P., para. 24---15 for a historical account of the evolution
of the quantity surveyor and an assessment of the value of their rOle at the present day.
45 For more detailed accounts of bills of quantities and the st_andard methods o_f measure-
ment, see C.C.P.P., Chap. 26, and additionally paras. 8-05 to S-06, 23-20 t~ 23-~; 24---20 to
24---21, 27-17 and 27-20 to 27-22. For particular criticism of their r6le in the United King-
dom standard forms, see C.C.P.P., paras. 29-12 to 29-14 and 30-13 to 30-21.
SECT. 2] DEFINITIONS AND QUALIFICATIONS 257
administration of the contract. These include the preparation of detailed
recommendations to the architect of the value of work done for the pur-
~ose of inte~ certificates, for which purpose periodical valuation inspec-
tions on the site have to be made, and examinations of sub-contractors'
accounts and architects' variation orders (if, as is the case with the United
Kingdom standard forms, valuation is the stipulated basis for interim pay-
ment rather than stage payments). It also includes the detailed prep~
aration of the final account, including any necessary re-measurement of
the contract work in contracts ·using bills, the ajdustment of all PC and
provisional sums, the valuation of variations and financial claims permit-
ted by the contract, and the calculation of sums due under fl.uctuations 45 a
or other compensatory clauses.
The principles of measurement by which bills of quantities are prepared
are the subject of a standard code or method of measurement in each in~
dustry, and it.is essential under most modern bulding and engineering con-
tracts tha~ these codes should be strictly followed, as they are usually
expressly incorporated by referenc;e. 46 In both industries, the excessive
deg~ee of sub-division for pricing purposes increasingly called for by suc-
cessive standard methods of measurement is open to the criticism that it
serves n? useful purpose and is increasingly divorced from pricing reality,
but part1cularJy by reason of the terms of incorporation used in the stan-
dard forms it exposes owners to legalistic and unmerited measurement
claims47 •
Quantity surveyors usually function as independent firms, but it is not 2-033
unusu_al to find firms of architects with partners or staff who are qualified
quantity surveyors able to prepare bills of quantities for works for which
they are engaged as architects. Most firms of civil engineers employ their
ow~ staff to prepare bills of quantities for the civil engineering works for
wh1~~ they are engaged and do not employ outside quantity surveyors. In
add1t_I?n many substantial contractors in both industries employ qualified
quantity surveyors for estimating and claiming purposes.
There is no prohibition against the use of the style or title of "surveyor"
or "quantity surveyor". The Royal Institution of Chartered Surveyors,
however, hold examinations in the various branches of surveying, and per-
s?ns with_the_necessary practical experience who have passed the requi-
site ~xa~1natJ.ons can style themselves associates or fellows of the Ro}'al
InstJ.tutJ.on of Chartered Surveyors. In RICS v. Shepheard,48 an injunction
was obtained restraining a defendant from styling himself a "chartered
quantity surveyor" when not admitted to the Royal Institution of Char-
tered Surveyors. The Institute of Quantity Surveyors is also a body which
examines and trains quantity surveyors. Both the Royal Institution of
Chartered Surveyors and the Institute of Quantity Surveyors fix a scale of
fees and prescribe a code of professional conduct for their members.
45
For which see post, paras. 8·052 et seq.
'
See Clause 12 of the 1963 and 1980 RIBA forms respectively and Clauses 55 and 56 of the
,i,;
ICE forms, and post, Chap. 7 para. et seq.
47
This is explained and developed in detail in C.C.P.P., in particular in Chap. 26 and in
Chaps. 23, 24, 29 and 30.
48
[1947] E.G., May 31, at p. 370.
 258 ARCHITECTS, ENGINEERS AND SURVEYORS [CHAP. 2
2·034 As previously stated,49 qualified quantity surveyors are in general
extremely highly skilled, and in the United Kingdom both they and char-
tered building surveyors are likely to be at least as well qualified, in mat-
ters of technical building construction, as are architects. Nevertheless,
they represent in the United Kingdom, uniquely among Western common
law countries, a powerful and successful vested interest operating effec-
tively on both sides of the two industries and enthusiastically supported by
contractors' organisations, favouring the universal use of measured con-
tracts for construction work of any but the most modest size, and formal
incorporation of the two industries' standard methods of measurement
into the standard forms of contract in terms which not only represent seri-
ous financial risks for owners (by opening the doors to a host of measure-
ment claims of great ingenuity), but which lack obvious elementary
safeguards to prevent abuse of the system. In particular this could be
achieved by requiring more precise definition of the work represented by
the large element of the contract price frequently allowed to be allocated
to preliminary or general items in the bills, and by requiring successful
tenderers to supply a detailed make-up of all their prices prior to com-
mencing work. 50 In fact, there are powerful commercial and administrat-
ive reasons why owners should use fixed price or "lump sum" contracts
even for major projects in both industries, and why interim· payment
should be based on fixed stage payments rather than periodical valu-
ation.51 On a true understanding of their r61e, none of these recommenda-
tions would dispense with the need for bills of quantities or for
independent firms of consulting quantity surveyors, which the profession
itself does not seem to appreciate,52 hence its sustained and powerful lob-
bying for the use of measured contracts using Bills of Quantities.
It must be said, however, that at the present time no lead to the contrary
appears to have been taken by government or local authorities or other
public owners in the United Kingdom, or in the new Commonwealth
countries where the United Kingdom influence is strong, such as Hong
Kong and Singapore (in contrast to the United States), and the need to use
measured contracts appears to be virtually unquestioned in both indus-
tries in those countries.
A detailed account of the over-elaborate and unique system of re-
measurement which has evolved under the English Standard Forms of
contract and their associated Standard Methods of Measurement is given
post; Chapter 8, Section 1(2)(b ).
(6) Structural Engineers
2·035 This is a comparatively new profession evolved largely from the engineer-
49 See supra, Subsection (1). .
so See C.C.P.P., Chaps. 23, 26, 29 and 30 passim, and Clause 5 of the Singapore S.l.A. con-
tracts, C.C.P.P., pp. 559-560.
51 See C.C.P.P., paras. 23-20 to 23-23, 24-20 to 24-21, 26-14 to 26-16, 27-20 t(? _27-21, and
30-20. , ..
52 See C.C.P.P., para. 24-15, where this is explained.
SECT. 2] DEFINITIONS AND QUALIFICATIONS 259
ing needs of those modern buildings which depart from the traditional
structure based on load-bearing walls, and from the use of materials like
steel, reinforced concrete, and precast and stressed concrete. Their pres-
ence is accordingly essential in almost all large modern buildings.53
Their presence in a modern contract can come about in four ways;
namely as direct professional consultants of the building owner working in
collaboration with the architect; as professional consultants called in by
the architect and employed by him; as members or employees of the archi-
tect or his firm; and finally as specialist sub-contractors for the supply or
supply and erection of the necessary structural steel, reinforcement steel
or reinforced or pre-cast concrete, as the case may be. This latter arrange-
ment, which seemed to be increasing at the time of the tenth edition, but
which now seems less common, was unsatisfactory:
( a) because design fees were concealed from the owner within the con- 2,03~
tractor's or sub-contractor's price;
(b) because competitive tendering on a fair basis between a specialist
who had designed, and others who had not, was difficult to arrange,
and led to undesirable trade practices between the tendering
specialists;
( c) because the same conflict of commercial interest, leading to under-
design, was present as in the case all turnkey or design-and-build
contracts54;
(d) because the law may find it difficult to import design or suitability
obligations into a construction contract where the work is nom-
inally designed by and under the control of an architectss;
(e) because it is not entirely certain that a nomination of a sub-
contractor to carry out design functions is valid under the standard
forms of contracts6;
(f) because it was rare to find that any or any adequate guarantee of
suitability was obtained from the specialist for the benefit of the
owner; and
(g) because serious contractual complications could arise between the
main contractor and ownei if the specialist sub-contractor
defaulted on those parts of his obligations which formed part of the
architect's duties (for example, to supply information, such as
reinforcement drawings or bending schedules, in time to permit the
main contractor to carry out his work). In fact, an architect who
made such an arrangement without informing his client was held
unable to escape responsibility for a negligent design. 57
53 Se.e also infra, paras. 2·074-2-076.
54
See post, Chap. 3, paras. 3·029-3-030.
55
See infra, para. 2·112 et seq., and see post, Chap. 4, paras. 4·079 et seq. and 4-108-4·110.
56
See infra, paras. 2·116-2·118.
SI See Moresk v. Hicks [1966] 2 Lloyd's Rep. 338, infra, paras. 2·116-2·118.
 260 ARCHITECTS, ENGINEERS AND SURVEYORS [CHAP. 2
(7) Project Managers
2·037 This description was probably used internally inside large organisations
such as oil companies and major engineering companies to identify an
individual or group in direct charge of a particular project of that organis-
ation. Since the tenth edition of Hudson, however, there have emerged a
number of firms or companies offering owners their services for reward in
the management of construction projects under this description. How-
ever, the services offered vary very considerably, as do the qualifications
and experience of the persons putting themselves forward for this r6le,
and no accepted or recognisable group of services, or of contracts for their
performance, appear to have evolved as yet. The qualifications and
experience of the persons so practising may stem from the professional
side of the construction industries, as, for example, in variously mixed
teams of architects, quantity surveyors or engineers, or they may emanate
from the contracting side, as, for example, in the management teams of,
not infrequently, existing major main contractors, in the latter case offer-
ing what is effectively a main contractor co-ordination service for a risk-
free fee, in substitution for a contract price, but no longer free of risk to the
owner of the inter-contractor interference claims which is, from the own-
er's point of view, the overriding commercial reason for engaging main or
prime contractors.
2·038 In some cases, the services offered may include entering into contracts
with all the remaining contractors or suppliers for a project in a principal
capacity and not as agent for the owner. Iri. such cases, if the services pro-
vided or contracted for include design, the project manager is no more
than a turnkey or design-and-build main or prime contractor. If not, the
arrangement does not differ from a conventional main or prime contract.
In other cases, the package of services offered may include providing,
through others, all the design and consultant services required for the pro-
ject, with or without the co-ordination or "chasing", administration and
supervision of any relevant construction main or sub-contracts. Unless an
unqualified indemnity is given to the owner against contractors' claims for
interference by other contractors, these latter services will differ in no
very important respect form the comprehensive package of professional
services obtained by or through a conventional A/E's contract of employ-
ment. In some other cases, what is offered may simply be an additional tier
of advice and administration interposed between the A/E and his consult-
ants on the one hand and the owner on the other-in other words, the
offer is to act as the owner's agent in all contractual matters, including
perhaps the engagement and briefing of architects, quantity surveyors and
consultants, but otherwise not departing from traditional arrangements.
A variant of this latter r6le may occur in the case of turnkey contracts,
where the project manager may be used for the professional or com-
mercial consultancy services involved in the preliminary studiesior a pro-
posed turnkey project, and for putting it out to tender or sele"Cting the
main or prime turnkey contractor.
SECT. 2] DEFINITIONS AND QUALIFICATIONS 261
In one version which is not uncommon in the United States for major 2·039
projects, what is offered is the negotiation on the owner's behalf of a
whole series of direct contracts between the owner and all the various
contractors and speciaist suppliers, possibly including the various pro-
fessional contracts as well, but accompanied by a guarantee that the final
total cost of the project will not exceed a stipulated sum. This version is
frequently offered by management teams who are also in business as main
or prime contractors. Effectively (subject to any such guarantee) this
arrangement turns the owner into his own main contractor, with major
potential exposures to co-ordination claims from the various contractors,
and removes both the pricing and normal co-ordination risks of a prime or
main contractor from the shoulders of the so-called project managers.
Precisely how, however, this type of project manager protects his own
position with regard to any price guarantee he may have given to the
owner, in the course of his arrangements or dealings with the various
direct contractors in the project, is not clear.
If all the various direct contracts expressly.absolve the owner from lia- :Z.040
bility for other contractor interference (unlike the United Kingdom, "no
damage" clauses of this kind have been common in traditional United
States construction contracts, and particularly public contracts, for more
than a century),58 the arrangement becomes more acceptable from an
owner's point of view, but the control over pricing obtained by competi-
tive tendering can easily be lost by such arrangements, which are also
obviously open to secret commissions or discounts and other undesirable
practices. This is not to say that, for a certain class of project, particularly
very complex projects such as manufacturing or industrial plant or hospi-
tal contracts, the services provided by project managers familiar with the
technology in that particular field may have advantages for owners in
cases where sufficiently specialised firms of A/Es are not available in the
market, and would no doubt be positively welcomed by A/Es in charge of
relevant individual contracts as a major assistance in obtaining and inter-
preting the owner's requirements, as well as by assuming an important
part of the burden of monitoring and improving co-ordination and
progress.
Owners should in all cases, however, exercise great care and take advice
in regard to the precise legal implication of such proposals when these
services are offered, including the availability of insurance necessary to
protect the owner's interest (which may not be readily forthcoming) and
should appreciate that in most cases such arrangements will be essentially
of a "one-off' kind with substantial legal and pricing dangers.
So-called "management contracts" are further discussed post, Chapter
3, Section 1(4).
18
See post, Chap. 8, Section 2(4)(b), paras. 8·217 et seq.
 262 ARCHITECTS, ENGINEERS AND SURVEYORS [CHAP.
SECTION 3. CONTRACT OF EMPLOYMENT
(1) Generally
2-041 The employment of an architect, engineer or quantity surveyor for ser-
vices in relation to the design and execution of construction projects arises
from his appointment by the owner or by someone authorised on his
behalf to make the appointment. The express and implied terms of the
appointment govern the rights and obligations of the parties and may con-
template a full-time officer, or a professional adviser for a particular build-
ing project or for a particular period of time. Permanent appointments are
usually the subject of a formal agreement entered into between the par-
ties, but the appointments of independent advisers either for a particular
building project or for a period of time are often made in a less formal
manner, usually by exchange of letters with or without incorporation by
reference of a professional institution's conditions of engagement or
scales of fees. In the case of the English bodies, these are in fact one docu-
ment, but it may be an important question whether the terms of the incor-
poration by reference are intended only to apply to the payme~t
provisions, or to the conditions of engagement as a whole, including the
arbitration clause.
ILLUSTRATION
2-042 Architects, after working on a project for three years, finally exchanged
letters with the owner dealing with eight specific services and providing for
their remuneration. The letter then provided that "the RIBA Conditions of
Engagement so far as is consistent with the foregoing shall apply". Clause 1.7
of the Conditions provided that any dispute arising out of "these Conditions
of Engagement" should be referred to arbitration. The architects presented a
bill for abortive work in accordance with the Conditions, but were then dis-
missed, and subsequently brought an action on a different basis for the value
of all work done plus loss of profit. The owners applied for a stay under the
arbitration clause, but the architects contended that the cause of action as
framed did not arise under the Conditions. Held, by the Court of Appeal, it
was reasonable to interpret "arising out of these Conditions of Engagement"
as applying to any dispute under a contract incorporating the conditions. It
would not be praticable to break the dispute into parts arising and parts not
arising, and the action should be stayed: Kaye v. Bronesky (1973). 59
(2) Form of Appointment
2·043 By virtue of the Corporate Bodies' Contracts Act 1960 and section 32 of
the Companies Act 1948, no particular form, whether of seal or writing, is
~ 4 BLR 1. For other cases on incorporationofarbitration clauses,seepost, Chap.18, Section
2(3).
2 SECT. 3] CONTRACT OF EMPLOYMENT 263
required for the appointment of independent advisers, whatever the legal
status of the owner.
. In_ the owner's interest, however, the contract relating to any major pro-
Ject m England should be under seal, sq as to obtain the benefit of the
longe~ period. of limita~ion of 12 years should there by any breach of duty
resulting, for instance, 1n defects in the work not discovered at the time of
completion.
(3) Conditions of Appointment
Since he is a professional man, and in law an independent contractor an 2·044
architect or engineer in private practice is entitled to be left free, in 'the
absence of express provision to the contrary,- to carry out the incidental
~uties necessa_ry to achieve the purpose for which he has been appointed
in the way which seems best to him. While he is entitled to be left undis-
turbed~ matter~ of the da~-to-day discharge of his duties, however, he is
not entitled to dictate to his employer on matters which come within the
latter's legitimate sphere of interest and decision (and indeed is, in such
matters, bound to consult the employer, at the risk of being liable in negli-
gence for failing to do so).60
ILLUSTRATIONS
(1) An architect in South Africa was employed to prepare sketch designs to :Z.045
the own~r's approval, pr~pare working drawings, and supervise the works in
connection with a fountain, ornamental feature, and surrounding area. The
owners approved the design of the fountain, but disapproved that of the orna-
mental feature and surrounding area, and started to construct the surround-
ing area without architectural assistance in a manner different from the
I
architect's design, and proposed to do the same with the ornamental feature
The architect sought an injunction, arguing that there was an implied te~
that the own~rs could. not use only a part of the architect's plans or depart
l from them without his approval, or alternatively that the owners' action
amounted to a breach of.copyright. Held, that neither contention was valid,
and the owners were entitled to make such use of the architect's services as
they saw fit, provided proper remuneration was paid: Bennet v. Capetown
Foreshore Board (1960).61
I
(2) Engineers were consulted by a city through their architects in regard to
a. pr~spective build.in~ sited on a garbage dump over a canal, and after con-
si?enng a report by piling sub-contractors advised a "floor on earth" design
with the outer walls ~upported on p~les but the inner partition walls supported
on gra?ular fill. This_ w~s substantially cheaper than full piling and carried
som~ nsk, b~t the buildings were to be lightly loaded. Full piling would have
earned no nsk~. Th~ advice to. the city's architect was unqualified, though
some of the engmeer s staff had internally queried the adequacy of the design.
w See infra, paras. 2·198-2·201, as to variations.
61
1960 (4) S.A. 439, S. Africa.
 264 ARCHITECTS, ENGINEERS AND SURVEYORS [CHAP. 2
The foundations failed. Held, by the Ontario Court of Appeal, that it was the
duty of the engineers to inform the city or their architect of the element of
risk. Also, because of the risk, it was the engineers' duty to make precaution-
ary examinations of the soil before and during excavations, which they had
not done: City of Brantford v. Kemp and Wallace Carruthers (1960). 62
2·046 On the other hand, the building owner is entitled to a professional stan-
dard of skill in the discharge of all the duties necessary until the purpose of
the appointment has been achieved. A mere request to act as architect or
engineer in relation to a project, without specifying at the outset the ser-
vices required of the architect or engineer, may lead to doubt or dispute as
to what are the respective rights and duties of the parties, and it is desir-
able that, whenever possible, and particularly where more than one type
of adviser is employed on the same project, the purpose and extent of the
appointment should be made clear by letter or otherwise. As a project
develops there may often be a series of such appointments rather than one
single appointment. (See infra, Subsection (4).)
2·047 As stated, various institutions and associations representing architects,
engineers and quantity surveyors issue scales of fees which also set out the
conditions of engagement of their members. The best known of these in
England are those issued by the Royal Institue of British Architects, the
Royal Institution of Chartered Surveyors and the Association of Consult-
ing Engineers. Each of these fixes fees based upon a percentage of the
estimated and ultimate total cost of the works and, in addition, sets out
certain conditions of employment which, if the scales are adopted, can
also be made applicable. One or other of these scales is frequently, by an
exchange of letters or by a more formal agreement, made the basis of the
agreement between the building owner and his advisers, and when this is
done then the conditions set out in the scale may also become applicable
to the appointment; but these documents are concerned primarily with
protecting the interests of the members of the association concerned, and
on several occasions it has been held by the courts that they are not bind-
ing upon the employer unless it can be clearly shown that they have been
incorporated into the agreement with him. 63 Moreover, it should be noted
that these documents do not always deal with many questions which may
arise during the employment, or may expressly leave for further
implementation or agreement a number of matters of importance,
including:
Z.048 (a) what other consultants, designers or specialists are to be employed
in addition to the architect, engineer or other adviser appointed,
including the engagement of resident engineers or clerks of works;
(b) whether an independent quantity surveyor is to be employed and if
so for what services;
Ol [1960] 23 D.L.R. (2d) 640.
63 See paras. 2-255 et seq.
SECT. 3] CONTRACT OF EMPLOYMENT 265
(c) the position in the event of retirement, death or incapacity of the
architect or engineer;
(d) the ~e and own_ership of drawings and designs prepared by the
architect or engineer (only the latter's copyright is often dealt
with);
(e) the authority of the architect to negotiate or contract with con-
tractors and sub-contractors;
( f) the architect's or engineer's powers to vary the work and bind the
building owner once the contract has been made·
(g) the duration of the appointment. '
Se~, for a discussion of the better known United Kingdom conditions of
appomtment in greater detail, Section 9, infra.
(4) Duration and Termination of Appointment
Unless .there is agreement to the contrary, an appointment in explicit, and 2,049
unqualified terms for a particular project cannot be determined until the
purpose of the appointment has been achieved. 64 However, it is not
un~sual for the contract of employment to contain provisions dividing the
duties to be performed by the architect in accordance with various stages
of progress of the contemplated project, and to give either party, in effect,
the powe~ of termin~t~on at the end of the various stages. An important
exa1:l"lple is the Conditions of Engagement contained in the scale of pro-
fess~onal charges of t_he RIBA. Indeed, this arrangement recognises the
reality of the transaction between the parties, since even if nothing specific
were sai~ wh~n an architect was first employed to get out plans and advise
on a_pro1_ect, 1t .would not necessarily follow that his employer required his
services m letting the C?ntract, if there was to be one, or in the supervision
of the w~rk. In fact, 1n the absence of express provision, an architect
engaged 1nfo~ally_ on a particul~ project will usually owe his employ-
ment .to a senes of mfo?Tial appomtments rather than one appointment
covenng the whole pro1ect from start to finish. In general, until the time
that the decision is taken to prepare contract documents with a view to
otaining a tender, the project is frequently of a tentative or exploratory
charact~r, and the architect is likely to be employed almost on a day-to-
~ay basis. At :hat stage the owner is certainly authorising, for the first
tune, substantial expe~diture and, usually, the engagement of other per-
sons, such as the quantity surveyor. But not until tenders are received and
the owner is in a position to know what his financial commitment; are
likely to be and to make arrangements for finance, that is to say at the time
of !he decision to accept the tender and place or "let" the cont;act, has the
pomt of no return, and therefore of a possible anticipatory breach by the
owner of the architect's contract of employment, really arrived. However,
64
Thomasv. Hamm~rsmith Borough Coun_cil [1_938] 3 AllE.R. 203, at pp. 208B and 211,per
Slessor and McKmnon L.JJ., and Edwin Hill & Partners v. Leakcliffe Properties Ltd
(1984) 29 BLR 43, per Hutchison J. ·
 266 ARCHITECTS, ENGINEERS AND SURVEYORS [CHAP. 2
in the event of clear agreement as to the purpose of the appointment, any
termination of the employment before the purpose of the appointment
has been acheived would amount to a breach of contract. Thus in Thomas
v. Hammersmith Borough Council65 Slessor L.J. said:
2·050 " ... I think it helpful first to consider what would have been the agreement
between the parties if the appointment had beensimpliciterto act as architect
for the erection of the new town hall without any provision as to scale of
charges, and if the council had then, before the work was completed, without
cause other than their mere volition, terminated the agreement. In such case,
I entertain no doubt that the architect would have been entitled to reason-
able remuneration for the work which he had already done, and also to dam-
ages for the loss of remuneration which he had been prevented from earning
until the work was finished. Although the contract in this assumed form
would contain no express term to this effect, I think that it would be implied
that the council, having employed the plaintiff to build their town hall, agreed
with him that they would not prevent him from doing the work and so prevent
him from earning his remuneration".
There are, therefore, many different types of employment. So an archi-
tect or engineer may be employed for preliminary advice only, or to make
preliminary drawings, plans or designs only, or to provide drawings so as
to obtain planning or other permissions, or to obtain tenders only, or to
supervise only, or in more general terms to carry a project through to com-
pletion. In the last alternative the duties of an architect or engineer as
generally carried out in the United Kingdom are as follows:
'2-051 (a) to advise and consult with the owner (not as a lawyer) as to possible
limitations on the use of the land to be built on, either (interalia) by
planning legislation, restrictive covenants or the rights of adjoining
owners or the public over the land, or by statutes and by-laws affect-
ing the works to be executed;
(b) to examine the site, sub-soil, and surroundings;
(c) to consult with and advise the owner as to the design, extent and
cost of the proposed work;
( d) to prepare preliminary sketch plans and an outline or approximate
specification, having regard to all the conditions known to exist and
to submit them to the owner for approval, with an estimate of the
probable cost, if requested;
(e) to elaborate and, if necessary, modify or amend the sketch plans
and then, if so instructed, to prepare drawings and a more detailed
specification of the work to be carried out as a first step in the pre-
paration of contract documents;
( f) to consult with and advise the owner as to the form of contract to be
used (including whether or not to use a measured contract and bills
of quantities) and as to the necessity or otherwise of employing
65 (1938] 3 AllE.R. 203,followed and applied in Edwin Hill & Partnersv. Leak;[iffProperties
(1984) 29 BLR 43,per Hutchison J. Both cases are illustrated infra, Section 9(2).
SECT. 3] CONTRACT OF EMPLOYMENT 267
a quantity surveyor to prepare bills and carry out the usual valu-
ation_ services during the currency of the contract;
(g) to bnng th~ contra.ct documents to their final state before inviting 2·052
tenders, with _or wit~out t~e assistance of quantity surveyors and
structural engmeers, 1nclud1ng the obtaining of detailed quotations
from and arrangement of delivery dates with any nominated sub-
contractors or suppliers whose work may have to be ready or avail-
able at an early stage of the main contractor's work·
(h) to advise the owner as to tenders received and the s~lection of the
main contractor, and to arrange starting dates and the contract
period, if this has not already been done;
(i) after work has started, to supply the builder with copies of the con-
tract. drawings and specification and any further working drawings
?eta1ls or instructions which may be necessary for the work, includ~
1ng work to ?e ~one by _nominated sub-contractors; to make any
further normnattons which may be necessary; and to advise the
ow~er if any variation of the work becomes necessary or
des1rable66;
(j) ~o supervise the work, doing his best to ensure66a in the owner's
1n:erest tJ_iat the contract is complied with in every respect; to value,
with or without the assistance of a quantity surveyor, the work both
for Pllll?o.ses of interim payment and final payment; and generally
to a~~n1ster the contract so that full effect is given to all its
prov1s1ons;
(k) to ac.t as certifier ~n sue~ matters as the terms of the contract may 2·053
:equ1re, up to ~nd 1nc~ud1ng the final certificate, for instance, quest-
ions of extension of time, practical completion, payment direct of
sub-contractors, and various claims for additional expense which
the contractor may be entitled to make under the terms of the con-
tract: (In th~ discharge of some of these latter certifying duties
:eq~~red of him_ und~r the_ c?ntract, sometimes referred to as quasi-
1ud1ci~ or quas1-arb1tral, It 1s now clear that the architect or engin-
eer will nevertheless o.we a duty of care or skill to his employer
(~xcept only, perhaps, 10 a case where he is ruling on a formulated
dispute between the parties at a time when he is required to
certify).67
An architect may sometimes be asked to take over from another archi-
tect in the middle of a project, either because of death or retirement or
because the owner is dissatisfied. As will be seen68 this does not, under ~he
terms of most building contracts, create any formal or legal difficulties in
the administration of the contract.
66a The extent to which this is practicable is often over-estimated by judiciaries - see infra
paras. 2·182 et seq. '
66
See infra, paras. 2·198-2·201.
61
See infra, paras. 2·218-2·220.
63
See post, Chap. 6, Section 6(5).
 268 ARCHITECTS, ENGINEERS AND SURVEYORS
(5) Death, Bankmptcy or Inability to Act of the Architect or Engineer
2·054 In the case of a personal appointment ( as distinct from the appointment of
a firm) of an architect or engineer, that person's death will terminate the
contract, as it is clearly one for personal setvices. 69 This may cause incon-
venience to the building owner in relation to the right to use drawings and
specifications, but almost invariably there will be an implied licence for an
owner ( or even a subsequent owner) to use them subject to payment of the
architect's fees or a reasonable licensing fee. 70
In the event of the bankruptcy of the architect or engineer, and in the
absence of express provisions in the contract of appointment, the contract
will not be determined. If the architect is ready to perform his contract, the
trustee will be able to insist on the performance by the building owner of
his part of the contract, and if the contract is performed by the architect
the trustee may then sue the building owner for the contractual
remuneration.71
2·055 It is submitted that the trustee of a bankrupt architect or engineer can-
not insist on performing by another architect or engineer the contract
which the bankrupt had undertaken: by reason of the personal nature of
the contract of appointment, the benefit of the contract does not pass to
the trustee in bankruptcy.72
Should the architect or engineer who has been personally appointed be
unable to act through serious illness, imprisonment or some other perma-
nent cause, then the contract of employment may be frustrated and the
rights of the parties will be governed by the Law Reform (Frustrated Con-
tracts) Act 1943. In the usual case, the architect may expect to receive
compensation under that Act governed by the value to the owner (if any)
of such services as he may have performed-not, it will be noted, the same
.thing as reasonable remuneration in all cases.73
Changes in the identity of the partners of a firm have the effect of dis-
solving the partnership, and in the absence of an express or implied
novation, for example, by the owner continuing to make use of the firm's
services when the circumstance of the change of partner is known or com-
municated to him, the owner's rights will be restricted to the partners of
the firm as it existed at the time of the appointment.
(6) Death or Bankruptcy of Building Owner
2·056 As a general rule a contract of employment only determines upon the
death of the owner if the personality of the owner is sufficiently
69 See post, Chap. 14, "Assignment", Section 8(2), and Chap. 16, Section 8. For the right to
payment, see post, paras. 4·025-4·027 et seq. and Stubbs v. Holywell Ry. (1867) L.R. 2 Ex.
311 there illustrated.
w See infrtl, Section 9(7) and (8).
71 See post, Chap. 16, "Bankruptcy and Liquidation", Section 8.
12 Compare Knight v. Burgess (1864) 33 L.J.Ch. 727,post, Chap. 14, Section 1(2).
73 See ante, Chap. 1, Section 11, and post, Chap. 4, Section 3(3).
[CHAP. 2 SECT. 3] CONTRACT OF EMPLOYMENT 269
material to the contract, or where personal considerations are the foun-
dation of the contract.74 It is submitted that the personality of the building
owner could theoretically be of material importance in certain contracts
of appointment of an architect, that is, in rare cases where the architect is
engaged to design work which will satisfy the taste or special aesthetic
requirements of the building owner. But, in most cases, the rights and lia-
bilities will pass to the personal representatives.
Bankruptcy of the owner will not by itself determine the contract
of employment, but it will justify the architect or engineer in refusing to
perform any subsequent services unless he receives some security or
assurance that his fees will be paid, whatever the contract might have said
as to payment.75 Once, however, reasonable security is given, the archi-
tect or engineer will be bound to continue his services under the
appointment.
SECTION 4. AUTHORITY OF THE ARCHITECT AND ENGINEER
(1) Generally
When an architect or engineer is first employed on any project his services 2·057
will be mainly of an advisory nature, and not until he has prepared con-
tract documents and been instructed to proceed with the works by his
employer is he likely to have any authority or even opportunity to Contract
as agent for the building owner.
Once this stage has passed, the conduct of a building or engineering
project will, from the owner's point of view, be in the hands of the NE,
and the question may arise as to what extent the A/E has authority to bind
his employer. When the owner enters into a written contract with a con-
tractor, authority for the A/E to vary the contract work will almost
invariably be expressly given in all but the most modest or informal con-
tracts. It remains important, however, to determine the extent to which
the architect, when carrying out his many duties or negotiating on behalf
of the owner, can, in the absence of express terms, commit or bind the
owner vis-d-vis the contractor or adjoining owners, for example. No prob-
lem, of course, exists in a case where the owner specifically instructs the
architect to contract on his behalf. The following discussion is concerned
with the implied or ostensible authority of the architect arising out of his
appointment as such, and the extent to which, without express authority,
he can bind his employer in relation to the contractor and third parties.
The same principles will apply to Concluding a contract de nova on behalf
of the owner as to the amendment or modification of existing
___ .
7
' Farrow v. Wilson (1869) L.R. 4 C.P. 744; Graves v. Cohen (1930) 46 T.L.R. 121.
71 See Re Sneezum, exp. Davis (1876) 3-Ch.D. 463, C.A.,post, Chap. 16, Section 6(2).
 270 ARCHITECTS, ENGINEERS AND SURVEYORS [CHAP. 2
contractual obligations-the latter, indeed, is more likely to occur and
present a problem in practice.
(2) As to Waiver of Contractual Requirements of Building Contract
2·058 It is of the essence of the A/Es function that he produces the design and
specification to which the contractor has to work, and administers a con-
tract under which he is constantly having to decide whether the work done
by the contractor is acceptable, and is constantly having to deal with
claims and contentions of the contractor, many of which he may provision-
ally accept or allow, or decide finally in his own mind in the contractor's
favour. It cannot be too strongly emphasised that the NE (unless, as is less
and less frequently the case at the present day, there is a contractual pro-
vision giving his opinion, decision or certificate finality) will have no auth-
ority whatever to waive strict compliance with the contract or to bind the
owner, and in fact in the United Kingdom, in the vast majority of cases, the
only contractual provisions which are likely to have this practical effect
are those relating to the final certificate in building contracts (which in the
latest 1980 RIBA forms have important qualifications and are open to
arbitration within stipulated time limits) and the maintenance certificate
in the FIDIC conditions (which has an express saving in favour of claims
by the owner). The ICE conditions have abandoned the policy altogether.
(An exception, however, is to be found in recent standard forms of sub-
contract in the United Kingdom which expressly confer a temporary
finality on the architects interim certificates so as to prevent main con-
tractors raising set-offs, however justified, against sub-contractors' claims
for interim payment.76 Furthermore, even provisions purporting to confer
finality or requiring approval can be interpreted as merely giving an
additional protection to the owner, and not as binding him,n and the vast
majority of arbitration clauses show the clearest intention to permit ulti-
mate review of nearly every opinion, decision or certificate of the architect
or engineer. 78
Z.059 This general inability of the architect to commit the owner to any
change of the building contract has a number of consequences including,
for instance:
(a) there is no implication that completion of the work to the archi-
tect's design is practicable or possible, so that the contractor must
do everything necessary to complete without additional payment,
and an attempt by the architect to help the contractor out of such a
difficulty by ordering the extra work as a variation would not bind
the owner to make additional payment, provided that the work
'" See post, Chap. 6, Section 6(7), paras. 6·186 et seq.
17
See Bil/yack v. Leyland (1968] 1 W.L.R. 471,post, Chap. 6.
711
See also the discussion in Subsection (7), infra, para. 2·078.
SECT. 4] AUTHORITY OF 'IHE ARCHITECT AND ENGINEER 271
would have been necessary to comply with the contractor's obli-
gations in any event79;
(b) acceptance of work by the architect, or his presence and standing by
at some earlier time during construction, or on practical com-
pletion, or at the end of the defects liability period, do not prevent
the owner, in the absence of a binding certificate or approval, from
suing for damages for defective work at any time during the period
of limitation, notwithstanding that by reasonable diligence on the
part of the architect the detects could have been discovered earlier
and repaired at far less cost80;
(c) claims approved by the architect on interim certificate can be disal- Z.060
lowed at any time subsequently and in no way bind the employer
even if he has paid them in full at the time81 ;
( d) the fact that the architect orders work explicitly as a variation under
the rele\fant provisions of the contract for ordering varied work in
no way binds the owner if, on a true view of the contract, the work in
question is included in the original contraCt obligations2;
( e) the granting of extensions of time by the A/E in no way binds the
owner, nor his decisions as to the date of practical completion;
(f) provisions requiring work to be done to the approval of the archi-
tect, or for shop drawings to be submitted for approval, for exam-
ple, will almost invariably be construed in an "additional
protection" sense, and the approval if given will not, subject to any
possibilities of detriment and estoppel,83 bind the owner if the work
is in fact in breach of contract.
The foregoing propositions summarise the great majority of present
day forms of contract but can, of course, yield to express provision.
(3) As to Contracts or Variations
An architect or engineer in private practice has no implied authority to 2·061
make a contract with the contractor binding on his employer, or to vary or
depart from a concluded contract.84 His duty when supervising a contract
is to see that it is faithfully fulfilled according to its terms; but it may, of
course, be varied by the parties themselves, or by the architect or engineer
under specific authority given him in that behalf, whether under the
express terms of the building contract, as in the case of a variations clause
19
See post, Chap. 4, Section l(l)(b); Chap. 8, Section 1(2). See also assurances given by an
architect as to the meaning of bills of quantities, and the case of Scriveners v. Pask (1866)
L.R. 1 C.P. 715, referred to infra, paras. 2·061-2·063.
80
See post, Chap. 5, Section 1(6).
1
~ See post, Chap. 5, Section 1(5) and see the case of Royston Urban District Council v. Roys-
ton Builders Ltd. (1961) 177 E.G. 589, ante, Chap. 1, paras.1·246-1·249.
ai See post, Chap. 7.
RJ See ante, Chap. 1, Section 10.
54
Hence the need for the express authority of the variation clause: see past, Chap. 8, Section
1(1). See also Ashwell & Nesbittv. Allen (1912) Hudson, Building Contracts (4th ed.), Vol.
2, p. 462, illustrated post, Chap. 6, Section 1(2).
 272 ARCHITECTS, ENGINEERS AND SURVEYORS [CHAP.2
(which in fact is a clause permitting variation of the contract work and not
of the contractual provisions as such) or on direct instructions from the
employer.
ILLUSTRATIONS
(1) A. agreed to build a house for B. according to certain plans. B. sued A.
for non-performance of the agreement. A. then set up that he deviated from
the plans by the authority of B. 's architect. Held, that this was no answer, as no
authority was shown on the part of the architect to bind B. by any deviation
from the plans: Cooper v. Langdon (1841).S!i
(2) A contracting company went into liquidation. The architect, with the
owner's agreement, arranged for the work to be carried on by an individual
director of the company. He then made arrangements with the owner's bank
for payments to be made in future to the director and to any nominated sub-
contractors who might be named in future certificates. Later he gave flooring
specialists instructions to lay certain floors, and purported to pledge the own-
er's credit for that purpose. Held, that the owner, not having approved or
ratified this last arrangement, could not be liable to the specialists: Vigers,
Sons & Co. Ltd. v. Swindell (1939).86
2·062 (3) An university's architect agreed with the contractor before tender that
future increases in certain taxes would be paid for under the contract, and in
due course issued a final certificate containing the increases. Under the terms
of the contract, the final certificate was binding as to sums due under the con-
tract. Held; by Morden J., that the architect had no authority, and the owner
was not bound by the certificate: James More v. University of Ottawa (1978).87
(4) Clause 31D(3) of theJCT/RIBA standard forms (a variation of price or
fluctuations clause operating in certain events) provided that the quantity
surveyor and contractor "may agree what shall be deemed ... to be the net
amount payable to or allowable by the contractor in respect of the occurrence
of any event ... in sub-clause (1)". The contract required notice of the rel-
evant event to be given by the contractor as a condition precedent. The quan-
tity surveyor agreed the amount of the claim, disregarding or waiving the
absence of notice. Held, by Webster J., that the quantity surveyor had no
authority to waive the notice requirements: John Laing Construction Ltd. v.
County & District Properties Ltd. (1982).88
2·063 Again, an architect has no implied authority to make agreements with
adjoining owners as to the method of carrying out building operations
which will affect the rights of his employer.
s5 9M. & W. 60, at p. 67.
oo [1939) 3 All E.R. 590. See also Randell v. Trimen (1856) 18 C.B. 786 (architect ordering
stone for a building), infra, Section 5(2), para. 2·082. ,· .,
81 85 D.L.R. (3d) 186. (The contractor recovered in quasi-contract, however: see ante, Chap.
1, Section 11, paras.1·265~1·267).
88
23 BLR 1.
SECT. 4] AUTHORITY OF THE ARCHITECT AND ENGINEER 273
ILLUSTRATION
The plaintiffs had leased for building purposes part of some land of the
defendants on which stood old buildings. Their architect arranged with the
defendants that certain timbers and stanchions should remain and be built
into the plaintiffs' new building, the agreed plans of which showed windows in
the wall in which the timbers, etc., were built. This made the wall a party wall
under the London Building Act 1894 and the local authority required the
windows to be blocked up. Held, that the architect had no authority to make
such an agreement, and the defendants were ordered to remove their beams
and joists: Frederick Betts Ltd. v. Pickfords Ltd. (1906).89
So an architect who provided a builder with quantities and assured him
that they were correct was held to have no power to bind his employer and
accordingly the latter was not liable to the builder for errors in the
quantities.90
Again, in a case where a local authority engaged a surveyor in private
practice to assist the architect with the valuations necessary for interim
payments under the contract, the Court of Appeal held that, even if cer-
tain acts of the surveyor amounted to acts of obstruction in the issue of a
certificate, the local authority were not responsible in law for the acts of
the surveyor.91
I tis, however, important to determine the exact legal and practical limi- 2·064
tations of the rule. In the first place, an owner who by some conduct or
statement has misled a contractor into thinking that the architect has full
authority may well be held either actually to have authorised the architect
to contract on his behalf or, if not, to have clothed him with ostensible
authority to contract. This, of course, would depend upon the particular
facts, but does not detract from the general principle that an architect,
even if instructed to obtain tenders, has no ostensible authority to con-
clude a contract, and strong · facts would be needed to rebut the
presllll1ption.
Secondly, an owner who knows what his architect has done, and stands
by and allows the work ordered to be carried out, will be held to have
ratified the contract made by the architect, or to have impliedly promised
f to pay a reasonable price for the work. 92
I
I
i
Thirdly, it seems right that a different view should be taken in the case of
full-time salaried architects and engineers, in particular those of local au-
thorities. In the case of the latter, it is customary for negotiation on points
2·06~
requiring alteration or clarification to take place with the selected ten-
s9 [1906] 2 Ch. 87.
90
Scrivenerv. Pask (1866) L.R. 1 C.P. 715, illustrated post, Chap. 7, Section 1(2)(b).
91
R. B. Burden Ltd. v. Swansea Corporation [1957] 1 W.L.R.1167, where theHouseofLords,
however, held that the acts were not as a fact acts of obstruction.
9
i See, for a good example, the County Court case of Williams and Williams v. Coatsworth
(1955) 105 LJ. 124; and see Re Chittick and Taylor (1954) 12 W.W.R., at p. 655, Canada,
quoted post, Chap. 7, Section 2(4)(e). ·
 274 ARCHITECTS, ENGINEERS AND SURVEYORS [CHAP.2
derer, prior to the signing of the contract, and also for matters of qualifi-
cation, clarification or alteration to be discussed with some or all of the
tenderers before the successful contractor has been chosen. Such negotia-
tions are nearly always conducted with the local authority's architects',
engineers' or surveyors' departments and their officers, and indeed it is
now usual for the contract documents to be prepared in the technical
departments of a local authority and only to be forwarded to the legal, or
clerk's, department immediately prior to formal execution of the agree-
ment, where sometimes a short formal document under seal is prepared
which adds nothing to the terms already agreed. It has already been seen93
how knowledge by the county architect and his assistant (not of the clerk)
of a contractor's mistake entitled the latter to rectification of the contract.
Clearly this is because a corporation can only be expected to have knowl-
edge by some official or servant. While it is the case that the standing
orders of local authorities require important contracts to be made by the
clerk or delegated to particular committees or officials, the provisos to
section 266 of the Local Government Act 1933 and section 160(2) of the
London Government Act 1939 absolve outside persons from the necessity
for inquiring whether the standing orders have been complied with. In any
event, the fact is that the vast majority of all important negotiations by
contractors with local authorities are conducted with their technical
departments, the heads of which are highly qualified and salaried officials,
and it would now seem that those officials do have ostensible authority to
contract.
ILLUSTRATION
2·066 A local authority's borough surveyor and quantity surveyor, at a meeting
with the contractor before signature of the contract at which he pointed out
certain errors in the contract documents, orally agreed to vary the contract
obligations, and the agreement was confirmed by the contractor by letter. The
contract as signed did not contain the agreed variations. Held, by Ungoed-
Thomas J ., that the borough surveyor had both actual and ostensible auth-
ority to negotiate and agree the terms of the contract with the contractor, and
that the contract should be rectified: Carlton Contractors v. Bexley Corpor-
ation (1962). 94
The principle of the above case might well, it is submitted, be applied to
the "in-house" NEs of major commercial undertakings as well as of local
93
A. Roberts & Co. Ltd. v. Leicestershire County Council [19611 Ch. 555, illustrat_ed ante,
Chap. 1, para. 1·121.
94
60 L.G.R. 331.
SECT. 4) AU'IHORITY OF THE ARCHITECT AND ENGINEER 275
authorities and other public entities such as hospital boards. It would not,
it is submitted, apply in a case where a public authority decided to use a
private firm of AJEs for a project (whether alone or in conjunction with
their own salaried staff as in Section 2(3), supra) if the commitment was
made by the private NEs alone.
The foregoing discussion is, of course, based entirely on the assumption 2-067
of there being no actual authority from the client. In such a case, a con-
tractor's remedy will be to sue the AJE on an implied warranty of auth-
ority (Section 5, infra). On the other hand, where there is actual authority,
an AJE may nevertheless find himself personally liable if he does not make
clear that he is acting as an agent.
ILLUSTRATION
A structural engineer ordered repairs to a concrete beam, accepting the
contractor's quotation on his own notepaper showing his qualifications, but
not actually mentioning any principal. In an action against both owner and
engineer, the action against the owner was stayed and settled on terms, but
the owner became insolvent. Held, by Kerr J., the engineer must be deemed
to have contracted personally and was fully liable: Sika Contracts Ltd. v. B. L.
Gill & Closeglen Properties Ltd. (1978).~5
An important field in which an architect may be concerned to make 2,068
contracts in connection with a building project is that of nominated sub-
contractors, where it frequently occurs that he will conduct the prelimi-
nary negotiations, including the invitations to tender and acceptance of
tenders or quotations from these sub-contractors, in many cases at a time
when the main contract has not yet been let or the main contractor selec-
ted. The true view in many of such cases is that the architect is, to the
knowledge of the sub-contractor, obtaining contractual offers on behalf of
whatever main contractor will ultimately be selected, or of the existing
main contractor, and that a binding acceptance will not take place until
the main contractor places his order. In the "early" cases the architect may
well need to give provisional or other orders to the sub-contractor in order
I'
to secure appropriate completion or delivery dates, and in the event of the
project falling through may well, by virtue of the foregoing cases, find him-
self personally liable unless he has first obtained express authority from
the owner before giving any kind of conditional guarantee on the owner's
behalf to the sub-contractor in return for the latter embarking on work
f before an effective order from the main contractor has been obtained.96
\_
Furthermore, in conducting the negotiations with the su"L?-contractor,
while it is submitted that the architect is in fact doing so on behalf of the
main contractor,97 or whatever main contractor ~ll subsequently be
,,.
95
9 BLR 11.
96 See post, Chap 4, Section 2(5), and Chap. 13, Section 2(2).
97
See post, Chap.. 13, Section 2(2).
 276 ARCHITECTS, ENGINEERS AND SURVEYORS [CHAP. 2
appointed, he cannot have implied authority actually to contract on behalf
of the main contractor. 98
(4) As to taking out Bills of Quantities
2·069 Under the current RIBA Conditions of Engagement, charges for quantity
surveyors' services in taking out and preparing bills of quantities are
expressly charges which the architect can make as an addition to his own
fees.
In the past, the employment of quantity surveyors by an architect could
give rise to two questions, first, whether additional payment was due to the
architect and, secondly, whether he had authority to bind the owner to pay
the quantity surveyor's fees. These questions provoked a substantial case
law during the period when quantity surveyors gradually ceased to be
employed by or on behalf of tendering lump sum contractors (with the
liability to pay his fees that of the successful tenderer, although these
would frequently be inserted as a separate item in his contract price) and
began to be employed on behalf of owners with the advent of the mea-
sured contract.99 This case law was collected and explained at considerable
length in this Subsection in the tenth edition. 1
2·070 In the light of modern United Kingdom practice, this body of case law
would now seem to be redundant, and has not been included in the present
edition. Thus one of the principal matters which an A/E will have to dis-
cuss with his client in the preliminary stages of a project at the present day
will be the important decision whether to use a measured contract (where
the contract sum will be re-measured in the light of the final "as built"
quantities, independently of any variations which may be ordered) or, on
the other hand, a lump sum contract (where the only adjustment for differ-
ences in quantities will occur if and to the extent that variations have been
called for). If a measured .contract is chosen, the A!E will be bound to
explain to his client the need for the employment either of independent
quantity surveyors, or of in-house quantity surveying services, in both
cases at additional cost ( although, as previously explained, these services
may be of considerable value in lowering the cost of tendering for large
projects even where the decision has been taken to use a lump sum
contract). 2
2-071 It is quite clear at the present day, it is submitted, that an AJE will, there-
fore, have no implied authority to employ quantity surveyors to prepare
98 See Davies & Co. Shopfitters Ltd. v. William Old (1969) 67 L.G.R. 395, illustrated ante,
Chap. 1, para. 1·035, and see post, Chap. 13, Section 2(2).
99 See, for an explanation of this change, C.C.P.P., para. 24-15.
I See the tenth edition, pp. 111-119, and the cases of Moon v. Whitney Union (1837) 3 Bing
N.C. 814; Gwyther v. Gaze (1875), Hudson, Building Contracts (4th ed.), Vol. 2, p. 34;
Waghorn v. Wimbledon Local Board (1877) ibid at p. 52; Youngv. Smith (1880) ibid at p.
76; Bailey v. Wilkins (1849) 7 C.B. 886; Richardson: v. Beale (1867) The Times, 11.lti,¢ 29 and
Evans v. Carte (1881), Hudson, Building Contracts (4th ed.), Vol. 2, p. 78. ' 24-20 to 24-21, 26-14 to 26-16, 27-20 to 27-21.
2 See supra, Section 2(5) and C.C.P.P'., para. 24-15 (p. 419).
SECT. 4] AUTHORITY OF THE ARCHITECT AND ENGINEER 277
bills for a project, and will need to secure the express authority of his client
to do so ( or alt~matively his client's prior agreement to additional pay-
ment of the A/E should his own firm provide the services in question). As
already stated,3 not only do AJEs in the United Kingdom habitually re-
commend measured contracts using bills of quantities to their clients with
little or no consideration of the advantages for their clients lump sum
alternative (because, it may be conjectured, measured contracts can sub-
stantially reduce the work of the A/E without any corresponding
reduction of fees), but all the offical contractors' organisations also bring
every possible pressure to bear for their use (including, in the past, the use
of collective agreements seeking to prevent their members from tendering
for lump sum contracts above a very modest level, rightly held to be con-
trary to the public interest under the Restrictive Practices Act 1956).4
There are, in fact, powerful if widely ignored arguments in favour of a
considerably wider use of lump sum contracts in the owner's interest,5but
in any event it is submitted that it would be professionally negligent for an
NE to allow any but a very well-informed client to enter into a construc-
tion contract using bills of quantities without discussion of the alterna-
tives, and unquestionably negligent to allow him to incur liability for the
substantial expense of preparing bills without prior explanation and
agreement. A conscientious AJE should also draw his client's attention to
the express terms in both the RIBA/JCT and ICE contracts permitting
claims for higher prices than those in the bills or for so-called omitted
items, it is submitted.5a
A more detailed description of Bills of Quantities is given infra, Section
7(1 ), and an account of the varying degrees of re-measurement and of the
unique and elaborate systems which have evolved under the English Stan-
dard Forms of Contract and of their associated Standard Methods of
Measurement post, Chapter 8, Section l(a) and (b).
(5) As to Measurement and Valuation of Variations
Virtually all construction contracts require the work to be measured and 2·072
valued for variations, whether for interim or final payment. On occasion
an architect may engage quantity surveyors, if not already employed, for
such services. While unlikely to occur at the present day, it would still
remain a question, in the absence of prior authorisation or express agree-
ment, whether such an arrangement would render the owner liable to the
quantity surveyor for his fees, or whether, if the architect performed the
duties himself, he would be entitled to additional payment for doing so. In
3
See supra, Section 2(5).
4
Re Birmingho.m Association of Building Trades Employers' Agreement [1963} l W.L.R.
484 (Mocatta J.).
s See also. the abuses and disadvantages of measured contracts discussed infra, paras. 2.226-
2·227. For choice of lump sum considerations, see also C.C.P.P., paras. 23-19 to 23-23,
:.. See infra, para. 2·161.
 278 ARCHITECTS, ENGINEERS AND SURVEYORS [CHAP. 2
the absence of express provision it seems clear that an architect's agreed
fees will include for such a service, it is submitted. As in the case of pre-
paration of bills of quantities, however, the practices in the building indus-
try with regard to the employment of quantity surveyors have changed
very substantially since-their emergence as a separate profession at the
end of the nineteenth century. Thus a custom to the effect that the owner
must pay his architect additionally for such fees was held to exist by a jury
in 1881,6 but a similar custom (including a direct payment to the builder by
the owner for onward transIIµssion to the surveyor) was doubted by Den-
man J. as early as 1884.7 Alternatively, in some cases at the end of the
nineteenth century where owners either refused to pay such fees or
became insolvent, architects sought to sue builders for these charges,
again alleging a custom, but were unsuccessful.8
2·073 Some Conditions of Engagement of professional institutions (particu-
larly the RICS on behalf of quantity surveyors) contain express provision
for remuneration for measuring and valuing variations. In their absence,
since these services are inherent in the administration of any construction
contract, they should usually be treated as included in any agreed overall
percentage fee, it is submitted.
It has already been seen that under most construction contracts at the
present day a contractor will not, in the absence of fraud, be able to main-
tain an acticin against an NE for a careless valuation, notwithstanding the
considerable extensions of liability for economic loss now effected by the
new Hedley Byrne principle in tort. 9
(6) As to Employment of Engineering or Other Consultants
2-074 An architect or engineer has no implied authority to employ engineering
or Other consultants, so as either to render the owner liable for their fees or
entitle the architect to additional payment in respect of his own fees. In
complex works it is often necessary for consultants to be brought in early
at the design stage, but as the design is essentially the duty of the architect
or engineer10 such consultants are, in effect, carrying out part of the archi-
tect's or engineer's duty. In such cases the architect or engineer, and not
the employer, is liable for the consultant's fees unless such consultant's
employment has been expressly authorised. Thus it has been said that an
architect, who had nominated a sub-contractor to design a reinforced con-
crete structure:
6 Birdseye v. Dover Harbour Commissioners, Hudson, Building Contracts, (4th ed.), Vol. 2,
p. 76.
1 Plimsaul v. Lord Kilmorey (1884) 1 T.L.R. 48.
8 Beattie v. Gilroy (1882) 10 R. (Ct. of Sess.) 226; Locke v. Morter (1885) 2 T.L.R. 121.
9 See post Chap. 6, and the cases of Stevenson v. Watson (1879) 4 C.P.D. 148 an_d Ludbrook
v. Barre~ (1877) 46 L.J.Q.B. 798 there referred to, and ante, Chap. l, Section~t2(2)(d)(iii)
and the case of Pacific Associates Inc. v. Baxter (1990] 1 Q.B. 993, para.1·303.
10 See infra, para. 2·099 et seq.
SECT. 4] AUTHORITY OF THE ARCHl'IBCT AND ENGINEER 279
" ... had three courses open to him if he was not able to design the whole of
the work himself. One was to refuse the job; one was to ask the building
owner to employ a structural engineer on this part of the work· and one was
while retaining responsibility for the design, himself to seek the advice and
assistance of a structural engineer, paying for the service out of his own
pocket, but with the satisfaction of knowing that if the advice given was
wrong the engineer would owe him the same duty as he owed the
employer."11
It is submitted, however, that a distinction may require to be made 2·075
between those aspects of design which can legitimately be expected to fall
within the general ambit of an NEs professional responsibility for the
design of a building and of its structure, and those aspects which obviously
and to the knowledge of the client cannot be within that ambit and for
~hich no ind~pendent _co~sultant advice may be available. High-speed
lifts for a multi-story bwldmg are a relatively clear example, but there will
be many other highly specialised and perhaps novel patented processes or
products which an A/E many consider desirable for the project. Here he
will have little option but to make inquiries in the part of the industry
concerned before selecting what he believes on the available evidence to
J;,e a suitable and reliable product, and to conclude the most satisfactory
contractual arrangements which he can with the manufacturer or special-
ist supplier in question on behalf of the owner. This may involve a separate
direct contract with the owner in some cases, but more often, so as to avoid
co-ordination responsibilities of the owner to main or other contractors it
may be prudent to provide expressly for a nominated (United Kingdo~)
or "sourced" (United States) supplier or sub-contractor in the main con-
tract documents, with or without express suitability or performance obli-
gations in the main contract or its specifications as well as in the
sub-contract documentation, and with possibly a direct sub-contractor/
owner warranty entered into separately from the sub-contract itself or a
combination of all these. The professional design liability of the in NE
such situatio.ns, along with the contractual liability of the main or prime
contractor to the owner, are two of the most difficult areas of contractual
responsibility in construction contracts, and are seldom dealt with suf-
ficiently precisely in construction contracts themselves.12
Since the loss or damage suffered by an owner or later owner in such 2·076
situati?ns·will normally be economic, there will not usually be any duty
owed 1n tort by the specialist supplier or sub-contractor involved, in the
absence of. some e"?ress representation on his part of sufficient gravity
and made tn such crrcumstances as to create liability under the Hedley
Byrne principle. 13
n Per Sir Walker Carter 0.R. in Moresk v. Hicks [1966] 2 Lloyd's Rep. 338.
12
For the problem in the ~ontext of sub-contracts, see infra, Section 6(2)(a), paras. 2·114-
2·115 and Chap.13, Section2(2). See also Chap. 4, paras. 4·091 et seq., and4· 108---4· 110. See
also C.C..P.P., paras. 20-08 to 20--13, and see Clauses 3 and 28(2) of the Singapore S.I.A.
contract m C.C.P.P., pp. 557 and 587.
13
See the cases referred to ante, Chap. 1, Section 12(2)(c), paras. 1·291 et seq. See also post,
paras. 4· 108---4· 110.
 ARCHITECTS, ENGINEERS AND SURVEYORS [CHAP.2
280
It is submitted that the duty of an architect to his client will be to ensure
that appropriate design or suitability or performance obligations, in cases
outside his own expertise or that of an available consultant, are to be
found in both the main and sub-contract documentations, and that in
appropriate cases direct warranties are given .to.the ow~er b~ the m.anu-
facturer himself, or by his distributors or specialist suppliers, 1n constder-
14
ation of the product concerned being specified for the project.
2·077 Under the Conditions of Engagement contained in the RIBA scale of
professional charges it is stated: 'The employment of consultants shall be
at the architect's discretion in agreement with the client and the payment
of their fees shall be a matter of arrangement between the architect and
the client." 15 Similar provisions are to be found in the ICE Conditions of
Engagement. Where consultants are employed by the client on an A/E's
recommendation in a matter outside a normal A/E's competence, the A/E
will, in most situations, no longer be professionally responsible for the
duties so delegated, beyond his own duties of co-ordination. isa
It is just possible that, in very large and technical or industrial projects,
the court might be asked to infer an authority, by virtue of an owner's
instructions to put such a project out to tender, to employ consultants for
site investigation or design, of for the selection of speciali~t products such
as plant and machinery or heating or ventilating or air conditionin~ sys-
tems. It is doubtful if such an argument would be successful, but architects
and engineers should as a matter of prudence always obtain express
approval before incurring such expenditure, unless they are prepared to
meet it themselves out of their own remuneration.
(7) Express Powers under Building and Engineering Contracts
2-078 Building and engineering contracts themselv~s expre~sly confer v~ri~us
powers on the architect or engineer, the exercise of which may be bmdmg
on the owner, and sometimes on both parties,16 although the modem trend
in all countries is increasingly against such interpretations.11 In so far as
such powers are expressed to be subject to review by an arbitrator (and,
therefore, if necessary, by the courts in ordinary litigation18 ) they do not
merit discussion in the present context. The most important power of all,
that of ordering variations, provided that the formalities laid down by the
contract are complied with, is, however, binding on the owner, in that he
14 For a further discussion of this subject, see Section 6(2)(a), infra, paras. 2·114-2·115.
1~ See also infra, paras. 2·238-2·244 for other provisions. . pal to make the contract, even in a case where the agent did have authority
1s. See infra, Section 6(1)(b), para. 2·093, and the valuable passage from the Investors m In-
dustry case there quoted.
16 See also the discussion supra, Subsection (2), paras. 2·058 et seq.
11 See post, Chap. 6,Sections 1(1) and3(1) and seealsoC.C.P.P.,paras.17-06to 17-lOfor an
analysis and history of this type of provision. . .
1a See post, Chap. 6. But see the very difficult case, there referr~d to m See:~on 4(2), of
Northern Regional Health Authority v. Derek Crouch Construction Co. Ltd. [1984] Q.B.
644, analysed in considerable detail and doubted in C.C.P.P., Chap. 17.
SECT. 4] AUTHORITY OF THE ARCHl1ECT AND ENGINEER 281
cannot in any circumstances thereafter dispute the architect's authority to
give the relevant instruction. But whether or not such an instruction in fact
involves a variation is, under the terms of the great majority of Common-
wealth contracts, not binding on the owner.
In the latest main contract forms, the ICE conditions appear to have
retreated altogether from any policy of binding certificates 19 and since
1977 the RIBA/JCTforms appear to have confined final certificate immu-
nities to one unusual class of defective work.2°
(8) Effect of Restrictions as between Owner and Architect
Restrictions both express or implied may well exist as between the AfE 2-079
and the owner as to the occasions upon which the powers expressly con-
~erred upon the A/E in the construction contract may be exercised, for
mstance, that substantial variations are not to be ordered without prior
consultation with and approval by the owner. These will not affect the
contractor or any other third party, provided, in the case of the contractor,
that the A/E acts strictly within the terms of the express authority con-
ferred by the construction contract (except, perhaps, in the unlikely event
that the contractor has full knowledge of all the circumstances, where he
might possibly be estopped from relying on the contractual provisions if
aware that the owner's restrictions had not been complied with).
As a matter of necessary implication, the A/E will be in breach of duty
to his client if, except in cases of emergency or in purely trivial matters, he
does not consult with and obtain the owner's approval to all variations
ordered by him, it is submitted.20a
SECTION 5. RIGHTS OF CONTRACTOR WHEN ARCHl'IECT OR
ENGINEER EXCEEDS AUTHORITY
(1) Warranty of Authority
~le an a~c~tect's or engineer's implied authority to bind his employer 2-080
In contract Is, as has been seen, extremely limited, he may nevertheless be
himself liable to the contractor for breach of warranty of authority if he
exceeds his actual authority, and the contractor suffers damage as a result.
This liability flows from the general rule of law that a person who, even in
good faith, purports to contract as agent for another with a third party
impliedly warrants to such third party that he has authority from his princi-
19
See Clause 61(2) of the fifth edition, but contrast the very difficult Clauses 62 and 63 of the
FIDIC international forms still present in the FIDIC fourth edition.
20
See Oauses 1(1) and30(7)(a),and 30.1.1.1 and 32 of the 1976 and 1980 forms respectively
commented on in C.C.P.P., para. 30--25. See, however, the case of Colbartv. Kumar (1992)
59 BLR 89, discussed and doubted by the editor in (1993) 9 Const. L.J. 7.
20a See infra, para. 2·198.
 [CHAP.2
282 ARCHITECTS, ENGINEERS AND SURVEYORS
but, unknown to him, it had been tenninated. 21 But the warranty must be
relied upon, and if in fact the contractor knows of the architect's want of
authority, that will be a good defence to an action of this kind. 22 Also, on
general principles, an architect may render himself personally liable
where he makes a contract in hiS own name without naming his principals
or expressly excluding his liability,23 though this is unlikely to occur in
practice in building contracts.24
(2) Measure of Damages for Breach of Warranty
2-081 The damages recoverable for breach of warranty of authority are the loss
which the contractor has sustained as the natural and probable conse~
quence of the absence of authority. Thus, where in building contracts
there hits been a warranty of this kind, the contractor's damages will nor-
mally include the costs incurred in reasonably bringing an action upon the
contract against the principal in addition to his remuneration and loss of
profit on any uncompleted work. If there is any doubt as to the agent's
authority the contractor, before suing the alleged principal, should give
notice to the agent that he will hold him responsible for the costs of the
action, if the event proves that the agent had no authority.
ILLUSTRATIONS
2·082 (1) T., an architect, ordered ston~ from R. for the owner of a building which
was being constructed under his superintendence. T. had no authority to do
this. R. brought an action against the owner, which was unsuccessful. Held,
that R. was entitled to recover as against T. the value of the stone and also the
costs incurred and paid in the action against the building owners: Randall v.
Trimen (1856). 25
(2) An action was instituted by a contractor against the supposed principal
to enforce a contract made by the alleged agent. The contractor gave the
agent notice that he would proceed with the action at the agent's expense, if
the agent did not give him notice not to proceed, and that, if the action was
dismissed on the ground of want of authority to contract, or if the agent gave
him notice not to proceed, he would bring an action against the agent for
damages. The agent did not give the contractor notice not to proceed, and the
action was dismissed on the ground of want of authority. It was held that the
contractor might, in an action against the agent on the implied warranty of
authority, recover as part of his damages his costs of the action against the
supposed principal: Collen v. Wright (1857).i6
21 Randell v. Trimen (1856) 18 C.B. 786; Collen v. Wright (1857) 8 E. & B. 647; Firbank's
Executors v. Humphreys (1886) 18 Q.B.D. 54; Yonge v. Toynbee [1910] 1 K.B. 215.
n Halbot v. Lens {1901] 1 Ch. 344.
23 Beigtheil and Young v. Stewart (1900) 16 T.L.R. 177.
24 For a recent example where this did happen, see Sika Contracts v. Gill & Closfglen Proper-
ties Ltd., illustrated supra, Section 4(3), para. 2·067. -,:.
25 18 C.B. 786.
Z1i 26 L.J.Q.B. 147; 27 L.J.Q.B. 215.
SECT. 5] RIGHTS OF CONTRACTOR, ETC. 283
Apart from legal costs, on the normal principle for the measure of dam-
age in contract, namely that the plaintiff should be put in the same position
as if the contract had been duly performed, an architect in breach of a
warranty of authority will also be liable for any other losses the contractor
may incur, such as the cost of abortive work and loss of profit on uncom-
pleted work.
SECTION 6. DUTIES AND LIABILITIES OF ARCHITECTS AND ENGINEERS
TO EMPLOYER
(1) Generally
(a) Nature of duty
The potential duties and liabilities of A/Es in tort to third persons other 2-083
than their clients have very greatly increased in all Commonwealth coun-
tries since the tenth edition,27 and have been discussed at length in Chapter
1 in the context of the Hedley Bryne principle,28 the Donoghue v. Steven-
son principle,29 the Anns principle,30 and the English Defective Premises
Act 1972." The liability of A/Es in tort in the Commonwealth and the
United States is comprehensively treated in C.C.P.P.n
Turning to the duty of A/Es to their clients, with which the present
chapter is concerned, at the time of the tenth edition there was universal
judicial agreement that an A/Es duty to his client, like that of other pro-
fessionals such as solicitors, lay in contract and not in tort. 33 One important
result of this was that, for purposes of limitation, time began to run at the
date of the breach and not, as in the tort of negligence, from the often
much later date when damage occurs,34 though the harsh1,1ess of the con-
tractual rule might be mitigated, particularly in the case of professional
relationships, by the concept of a continuing professional duty to revise or
correct any earlier breach which would last until the end of the services
performed.35 In the case of construction professionals, this would apply
particularly to design faults in cases where the NEs engagement would
27
For the history see ante, Chap. 1, Section 12(1), paras. 1·273--1·275, and C.C.P.P., paras.
5-01 to 5--05,. 7--01 to 7--08, and, for the emergence of Anns-type liabilities in the U.S., see
also C.C.P.P., para. 2-17.
28 Section 12(2), paras. 1·280-1·281.
29
Section 12(3), paras. 1·308-1·309.
3
~ Section 12(6) para. 1·345 and, for its emergence in the U.S., C.C.P.P., para. 2-17.
31
Section 12(7).
32 See C.C.P.P. Chap. 4 and see para. 2-17.
33
Stel~e~ v. Ingram (1903) 19 T.L.R. 534 (architects); Groom v. Crocker [1939] 1 K.B. 194
(solicitors); Bagot v. Stevens Scanlan & Co. Ltd. {1966] 1 Q.B. 197 (architects); McLaren
Mayhew v. Fletcher Developments [1973] 2 N.Z.L.R. 100 (architects).
3
• Whitev. Taupo Totaro [1960] N.Z.L.R. 547; Bagotv. Stevens Scanlan, supra.
35
See, e.g. for a solicitor's case Midland Bank Trustee v. Hett Stubbs & Kemp [1979] Ch. 384.
 !1
ARCHITECTS, ENGINEERS AND SURVEYORS [CHAP.2
284
also include the subsequent supervision of the project,36 and would also
apply in the case of turnkey or design-and-build contractors for the sa~e
reasons. But it will also apply in supervision cases, even after defec~v~
work has been covered up and can no longer be detected, at least until; it
would seem, practical completion.36"
There now however, seems to be equally universal judicial agreement
2·084
in England a~d much of the Commonwealth that the liability of a pro-
fessional man to his client arises in tort (in economic loss cases under the
Hedley Byrne principle) as well as in contract.37 ~or~over, even in eco-
nomic loss cases in tort under the Hedley Byrne principle, the start of the
limitation period in England has been still further ext~nded_statutoril!.as
a perhaps unintended consequence of the alternative discoverability
ground afforded by the Latent Damage Act 1986," while in Canada dis-
coverability has been judicially adopted as the test in tort e:en tn the
absence of express legislation.39 Discoverability may also be on _its way as a
limitation test in tort in Australia as an indirect result of the High Court's
decision in Shire of Sutherland v. Heyman. 40 Limitation is discussed fur-
ther, infra, Subsection (5).
As has been seen (Section 3, supra) the contract of employment may be
informal, or may be in writing without ~efini~g dut_ies expressly.1:he P!e-
sent Section attempts to set out the duties which will normally be implied
from the fact of employment in the absence of any term to the contrary.
Generally, an owner under a building or engineering contract will have
four main interests which he employs his professional adviser to secure,
namely:
2-085 (i} a design which is skilful and effective to meet his require~ents,
including those of amenity, durability and ease of mainten-
ance reasonable cost and any financial limitations he may
irop~se or make known, and compr~hens~ve, in the sense that
no necessary and foreseeable work 1s omitted;
:ii; Edelman v. Boehm (1964) 26 S.A.S.R. 66, per Napier C.J., Sup. Ct. of South Australia;
Brickfield Properties Ltd. v. Newton [1971] 1 W.L.R. 862, at p. 873,per Sachs LJ.; <;:helms-
ford DistrictCouncilv. T.J. Evers Ltd. (1983) 25BLR 103,per Judge Smout O.C., _discussed
and quoted infra, Subsection (2), para. 2· 108; see also Merton Borough Council v. Lowe
(1981) 18 BLR 130, at pp. ;32-3,per Judge Sta?b Q.C. ..
:ii;, See the difference of view m the N.S.W., C.A., m Sheldon v. McBeath, a superv1s1on case,
reported in Australian Tort Rep. [1993] 81-209, and commented on (1994) 11 I.C.L.R. 76
by R.H. Pringle Q.C. See also Hawkins v. Clayton (1988) 164 C.L.R.539.
31 See the discussion on ante, Chap. 1, Section 12(10)(a), para. 1·372, and see also per Lord
Keith when discussing Pirelli General Cable Works Ltd. v. Oscar Faber & Parmers [1983] 2
A.C. 1 in Murphy v. Brentwood District Council [1991] 1 A.<;. 398 at P· 466.
1s For the Act and for this consequence, see ante, Chap. 1, Section 2(8).
39 See the powerful judgment ofWilsonJ. inKamloops (City of) v. Nielsen [1984] 2 S.C.R. 2,
at p 40 where Pirelli "first damage" in tort was rejected in favour of discoverability, and
the English case Sparlwm-Souter v. Town & Country De~elopmen~ fEssex). Ltc!- [1976]
Q.B. 858 preferred; and see the authorities examine~ a~~ d1scoverability apphed ~ a con-
tract case with concurrent Donoghue v. Stevenson liability for property dama?e m Con-
sumers' Glass Co. v. Foundation Co. (1985) 20 DLR (4th) 126, where the Ont~!10 Court of
Appeal made a full examination of the authorities in Canada. ' Per Erle C.J. in Rich v. Pierpont (1862) 3 F. & F. 35.
40 (1985) 157 CLR 424.
SECT. 6] DUTIES AND LIABILITIES, ETC. 285
(ii) obtaining a competitive price for the work from a competent
contractor, and the placing of the contract accordingly on
terms which afford reasonable protection to the owner's inter-
est both in regard to price and the quality of the work;
(iii) efficient supervision to ensure that the works as carried out
conform in detail to the design and specification; and
(iv) efficient administration of the contract so as to achieve speedy
and econOmical completion of the project.
In so far as any act or omission of the architect or engineer prejudices
any of these interests, and is due to lack of care or skill on his part, he will
be failing in his obligations and will, if the breach of duty is clear, be
responsible to his employer for any damage which he may suffer.
(b) Standard of care
The exact degree of care owed by personS holding themselves out as 2·086
specially qualified in a particular trade or profession and rendering ser-
vices for reward has been somewhat variously expressed by different
judges. It is a question of fact which "appears to us to rest upon this further
inquiry, viz.;,whether other persons exercising the same profession or call-
ing, and being men of experience and skill therein, would or would not
have come to the same conclusion as the defendant". 41
Thus in a medical case it was said:
"It is not enough, to make the defendant liable, that some medical men, of far
greater experience or ability, might have used a greater degree of skill, nor
that even he might possibly have used some greater degree of care. The
question is whether there has been a want of competent care and skill to such
an extent as to lead to the bad result. " 42
In another medical case it was stated: 2-087
'.'There is ample scope for genuine difference of opinion, and one man clearly
ts not negligent because his conclusion differs from that of other professional
men nor because he has displayed less skill and knowledge than the others
would have shown. "~3
In England, the House of. Lords has adopted as definitive, in the case of
professional men generally, the following direction to a jury by McNair J.:
"Where you get a situation which involves the use of some special skill or
competence ... the test is the standard of the ordinary skilled man exercising
and professing to have that special skill. A man need not possess the highest
41
Per Tindal C.J. in Chapman v. Walton (1833) 10 Bing. 57, at p. 63.
42
•J Hunterv. Hanley 1955 S.LT. 213, at p. 217,per Lord President Clyde.
 286 ARCHITECTS, ENGINEERS AND SURVEYORS [CHAP. 2
expert skill ... it is sufficient if he exercises the ordinary skill of the ordinary
competent man exercising that particular art. "44
Z.088 Of architects as such it has been said in Canada:
"As architect, he is in the same position as any other professional or skilled
person, and whether it be in the preparation of plans and specifications, or
the doing of any other professional work for reward, is responsible if he omits
to do it with an ordinary and reasonable degree of care and skill. " 4s
The following are some American comments:
" ... We must bear in mind that the [architect] was not a contractor who had
entered into an agreement to construct a house for the [owner], but was
merely an agent of the [owner] to assist him in building one. The responsi-
bility resting on an architect is essentially the same as that which rests upon
the lawyer to his client, or upon the physician to his patient, or which rests on
anyone to another where such person pretends to possess some skill and abil-
ity in some special employment, and offers his services to the public on
account of his fitness to act in the line of business for which he may be
employed. The undertaking of an architect implies that he possesses skill and
ability, including taste, sufficient to enable him to perform the required ser-
vices at least ordinarily and reasonably well; and that he will exercise and
apply in the given case his skill and ability, his judgment and taste, reasonably
and without neglect. But the undertaking does not imply or warrant a satis-
factory result. " 46
"An architect, in the preparation of plans and drawings, owes to his employer
the duty to exercise his skill and ability, his judgment and taste reasonably
and without neglect ... In his contract of employment he implies th8;t he pos-
sesses the necessary competency and ability to enable him to furnish plans
and specifications prepared with a reasonable degree of technical skill. He
must possess and exercise the care of those ordinarily skilled in the business
and, in the absence of a special agreement, he is not liable for faul! in con-
struction resulting from defects in the plans because he does not rmply or
guarantee a perfect plan or a satisfactory result. " 47
2-089 "Architects, doctors, engineers, attorneys and others deal in somewhat
inexact sciences and are continually called upon to exercise their skilled judg-
ment in order to anticipate and provide for random factors which are
incapable of precise measurement. The indeterminate nature of these factors
makes it impossible for professional service people to gauge them with com-
plete accuracy in every instance. Thus, doctors cannot promise that every
operation will be successful; a lawyer can neve~ be certain that a co~tract he
drafts is without latent ambiguity; and an architect cannot be certam that a
structural design will interact with natural forces as anticipated. Because of
44 PerMcNair J. inBolamv. FriernHospital Management Committee [1957] 1 W.L.R.582, at
p. 586, cited by the Privy Councilin Chin Keowv. Government ofMalaysia [1967} 1 W.L.R.
813, at p. 816, and by Lord Edmund-Davies in the House of Lords in Whitehouse v. Jordan
[1981] 1 W.L.R. 246, at p. 258.
•s Per Osler J .A. in Badgley v. Dickson (1886) 13 A.R. 494, at p. 500.
46 Coombs v. Beede 89 Me. 187, at p. 188; 36 A. 104 (1896), Sup. Ct., Maine, cited by the
Supreme Court of Minnesota in City of Mounds View v. Walijarvi 263 N.W. (2d) 420, at p.
423 (1978). . \'.
•1 Surf Realty Corp. v. Standing7S S.E. (2d) 901, at p. 907 (1953), cited by the 0.S. Court of
Appeals, Fourth Circuit, in Gravely v. Providence Partnerships 549 F. (2d) 958 (1977).
SECT. 6] DUTIES AND LIABILITIES, ETC. 287
the inescapable possibility of error which inheres in these services the law
has traditionally required, not perfect results, but rather that exerci;e of that
skill and judgment which can be reasonably expected from similarly situated
professionals ... Until the random element is eliminated in the application of
architectural sciences, we think it fairer that the purchaser of the architect's
services bear the risk of such unforeseeable difficulties. "48
Of architects in their role as supervisors, it has been said in England:
"As regards matters in whi_ch_ the plaintiff (an architect) was employed
merely as agent for the butld1ng owner, he was to protect his interests
adversely !O the builder, ~nd the plaintiff would be liable to an action by his
employer if he acted negligently in such matters. "49
The architect:
"is ?ound to do his best for his employer, and to look sharply after the builder
~hilst the work .is going on, ?nd i~ is his duty in that capacity to form an opin-
ion as to what his employer 1s entitled while the works are being executed. "5o
In considering the quotations from the above cases, a number of con- 2·090
siderations should be borne in mind. First, the language used should not
be misunderstood as justifying a lower ("ordinary") standard of pro-
fessional knowledge and skill in cases where an A!E happens, whether by
diligence or mere accident, actually to possess greater knowledge or skill
than an ordinary similarly situated professional. Thus an AJE may have
had reason to study the geology of a particular area or of a particular site
due to difficulties on another occasion, or have accidentally obtained spe-
cific information not normally available to an A/E, or may have attended
some special course of instruction which he has not put forward or pro-
fessed. as a special skill to his client. In such a case there will be liability if
the skill or knowledge so obtained is not used with care.
"[Counsel submitted] that it is the duty of a professional man to exercise
reasonable care in the light of his actual knowledge, and that the question
whether he exercise reasonable care cannot be answered by reference to a
lesser degree of knowledge than he had, on the grounds that the ordinarily
competent practitio~er.would only have had tha~ lesser degree of knowledge.
I ac~ept [that] subm1ss1on; but I do not regard 1t as a gloss upon the test of
negligence as applied to a professional man. As it seems to me, that test is
only to be applied where the professional man causes damage because he
lacks some knowledge or awareness. The test establishes the degree of
knowledge or awareness which he ought to have in that context. Where, how-
ever, a professional man has knowledge, and acts or fails to act in a way
which, having that knowledge, he ought reasonably to foresee would cause
dam~ge, then, if the other aspects of duty are present, he would be liable in
negligence ... " 51
48
City of Mounds View v. Walijarvi 263 N.W. (2d) 420, at p. 424 (1978), Sup. Ct., Minn.
•
9
Per A. L. SmithM.R. in Chambersv. Goldthorpe [1901] 1 K.B. 624, atp. 634.
50
Per Mathew L.J. in Cross v. Leeds Corporation (1902) Hudson, Building Contracts (4th
ed.), Vol. 2, pp. 339, 343.
51
Per Webster J. in Wimpey Construction U.K. Ltd. v. Poole [1984] 2Lloyd's Rep. 499, at p.
507; 27 BLR 58, at p. 78.

288 ARCHITECTS, ENGINEERS AND SURVEYORS [CHAP. 2
2·091 Furthermore, it is obvious that a professional man may profess special
qualifications, skills or experience to prospective clients. In such cases the
standard of care will obviously be raised to the new level professed by him.
In addition, it may be that where a client seeks the services of a pro-
fessional man of pre-eminent standing in his field and pays appropriately
higher remuneration for his services, that a higher standard will be
expected than that of the ordinary, everyday practitioner in that field. 52
Against these possible factors raising the standard of skill required, it
should be remembered that in areas of skill such as construction (to a
greater extent than in law or accountancy, for example) a degree of
experiment and innovation is clearly not only acceptable, but to be
encouraged if technical progress is not to be stultified:
"if you employ an architect about a novel thing, about which he has had little
experience, if it has not had the test of experience, failure may be consistent
with skill. The history of all great improvements shows failure of those who
embark in them." 53
2-092 It is to be noted that the language used in the above judgments makes
very clear that an AJE does not warrant the adequacy of his design to his
client-only due professional care in preparing it. It will be seen, however,
that in one difficult case in 1975 the English Court of Appeal appears to
have lent some support to the opposite view, not as a matter of general law
but as a possible term to be "implied in fact" 54 in a particular situation. 55
Greaves' case (in which all three judges expressly denied any intention to
change the traditional test) was, however, distinguished on slender
grounds by the Court of Appeal in 1986 when refusing to imply such a
terro.s6
There is, of course, nothing to prevent an AJE expressly agreeing with
his client to produce a particular result. 57 Moreover, after contracting, spe-
cific re-assurances about his design might well impose liability under the
Hedley Byrne principle in tort. 5s But it is submitted that only the most
unusual.facts and convincing evidence should be allowed to override the
traditional case law, which accords with the consensual realities of vir-
tually all client/A/E relationships, as well as with sound commercial pol-
52 See per Megarry J. in Duchess of Argyll v. Beuselinck [1972] 2 Lloyd's Rep. 172, at pp.
183-184.
s, Turner v. Garland (1853), Hudson, Building Contracts (4th ed.), Vol. 2, p. 1, per Erle J.
~ See ante, Chap. 1, Section 6, paras. 1·179 et seq. for the distinction.
"Greaves & Co. (Contractors) Ltd. v. Baynham Meikle & Partners [1975] 1 W.L.R. 1095,
illustrated infra, paras. 2· 106-2· l 07, followed, apparently quite unnecessarily, in the other-
wise straightforward case ofMedjuck & Budovitch v.Adi Ltd. (1980) 33 N.B.R. (2d) 271.
See both cases doubted in C.C.P.P., paras. 5-07 to 5-09.
,r; George Hawkinsv. Chrysler (U.K.) Ltd. (1986) 38 BLR36, illustrated and discussed infra,
paras. 2·106-2·107.
si See the new trial ordered on this issue in Tamarac Development v. Delam~te,r Freud & .
Associates 675 P. (2d) 361 (1984). -,:.
58 Compare Independent Broadcasting Authority v. EMI Electronics Ltd. (1979) 11 BLR 29,
illustrated ante, Chapter 1, Section 12(2), paras. 1·141-1 ·142 and see post, para. 4·094.
..,-_.
SECT. 6] DUTIES AND LIABILITIES, ETC. 289
icy, and that ambiguous statements or documents should be interpreted in
the traditional light. s9
There is a further important consideration in the context of the stan- 2·093
<lard of c~re. The foregoing quotations all refer to alleged negligence in
the exerCise of professional judgment. Professional firms in the construc-
tion indu~try, however, frequently offer a wide range of services, which
may require delegation of administrative or day-to-day drafting or design
work to employees, or the placing of specialist work with outside sub-
contractors or sub-consultants, such as drilling of bore holes and recordR
ing t~eir results, the _making of laboratory and other tests, or the obtaining
of S?tls reports or ~1te surveys. Where what is being offered by the pro-
f~ss1~nal to the client includes the provision of such services, as dis-
~ngu1s~ed ~om an exercise of the relevant partner's own professional
~u~gment, ~1mple errors or mistakes by subordinates and others may well,
1t is_ subm1~ed, be treated as a contractual responsibility of the pro-
fessional, wtthout proof of professional negligence in the normal sense
(compare solicitors' responsibility for the errors of their staff in late ser-
vice of writs and other administrative failures ).60 It will be sufficient if the
service in question, if conscientiously performed, would have avoided the
damage suffered-in other words, an implied warranty of at the least due
care, and even per~aps in some cases an unqualified one, may be given in
regard to the carrying out of the service in question.
The subject of delegation of design responsibilities to sub-contractors
and specialist suppliers is not an easy one, and is dealt with infra Subsec-
61
~io°: (2)_. ~ere, ~~wever, an AJE ( as contemplated by most professional
mstttuttons cond1ttons of engagement) recommends to his client the
appointment of another consultant to deal with a particular part of the
work, an~ the client does employ such a consultant, the position is much
more straightforward, and has been very well stated in the English Court
of Appeal by Slade L.J.:
'.'··. where a .P~rticular part of th_e work involved in a building contract
involves specialist knowledge or skill beyond that which an architect of ordi-
~ary competence may reasonably be expected to possess, the architect is at
liberty to recommend to his client that a reputable independent consultant
who .appears to h~ve the relevant _specialist knowledge or skil~ shall b~
~ppo1nted by the chent to perform this task. If following such a recommenda-
tion a consultant with these qualifications is appointed, the architect will nor-
ma.lly ~arry no legal respo':~ibility for th~ work to be done by the expert
which 1s beyond the capability of an architect of ordinary competence; in
19
See I:'arti~ularly the..wri!ten "guarantees" given by the A/E with regard to damp pen-
etrat10n m the Walt~arvt case, quoted supra, and illustrated infra, Section 2, where the
Supreme Court ofMmnesota rightly, itis submitted, refused to so interpret the documents
before them.
60
A ~ood example is the liability of engineers for their resident site representative in City of
~ Prmce Albert v. Under"!'ood "!cLellan, illustrated infra, Section 6(d), para. 2·139.
1
Paras. 2·114 et seq. See rn parttcularthe cases ofMoresk Cleaners v. Hicks {1966] 2 Lloyds
Rep. 3~8; Merton London Borough Councilv. Lowe (1981) 18BLR 130, C.A. and George
Hawkins v. Chrysler (U.K.) Ltd. (1986) 38 BLR 36, C.A., illustrated infra, paras. 2·117-
2·118 and 2·104. See also supra, para. 2·075.
 290 ARCHITECTS, ENGINEERS AND SURVEYORS [CHAP. 2
relation to the work allotted to the expert, the architect's legal responsibility
will normally be confined to directing and co-ordinating the expert's work in
the whole. However, this is subject to one important qualification. If any dan-
ger or problem arises in connection with the work allotted to the expert, of
which an architect of ordinary competence reasonably ought to be aware and
reasonably could be expected to warn the client, despite the employment of
the expert, and despite what the expert says or does about it, itis in our judg-
ment the duty of the architect to warn the client. In such a contingency he is
not entitled to rely blindly on the expert, with no mind of his own, on matters
which must or should have been apparent to him. " 61 "
2-094 Largely as a result of the present systems of negotiating the standard
forms, in which the interests of the owner or consumer tend to be
under-represented, there has been over the last 30 or 40 years a steady and
progressive increase in the number of risks transferred from the con-
tractor's to the owner's shoulders. Thus apart from extension of time pro-
visions (which are expressed to operate in the case of many matters, such
as weather, availability of materials and labour, and delays by nominated
sub-contractors or suppliers, over which the owner can be regarded as
having little moral responsibility or control), direct financial burdens, for
instance, rises in costs of materials or labour, the cost of meeting unfore-
seen unfavourable physical conditions or artificial obstructions,62 loss due
to delay or repudiation by nominated sub-contractors, and alleged pricing
losses due to differences in quantities or failure of the bills to comply with
the standard methods of measurement in measured contracts, have been
transferred to the owner. An architect or engineer or quantity surveyor
recommending contracts in such a form is, it is suggested, under a heavy
responsibility to see that all that is humanly possible is done both in the
preliminary and later design ·and pre-contract stages to reduce such risks
to a minimum.
Furthermore, in the case of those contracts which are so drafted as to
deprive the owner prematurely of his remedies for defective work against
the contractor through the mechanism of a binding final or other certifi-
cate, this must, it is submitted, require a higher degree of frequency and
thoroughness of inspection by an architect who has recommended such a
contract to his client. 63
2·095 On the other hand, as in the case of all professional men, the breach of
duty must be clear and self-evident. As the various quotations from the
judgments, supra, make clear, to show that better methods might have
been used is not of necessity to show that the methods employed were so
unprofessional or unskilled as to amount to negligence.64 And, in the case
of the administration of building contracts, where the contract is suscep-
~ 1'Investors in Industry Commercial Properties Ltd. v. South Bedfordshire D.C. (Ellison &
Parmers (aft.rm) and ors., third parties) {1986] 1 All E.R. 787, 807-8.
112In engineering contracts, discussed post, Chap. 8, paras. 8·060 et seq.
63 See infra, Subsection U), Supervision, paras. 2· 167 et seq.
.. See, e.g. Armitage v. Palmer (1960) 175 E.G. 315, C.A. (advice on rights of light).
SECT. 6] DUTIES AND LIABILmEs, Ere. 291
tible of two different meanings, it may be that if an architect acts honestly
but erroneously upon one const~ction he will not be liable for so doing. Gs
. How~ver; this must be a question of degree, particularly if the contract
m question is a standard form recommended by the A/E to his client, and
the error relates to an everyday administrative matter under that form
which is either elementary or on which adequate advice or commentaries
are available. Thus, where an architect deliberately certified the full value
of work do_ne for interim payment without any deduction for defective
work of which he was aware, on the ground that the contractual retentions
':ould be a sufficient protection for the owner, the Court of Appeal con-
sidered that there was no specific mandate in the contract for the use of
retentions for that purpose, and that the architect was in breach of his duty
to his client.66
If .a building owner is considering proceeding against an architect for 2·096
neg~gence, one of the first tactical problems which usually faces him is
~at in many cases he may wish to proceed against the contractor as well,
either ?ecause th~ contractor may seem also to be in breach (as in cases of
s~1;erviso~ negligence )61 or because his breach is an alternative possi-
bility, or hkely to be pleaded by way of defence. The obtaining of a single
tnbunal t? hear the tripartite dispute at one hearing, which is a normal
part of High Court procedure, may be difficult to achieve, since one or
b~th of the two contracts may contain an arbitration clause, and because
w1th?ut agreeme~t the same arbitrator cannot necessarily be obtained
and in any case without consent cannot hold one hearing to resolve both
dispu~eS. 68 A!tempts to draft arbitration clauses to bring this about have
been 1ncreasmgly made of recent years, but the consensual objections
ma~e s~ch ~~ftsmanship very difficult.69 Hong Kong has recently passed
legislation g1VIng the courts powers to order a tripartite arbitration where
separate arbitration clauses exist, but that is not always the case.
Building and engineering disputes in the High Court in England are at
the present day, _whatever the sums of money involved, almost invariably
referred to official referees, and ~bile allegations of professional negli-
?e
gence used not to so referred, 70 because there was no right of appeal on
fact from an ?fficial referee, c~anges in .the rules, specifically permitting
s~c~ appeals 1n cases of professional neghgence,71 now mean that these too
w1ll mall but cases of substantial public interest be similarly referred.
11.1C~mpare Ireland v. Livingstone (18~1) LR. 5 H.L. 395 (a shipping broker); Bulmer v.
G1lm.an (1842) 4 M. & G. 108 (a parliamentary agent); and the difficult case of Cotton v.
Wall,s [1955] 1 W.L.R.1168, infra, para. 2·199, of which this maybe the best explanation.
66
To~nsend v. Stone Toms & Partners (afirm)(l984) 27 BLR 26, C.A., and see Sutcliffe v.
Ch1J?pendale & Edmonson (afirm)(1971) 18BLR 157, at pp.162-166. See alsoinfra,Sub-
section (f), paras. 2·146 et seq.
1
~ See, for a recent example of these concurrent liabilities, Townsend v. Stone Toms & Part-
ners (aft.rm) (1984) 27 BLR 26.
o11 See post, Chap. 18, Section 3(2), paras. 18·088 et seq.
(I} See, for one attempt, the SIA contract, Clause 37(8), (9) and (11), C.C.P.P., pp. 614-615.
See also C.C.P.P., para. 20-07.
70
Osenton v. Johnston [1942] A.C. 130.
11 See Ord. 58, r. 5.
 292 ARCHITECTS, ENGINEERS AND SURVEYORS [CHAP. 2
2·097 Comment has already been made on the apparent readiness with which
expert evidence is available in construction disputes to allege negligence
by A/Es in supervision and in failing to detect defective work by contract-
ors,n and indeed on the readiness of some courts, particularly in Canada,
to take an unduly critical view of A/Es when carrying out this part of their
duties. 73 Just as the adversarial character and preparation of medical
expert evidence has been noted and criticised by the courts, it must be said
that there is now a veritable army of arbitrators, expert witnesses and
claims consultants, sometimes with doubtfully relevant" qualifications,
available for these purposes in the United Kingdom construction indus-
try, with the borderline between claim consultancy services, and expert
evidence and actual advocacy increasingly obscured.74 Of late there
appears to be a tendency in the construction field, probably more so than
in the medical fields where many witnesses are of considerable ( and com-
bined) academi~ and practitioner distinction, for the giving of expert evi-
dence or sitting as an arbitrator to be regarded as a practitioner's principal
profession, and for expert witnesses to be decreasiilgly available from the
leading ranks of the practising technical professions themselves. Even
where the credentials and practical experience of a witness are impec-
cable, the tendency to adopt an adversarial approach appears to be diffi-
cult to resist, with. often dramatic changes of opinion put forward at a late
stage in the proceedings to meet the development of opposing views dur-
ing the evidence in the case. Thus of a medical report in a leading case in
the House of Lords it has been said:
:Z.098 "Their joint report suffers to my mind from the way it was prepared. It was
the result of long conferences between the two professors and counsel in
London, and it was actually 'settled' by counsel. In short, it wears the colour
of special pleading rather than an impartial report. Whenever counsel 'set-
tles' a document we know how it goes. 'We had better put this in', 'We had
better leave this out', and so forth. "75
"I have to say I feel some concern as to the manner in which part of the expert
evidence called for the plaintiff came to be organised .... While some degree
of consultation between experts and legal advisers is entirely proper, it is
necessary that expert evidence presented to the court should be, and should
be seen to be, the independent product of the expert, uninfluenced as to for-
mal content by the exigencies of litigation. To the extent that it is not, the
evidence is likely to be not only incorrect but self-defeating. "76
72 See ante, Chap. 1, Section 12(2){d)(ii), paras.1·299-1·300.
13 See the case of City of Prince Albertv. Underwood McLellan & Associates Ltd. (1969) 3
D.L.R. (3d) 385, illustrated infra, para. 2·139; see also in the U.S. Fidelity & Casualty of
New York v. Jones Construction (1963) 325 F. (2d) 605, discussed in C.C.P.P., para. 5--09.
74 See James Longley & Co. Ltd. v. Southwest Regional Health Authority (1983) 26 BLR 56,
and the cautionary comments on that case of the editorsofBLR See also C.c.r_J'., p. 418.
75 Whitehouse v. Jordan [1980} 1 All E.R. 650, at p. 655,per Lord Denning M.R;,:C.A.
76 Per Lord Wilberforce in Whitehouse v. Jordan [1981] 1 W.L.R. 246, at pp. 256H-257A,
H.L
SECT. 6] DUTIES AND LIABILITIES, ETC. 293
The list of duties of architects and engineers in the following Subsection
is not intended to be exhaustive, and any set of circumstances should be
tested in the light of the interests of the owner set out above. 77
(2) Duties in Detail
(a) Design
(i) Degree of care
The word "design" in this context includes the specifications, whether 2·099
or not incorporated in bills of quantities, as well as plans and drawings, and
indeed any element of choice on the part of the designer, such as require-
ments as to materials or working methods. The architect or engineer will
normally be given a relatively free hand in this part of his duties, but build-
ing owners may press their own ideas upon him as to materials to be used
or plans to be followed. Where his employer's suggestions or wishes are
likely to lead to an unsatisfactory result, the architect's duty will be dis-
charged if he gives a sufficient warning, it is suggested. So, where an archi-
tect is specifically instructed to use a new method of construction, its
failure may be consistent with a proper degree of care on his part.
ILLUSTRATION
A building owner employed an architect to plan and superintend the erec-
tion of model lodging-houses after the latest improvements, and instructed
him to put in a new patent concrete roofing which was much cheaper than lead
or slate. The roofing proved a failure, and the building owner sued the archi-
tect for negligence. Erle J. charged the jury that, although failure in an ordi-
nary building was evidence of want of competent skill, yet if out of the
ordinary course an architect was employed in some novel thing in which he
had 1_10 expe~ence_, and which had not the text of experience, failure might be
consistent with skill: Turner v. Garland and Christopher (1853).1s
Where a project involves new techniques of construction, the architect 2·100
or engineer is, it is suggested, under a special duty to take the best advice
available upon the use of such new techniques, and to advise his employer
of any potential risks; and where the selection of the technique is the archi-
tect's, the onus of justifying his action will be correspondingly heavier,
since nearly all building and civil engineering techniques have beerr
arrived at by empirical means, materials have evolved gradually by
n At paras. 2·084-2·085.
78
Hudson, Building Contracts (4th ed.), Vol. 2, p. 1. See the quotation from this case in Sub-
section (1), supra, para. 2·091.
 294 ARCHITEcrS, ENGINEERS AND SURVEYORS [CHAP. 2
experience and trial and error, and untried, non-traditional or high tech-
nology methods and materials are notoriously susceptible to unexpected
difficulties and failure. It goes without saying that in normal circumstances
an architect or engineer will not be ~utomatically relieved from liability
for his plans or design by obtaining his employer's approval of them, if the
defect of design complained of is one of construction or of a technical
character. On the other hand, approval of the proposed aesthetic or amen-
ity or performance aspects of a design might well discharge the AIE of
personal liability. A more doubtful area of liability may arise if the design
defect affects the commercial value or purpose of the design. So an archi-
tect was held not liable to experienced developers because houses con-
structed to his design did not have downstairs lavatories.79
It has already been seen that if, by reason of the known facts, there is
only one really foolproof type of scheme, and another which is consider-
ably more economical but involves an element of risk, it is the adviser's
duty to acquaint his employer of the position and leave the decision to
him,80 and in that event approval of the less safe course may often negative
liability.
2·101 The quotations from the judgments in Subsection (1),supra, are specifi-
cally clear that professional men in general and A/Es in particular do not
guarantee results-in other words, in the case of their decisions they
impliedly warrant, unlike sellers of goods or turnkey contractors (who
construct as well as deSign a project), professional care only in its design
and not, as in design-and-build cases, a suitable satisfactory result irre-
spective of fault. While no doubt there have been some cases in the United
States to the opposite effect, they do not represent, it is submitted, the
correct or majority view on this very important point. In England, there
has been one difficult case in the Court of Appeal which, while expressly
not seeking to question the traditional obligation in normal cirumstances,
does seem to obscure the distinction by holding that, in what appear to be
not unusual circumstances, an implied term of suitability can be implied in
fact (that is, from the particular transaction) as opposed to the more uni-
versal implied term in law.
ILLUSTRATIONS
2-102 (1) A turnkey contractor engaged structural engineers to design the frame
of a factory building, the floors of which were required to accept the weight of
stacker trucks moving over them carrying oil drums. As designed, the floors
were not in fact able to withstand the resonance forces set up by the move-
ment of the trucks. The contractor sued his engineer for damages. The trial
judge expressly stated that there was no negligence but implied a term of
suitability, suggesting that a higher duty might be implied by law than that
19 Worbuoys v. Acme Investments (1969) 210 E.G. 335. ~/'.
so See City of Brantford v. Kemp and Wallace-Carrnthers Ltd. (1960) 23 D.L.R. (2d) 640,
Canada, illustrated supra, para. 2·045.
SECT. 6] DUTIES AND LIABILITIES, ETC. 295
owed by professional men generally. Held, by the Court of Appeal, that while
in general no higher duty rested on a structural engineer than that formulated
in Bolam's case for professional negligence, on these particular facts, since
the design-and-build contractor was liable to the owner without qualification
for a suitable design, the defendants were liable to the contractor under a
term to be ~mplied from the particular facts: Greaves v. Beynham Meikle
(1975)."'
[Note: There is considerable difficulty in following the precise logic of this
case. The evidence cited by the Court in support of the implied tenn appears
to show no more than that, as in any other case, the contractor client had made
known to the enginper the precise purpose for which the floors were required.
The case, as will be seen, has also been explained as being based on a sub-
sequently withdrawn admission in the pleadings, and by evidence under
cross-examination by the engineers to the effect that they knew the specific
purpose for which the floor was required, and that they were being instructed
to supply a suitable floor; but this, it is submitted, begs the question whether
the undertaking was or was not in unqualified terms.82J
(2) A city became concerned about damp penetration which appeared to 2·103
be taking place in a building during construction, and wrote to the architects
in a letter not before the Court. The architects reassured the city in a letter
which stated "We ... hereby guarantee that our design ... is such that in our
opinion the lower level shall remain water-tight and damp-free", and sug-
gested that the city might ask for a guarantee from the contractor. Ultimately,
the city sued the architect alleging an unqualified warranty in tenns of the
letter. The trial judge held that the letter was no more than a statement of
opinion. Held, by the Supreme Court of Minnesota, that architects were not,
by virtue of the uncertainties of their art, liable for their designs in the absence
of fault, and without seeing the earlier letter from the city it was not possible
to accord contractual force to the architect's letter in the unqualified sense
contended for: City of Mounds View v. Walijarvi (1978).83
(3) Engineers were engaged to design and select new floors for showers and 2-104
changing rooms for workers in a foundry, and, after inquiries and investi-
gatio~s with a manufacturer, selected o:p.e of two vinyl non-slip safety floor
coverings offered by that manufacturer. A workman slipped and was injured,
and sued the factory owners, who joined the engineers alleging negligence
and breach of an implied warranty that the floor surface would be fit for use in
a shower room. The trial judge found that there had been no negligence. The
evidence relied on for the warranty was the engineer's admission in cross-
examination that they had been asked to provide a floor safe for use in wet
and soapy conditions, and that it was their job to provide a floor that was "as
safe as they po.ssibly could". Held, by the Court of Appeal, distinguishing and
not following Greaves' case and following Lord Scarman in Independent
Broadcasting Authority v. E.M.l., 84 that where there was a contract for both
the design and supply of a product there would usually be an implied tenn of
the ~uitability of the design, but where a professional man supplied a design
service only, he would not nonnally warrant more than reasonable skill and
care: George Hawkins v. Chrysler (U.K.) Ltd. (1986).s>
SI [1975] 1 W.L.R. 1095.
si See also C.C.P.P., paras. 5---07 to 5-08.
83 263 N.W. (2d) 420.
84
(1980) 14 BLR 1, at p. 47.
IU38BLR36.
 296 ARCHITECTS, ENGINEERS AND SURVEYORS [CHAP.2
[Note: Fox L.J.'s ground for distinguishing Greaves' case (namely that in
that case there had been an admission of liability in the pleadings which was
subsequently withdrawn) seems slender, and the admissions in cross-examin-
ation in both cases were expressly stated in the later case to be very similar.
The Hawkins judgments effectively disregard Greaves' case, citing only those
parts of the Greaves judgments which reject any intention to depart from the
traditional position.]
2-105 Greaves' case has been followed (and on the facts found, which clearly
showed negligence, it would seem quite unnecessarily) in Canada.86
Greaves has been distinguished twice in the English Court of Appeal. 87
Two judges in the Hawkins case, however, appeared to acknowledge
some difficulty in reconciling the differing position in law of contractors or
sub-contractors undertaking design compared with that of professionals.ss
It is respectfully submitted that there are powerful and valid reasons for
the distiitction. The fundamental reason why the liability of an AfE for the
design and suitability of his building is based on negligence, and so subject
to "state of the art'' defences even where the design fails, whereas a
design-and-build contractor's liability, in the absence of express pro-
vision, will be an unqualified obligation of suitability not subject to such
defences, is that, in the case of a manufacturer or seller of goods or person
carrying out work for a price on whom design reliance is placed, there are
unavoidable competitive pressures to "design down", as near as possible
to the minimum acceptable.standards of quality, durability. and ease of
maintenance compatible with maintaining his position as a supplier in the
market. In such a situation the purchaser must have, it is submitted, the
protection of an unqualified suitability obligation, not open to state of the
art defences, to counterbalance this basic conflict of interest.89 On the
other hand, a professional AfE is under far less, if any, pressure to "design
down"; and indeed on the contrary will, if anything, be influenced, not
least by his traditional means of remuneration, in the direction of con-
servative over-design. In such a situation owners will regard themselves as
sufficiently protected by a professional negligence obligation in the
absence of this conflict of interest, and indeed will see an advantage in the
increased availability, flexibility and cheapness of professional services
which the more limited liability permits. The reduced liability will also be
I With the growth of "design and build" construction contracts, however 2·107
86 Medjuck & Budovitch Ltd. v.Adi Ltd. (1980) 33 N.B.R. (2d)271,perStrattonJ., discussed
and criticised in C.C.P.P., para. 5-08.
87 In addition to Hawkins' case, see also per Robert GoffL.J. in Holland Hannen & Cubitts
(Northern) Ltd. v. Welrh Health Technical Services Organisation (1985) 35 BLR 1, at pp.
21-22, illustrated infra, para. 2·200, where he pointed out that, if the negligence lay in not
appreciating the client's need for a particular aspect of design, the duty would come close
to a warranty of suitability.
88
Per Fox L.J., at p. 51, and per Neill L.J., at p. 55. -i·
89 This conflict is correctly noted as an important factor by Sir Walker Carter in Moresk v.
Hicks, illustrated infra, para. 2· 117.
SECT. 6] DUTIES AND LIABILITIES, ETC. 297
less of an inhibition against innovation by professional designers, which
an unqualified obligation might stultify, and which will be acceptable to
clients particularly where there are protective factors present, such as the
professional's ID;Ore long-term aim to enhance his reputation by successful
designs, as opposed to the more short-term profit considerations of manu-
facturers, sellers and design-and-build contractors.
The judgments of the Court of Appeal in the Hawkins case are clear and 2·106
well-researched in terms of the leading English authorities, it is submitted,
and clearly to be preferred to the Greaves case, which should be treated as
decided on its own special facts.
.The~e i~, of .course, nothing in principle to prevent an A/E contracting
with his chent 10 terms of an unqualified design or suitability warranty, but
it is submitted that in practice it will only be in the rarest of cases that an
NE will be likely to give such a warranty, which will be directly contrary to
his profession's perception of the designer's role, as well as commercially
extremely unwise, given the inevitable hazards attending all construction.
In addition, such an unqualified liability is extremely unlikely to be cov-
ered by a professional man's insurance policies, of which he is likely to b~
well aware, and the Supreme Court of Minnesota in the Mounds View case
supra was, it is submitted, right in its interpretation of the apparent
express "guarantee" given by the engineers in that case, which on close
analysis did no more than reassure the client that the engineers had
checked their own design and were satisfied that it would achieve its pur-
pose. That undertaking may be compared with the terms of the sub-
sequent representation, after work had started, by the design
sub-contractors in the Independent Broadcasting Authority v. EM! case,90
~hich, i~ the absence of any contractual relationship gave rise to liability
in tort, 1n the absence of any contractual relationship, under the Hedley
Byrne principle. But it should be remembered that even unqualified
undertakings, if not forming part of a contract, can only rank in English
law, whether under the Misrepresentation Act or under the Hedley Byrne
principle, as imposing a liability of due care, and not of warranted result.
it is possible that consultants advising such contractors, particularly if in~
effective joint venture capacity, may owe a more strict duty compatible
with that owed by their contractor clients to owners or purchasers. 91
Dealing with a quite different question whether the owner's AJE owes
an economic loss duty of care in tort to the contractor in regard to the
design of a construction project, while there have been conflicting
decisions on this in the United States (and to some extent in Canada) it
seemed reasonably clear that, in the Commonwealth as a whole, the
90
Illustrated ante, Chap. 1, Section 12(2)(c), paras. 1·295-1·296.
91
See, e.g. Consultants Group International v. John Worman Ltd. (1985) 9 Con. L.R. 46, per
Judge John Davis Q.C.
 298 ARCHITECTS, ENGINEERS AND SURVEYORS [CHAP.2
trend was firmly against such a duty, until the very recent decision to the
contrary in the Supreme Court of Canada.92
(ii) Continuing duty and limitation
2·108 It has already been stated93 that the duty of design in a construction
contract is essentially a continuing one where the A/E's employment con-
tinues during the supervision stage:
"The architect is under a continuing duty to check that his design will w?r~ in
practice and to correct any errors which ~ay emerge. It savours of the nd1cu-
lous for the architect to be able to say, as rt was here suggested that he could
say: 'True, my design was faulty but, of course, I saw to it that the contr~ctors
followed it faithfully' and to be enabled on that ground to succeed m the
action." 94
"I consider that the architect was responsible for the design and that th.at
responsibility was a continuing one in the sens~ th~t, if ~e subse~uently dis·
covered that what he may initially have been Justified 1n assum1ng was an
adequate design was in fact a defective design, his responsibility remains. "95
"I am now satisfied that the architect's duty of design is a continuing one,. and
it seems to me that the subsequent discovery of a defect !n the design,Jnitially
and unjustifiably thought to have been suitable, reactivated or revived the
architects' duty in relation to design and imposed upon them the duty to take
such steps as were necessary to correct the results of that initially defective
design." 96
"In principle, it would seem that liability should continue until the .time of the
final certificate when the architect's services usually cease. Thus, ma c~se of
combined design and supervision failure? the breac~ ~f duty was s~1d 't?
occur at the time when the defendant advised the plaintiff that the builder s
contract had been satisfactorily performed, and that she should accept the
house, as the house that she had engaged him to design and arrange for'. " 97
This view of a continuing design duty has been followed in a number of
other official referee cases in England.98
2-109 However, if the original design failure has resulted in finished work of a
final or irreparable nature, so that rebuilding costs will have to be
92 See ante, Chap. 1, Section 12(2)(d), paras. 1·295-1·~~6 and l ·30'.3:-1·304 wh~re this subject
and recent important authorities in England and Bntish Columbia are cons1d~red, and the
doubtful decision of the Canadian Supreme Court in Edgew.orth C.onstruction Ltd. v. F.
Lea and Associates [1993] 3 S.C.R. 206, illustrated and extensively discussed ante, Chap 1,
para. 1·296.
9J See supra, Subsection (1), paras. 2·~83--2·084.
94 Per Sachs L.J. in Brickfield Properlles Ltd. v. Newton [1971] 1 W.L.R. 862, at p. 873.
9.1 Per Judge Stabb A.C. in London Borough of Merton v. Lowe (1981) 18 BLR 130, at P·
%
w
=
Per Judge Stabb Q.C. in London Borough of Merton v. Lowe, supra, at p. 1TI ·
Edelman v. Boehm (1964) 26 S.A.S.R. 66, South Australia. See also supra, para. 2·083, and
see also in Australia Hawkins v. Clayton (1988) 164 C.L.R. 539, and Mcl!eqth v. Sheldon
(1993) Aust. Tort Rep. 81-208, N.S.W., C.A. -,:.
98 Che/msfordDistrictCouncilv. T.J. Evers (1983)25BLR99;EDACv.Moss(l985) 1 C.L.J.
131; University of Glasgow v. Whitfield (1988) 42 BLR 66.
SECT. 6] DUTIES AND LIABILITIES, ETC. 299
incurred in any event, any theory of a continuing liability beyond that date
would seem to pose difficulties of both quantum and liability, since in such
a case a subsequent recognition by the architect of the inadequacy of the
design and new advice to the owner could not, by that stage, be of any
further benefit to the owner; and conversely no additional damage could
be attributed to any later failure of due care of this kind on the architect's
part. Design failures of this kind would therefore seem to differ in prin·
ciple from continuing supervision duties, where later detection of a defect
in completed work and its reinstatement at the cost of the contractor will
usually avoid any loss to the owner. The legal advice limitation cases are
also ones where, on examination, a later due discharge of the continuing
duty would have avoided the plaintiff's loss, thereby justifying the later
limitation date. In design cases, there might of course be intermediate
situations where at a later stage the design could have been rectified at less
cost than when finally discovered after entry into occupation by the
owner, for example. In these cases, however, the quantum of damage
would appear to be less than the full rebuilding cost.
In practice, a design duty can also be revived at a still later date than
even the final certificate, since AJEs are frequently consulted by their
clients, perhaps some years later, when doubts or symptoms of possible
design defects emerge. 99 Again, there may be difficult problems of both
quantum and liability if, later, negligent advice is given, perhaps gratu-
itously but in any case after the original limitation period has expired,
whether in contract or tort. Such facts may indicate a new and later liabil-
ity at best, and a possibly very reduced quantum of damage, if any. Again,
the by now final nature of the original design failure may create consider-
able difficulties of quantum and causation in cases where a plaintiff is
forced to rely on post-completion assurances or advice, even if given
before_ the limitation period has expired, in order to overcome a limitation
defence. It has, however, been held that representations and reassurances
by an architect, when called in at a later stage after completion to recon·
sider a question of possible design failure, on the faith of which the client
forbore to pursue the matter further against him, may ground an estoppel
preventing his raising a subsequent expiry of the limitation period when
sued. 1
When considering the question of limitation and an A/E's design res- 2-110
ponsibilities, in the present state of the law in England the possible con-
current liability of the A/E to his client in tort as well as in contract may be
of great importance.2 In Murphy v. Brentwood District Council Lord
Keith, when commenting on the basis of liability in the well-known Pirelli
case, was of the opinion that an A/E's design liability to his client in tort
would be founded on the Hedley Byrne principle (as indicating reliance by
09
See, e.g. University of Glasgow v. Whitfield (1988) 42 BLR 86 as an example.
I
Kaliszewslw. v.John Clague & Partners (1984) 5 Con. L.R. 62, and see Westlakev. Bracknell
J 2
District Council (1987) 19 Housing L.R. 375.
For concurrent liability see infra, Chap. 1, Section 12(10), para. 1·372.
ll
;
 300 ARCHITECTS, ENGINEERS AND SURVEYORS [CHAP.2
the client on the A/E's advice in that regard) as much as on any more
general duty of care in tort.3 On either view, any liablity of the AfE to his
client would be for damages in negligence, and so, notwithstanding that
the claim might only be for simple economic loss, within the defined ambit
of the Latent Damage Act 1986,4 thus conferring the great limitation
advantages of the alternative three-year discoverability period, subject to
the overall 15-year "long stop" under that Act {the latter dating from the
original negligent act or omission, not first damage).
It may perhaps be commented that this produces the anomalous pos-
ition, at least until English limitation legislation is further amended (which
seems a possibility after the Murphy decision) that a plaintiff suing under
Hedley Byrne (in principle based on a relationship which approaches but
does not actually reach a full contract with the defendant) will enjoy sub-
stantial limitation advantages over a plaintiff who does have a full contract
( unless all breaches by an AIE of his contract are held, ispo facto, to carry
concurrent Hedley Byrne or negligence liability, which hardly seems
likely). This odd result is perhaps the more noteworthy in that, but for the
new Anns liability, later overruled and abolished by the Murphy decision
in 1990, and at which the 1986 Act was undoubtedly aimed, that Act would
certainly never have been passed.
(iii) Measure of damage
2·111 If an error in the design is discovered at an early stage, the building
owner should normally, as part of the duty to mitigate damage, give the
architect or engineer an opportunity to correct it. Thus in Columbus Co. v.
Clowes' Wright J. said:
"It seems to me that the most the plaintiffs can get is the reasonable cost of
making the plans good. But then comes the difficulty. The defendant himself
would have made the plans good without any charge. Indeed he would have
been bound to do so. If, however, the plaintiffs had called in another archi-
tect he would in all probability have insisted on commencing the plans de
nov~, and would have refused to make any use of the defendant's plans. but
would that have been a reasonable course to pursue? I do not think it would."
The above remarks would not, however, apply if the design was quite
useless or the defect such as could reasonably be expected to destroy any
further confidence in the professional adviser. In that event the building
owner would be entitled to treat the contract of employment as repudi-
ated, it is submitted,6 and resist payment on the ground of a total failure of
consideration.7
3 See {1991] 1 A.C. 398, at p. 466.
4 See ante, Chap. 1, Section 12(8).
~ [1903] 1 K.B. 244, at p. 247.
6 For discharge by breach, see post, Chap. 4, Section 3(1).
1 Moneypenny v. Hartland, illustrated infra, para. 2·125, and see also para. 2·158.
SECT. 6] DUTIES AND LIABILITIES, ETC. 301
The measure of damage for breach of the design obligation will obvi- 2-11
ously differ widely according to the nature of the breach· it may be nom-
inal if the error can be rectified simply at an early stage, or it may be for loss
of value or loss of commercial profitability in the case of a non-structural
suitability breach, which cannot be rectified. Where the design failure
~ela~es to the structure itself, the difficult question of cost of repair or dim-
mutton of value as the proper measure of damages may be raised. 8 It has
been authoritatively held in a leading case in the Court of Appeal of New
9
Zealand that, applying the basic compensatory principle in breach of con-
tract cases? the measure of damage will be the cost of rebuilding to a
proper design, but less a credit for any higher cost which would have been
p~yable for a proper design in the first place (on the assumption that the
client would have proceeded with the properly designed project), and the
"indemnity" or diminution of value basis of assessing damages (cost of
demolition, return of abortive expenditure, etc.), which had been earlier
suggested in an Australian case, should be rejected in such a situation.10
ILLUSTRATION
An owner wishing to build a sports centre indicated a total limit on price of 2,, 113
$110,000. The a_rchitect employed an independent structural engineer who
prepared a special pre-stressed design to achieve the wide spans needed for a
ground fl?or skatin~ rink, and the contract was let at $110,000, but during
construc_tton the ~esign wa~ f<;'und to be unsafe, and a design was prepared by
new engineers u~1ng the existing ground floor with columns to support a new
firs~ floor. The_ hke~y o~er~l~ cost was now _$200,000, and, since the original
designer was disputing hab1hty and contending that his design had been satis-
facto:r, the contractor was pressing for substantial payments, and the bank
re!using furth~r loans,. the owner 'Yas c?mpelled by financial stringency to
bnng proceedings, against the architect 10 contract and the engineer in tort
without restarting work. The defendants contended that the correct measur;
of damage should be on an "indemnity" basis, namely the sums due to the
contractors for abortive work already done, plus the cost of demolition, but
less the salvage value of any reusable work or materials, which were said to
to_tal ~35,000 net. Held, by the Court of Appeal of New Zealand, affinning the
~nal Judge, that the owner would have proceeded with the project had the
increased_ cost been known, and was entitled to damages of over $100,000,
representing the excess of likely final cost over the original contract sum, less
an allowance of $8,000 representing the additional cost had the final design
been used in the first place: Bevan Investments Ltd. v. B/ackhall & Struthers
(1978)."
. [Note: ~is characteristically well-reasoned and researched and very
Important J~dgment of the New Zealand Court of Appeal (which dealt with a
8
See post, Chap. 5, paras. 5·059--5·062 and the full discussion in Chap. 8, Section 2(2)(a). See
also the detailed discussion in Chaps. 9 to 13 of C.C.P.P.
9
Bevan Investments Ltd. v. Blackhall & Struthers (No. 2) [1978] 2 N.Z.L.R. 97.
10
[1978] 2 N.Z.L.R. 97, at pp. 106-109,per Richmond P., disapproving the obiter remarks of
Hutley and Hardie JJ.A. in Auburn Municipal Council v. ARC Engineering Pty. Ltd.
[1973] 1 N.S.W.LR. 513.
11
·[1978] 2 N.Z.L.R. 97: see also per Beatty J. in [1973] 2 N.Z.L.R. 45.
 302 ARCHITECTS, ENGINEERS AND SURVEYORS [CHAP.2
number of other matters including the effect of financial stringency on dam-
ages in tort, and the correct date for ass~ssing damag.e in the light of inflation)
is analysed in depth, and compared with the English cases on these latter
aspects, in C.C.P.P., Chapters 11 and 12.]
For further examples of design failures by architects and engineers, see
also Subsection (b ), "Examination of Site", infra.
(iv) Delegation
2·114 The growth of specialisation and the complexities of modern buildings
and their contents have meant that in many cases an architect is bound to
employ consultants, since he will lack the necessary skill hirnself. 12 Fu~-
thermore, the specialist sub-contractors who carry out work or supply arti-
cles for incorporation in the work are frequently more expert in design in
their own field than the architect or engineer in general charge of the pro-
ject can hope to be. Quite apart from obvious examples, such as ~he
machinery which is often installed in engineering contracts, and ~eating
and ventilation and electrical services, there are many processes which are
now a normal part of modern building and engineering techniques, yet
which fall into this category. They include, for example, the structural
frames of large buildings whether in steel, reinforced concrete, or pre-
stressed concrete, specialist piling and foundation work, roofing work of
many different kinds, specialist floor finishes, and so on. In some cases
consultants practising in these fields either do not exist at all, or are so few
in number as to be beyond the practical reach of the ordinary owner or his
professional advisers, except in the case of the most massive projects
where the expense of employing them could be justified.
2·115 In these circumstances a substantial proportion of the technical design
of a project can be (and often is) delegated in reality (thou_gh quite often
not in appearance) to a specialist sub-contractor or supplier who under
the present system in the United Kingdom is usually nominated by the
architect or engineer under a power reserved in the contract (see also the
"sourcing" of sub-contractors in United States contracts). Another class
of sub-contractor, far from receiving plans and details of his work from the
architect or engineer, may give a quotation without receiving any detailed
drawings or specification from the owner, or against outline drawings
only, and be required (often not in any express part of his sub-contract) to
supply working or shop drawings to an ar.chitect or structural engineer f~r
"approval". This approval can often be little more than an act of co-ordi-
nation designed to see that the specially designed work will not clash with
the architecturally designed part of the project, rather than any genuine
technical check upon the efficiency of the design so submitted. This may
apply, for example:, to re-inforcement steel drawings for re-i1:1o.rced con-
crete or to structural steel drawings for steel-framed buildings. The
, ';'
12 See supra, Sections 2(3) and 4(6).
Seer. 6] DUTIES AND LIABILITIES, ETC. 303
designs themselves are sometimes provided by structural engineers advis-
ing the architect, but sometimes by the sub-contractor supplying and
erecting the frame of the building. 13
Under traditional contract arrangements, architects and engineers are 2·116
responsible to the owner for the design and suitability of the final perma-
nent works for their intended purpose, whereas the contractor is only
responsible to the owner for bringing the works to completion according
to the design. 14 The situation under discussion may, however, mean that in
respect of the sub-contracted work the owner will need to have a remedy
for an unsatisfactory design against the contractor for breach of contract,
and the terms of the nominated sub-contract in question may show
expressly that the sub-contractor ( and hence the main contractor) is
thereby undertaking a design responsibility. 15 The question remains: what
is the liability of the architect to the owner in such a case if the design is
defective? While every case must depend on the exact facts, it is suggested
that the fact that the sub-contractor may, as part of the obligations of his
sub-contract, have accepted an express responsibility for design, and that
in accordani;:e with most provisions for nomination of sub-contractors the
main contractor is accordingly deemed to have contracted with the owner
in identical terms, who accordingly may have a concurrent remedy against
the contractor, will usually be irrelevant to the question of the architect's
liability to the owner, just as a contractor's liability for defective work to
the owner will not affect the owner's rights against his supervising A/E for
failing to detect or prevent it. 16
ILLUSTRATIONS
(1) A building failed after two years because of the defective design of its 2-117
reinforced concrete frame, in that the purlins were of inadequate strength and
the portal frames were not tied together at knee or ground level. The owner
sued his architect, who pleaded an implied term of his contract of employ-
ment that he should be entitled to delegate specialist design tasks to qualified
specialist sub-contractors. 17 The architect had invited a firm of nominated
sub-contractors, with structural engineering partners, to prepare the draw-
ings and construct the frame, and to submit a price for the work to be done,
and had approved the drawings and caused a sub-contract to be placed with
an appropriate specification. Held, by Sir Walker Carter O.R., that the
13
See the discussion as to the possible abuses of this type of arrangement in the case of
structural engineers, supra, Section 2(6), paras. 2·035-2·036. ·
14
See ante, Chap. 1, paras. 1·295-1·296, and see post., Chap. 4, Section 1(1).
1
$ For a modern example of this very common situation, see Fairweather & Co. Ltd. v.
London Borough of Wandsworth (1987) 39 BLR 112. As to the suggested basis of this
liability of the sub-contractor, see post, Chap 13, Sections2(2) and3(1), where the difficult-
ies of any implied liability are also explained. See also post, Chap. 4, paras. 4·082 et seq. and
4·108-4·110.
16
See Hutchinson v. Harris (1978) 10 BLR 19, at p. 22; London Borough of Merton v. Lowe
(1981) 18 BLR 130, at p. 134, illustrated infra.
17
The pleading indicate that it was a case of nominated sub-contractors, though the language
in the judgment might suggest direct contracting.
 ARCHITECTS, ENGINEERS AND SURVEYORS [CHAP,2
304
architect had no implied right to delegate the duty of design, certainly not to a
contractor who would have an interest which was entirely opposed to that of
the building owner: Moresk v. Hicks (1966). 18
(2) Naval architects were employed for the reconstruction. for an ocean-
arium. Prior to their being employed, the owners had receive~ represen-
tations from the suppliers of a product (venniculite concrete) that tt would be
suitable for a special underwater use. The suppliers made t~~ same repr~sen-
tations to the architects. Held, by the Court of Appeal of Bntish Columbia, on
the facts the architects owed a duty to make further inquiries, an~ they as well
as the suppliers were liable to the owners: Sealand of the Pacific v. Robert
MacHaffie Ltd. (1974)."
(3) Architects nominated a specialist company, using their own proprietary
2·118
product called "Pyrok", as nominated sub-contractors for suspended plas-
tered ceilings in a swimming pool building. !he exact content of the Pyrok
finishing coat mix was a trade secret. At the time the comp~ny had done suc-
cessful work elsewhere and the name of the product was natlon~Ily known. By
the time of practical completion in 1967, cracks had appeared tn a numbe~ of
rooms in the building and tests carried out showed that the undercoats, which
had been applied by sub-sub-contractors, were ~eaker ~es than those
specified, while it was now known that the Pyrok lDlX was part1cula:ly strong.
Though further testing of samp!es has been cont~mp!ated, the architects only
recommended a period of monitoring by the sw1m£?1ng pool manager. Some
five years later (considerably later than was re.quired by the c~ntract) _the
architects, in the absence of any adverse reports, issued a final certi!icate w1t~-
out further inspection. One year after that, new cracks appeared tn the main
pool ceiling, which finalr h~d to be remo~ed altogether. H_eld, by the c?urt ?f
Appeal, affirming the tnalJudge, that while the Pyrok d~s1gn was deficient, 10
that the mix of the finishing coat was too strong relative to the unde~coats
even if they had properly complied with their specification, it was not 10 the
circumstances negligent to specify the product; but after the streng0 of the
Pyrok mix and the weakness of the underC;Oat~ became known foll.owtngpra:-
tical completion, and in the light of cracking 10 the oth~r rooms, it ~as negli-
gent not to call for a full inspection and to take samples 10 1967; and !twas also
negligent to issue the final certificate (which pr~ven~ed any claun _by the
owner, against the contractor for bad workmanship) without further inspec-
tion in 1973: London Borough of Merton v. Lowe (1981).
20
•
[Note: A question, of which there is no sign in the argu~ent or Judgments 10
• 1
this case, no doubt due to the special final certificate basis of cl~, relates to
quantum, since presumably an inspection in 1967 would have disclosed the
need to remove the ceiling in any event.]
In the Merton case Waller L.J. said of Moresk v. Hicks:
21
2-119 "I entirely agree with the judgement in that case. There the architect had
virtually handed over to another the whol~ task of design. The architect could
not escape responsibility for the work which he was supposed to do by hand-
ing it over to another."
There is an obvious need to reconcile the Merton and Moresk cases. It is
suggested that where an A/E delegates design work to others in areas for
1~ [1966} 2 Lloyd's Rep. 338.
1• 51 D.L.R. (3d) 702.
2018 BLR 13.
21 Atp. 148.
SECT, 6] DUTIES AND LIABILITIES, ETC. 305
which A/Es either traditionally design and charge, or which is in any case
comprehended within the design fees charged, then he will not escape
liability if he chooses for his own purposes to delegate design services to
another designer, and in particular to contractors or sub-contractors, if
they are negligently carried out; that is, he will be warranting due care by
that other designer. 22 Where, however, the area of design is obviously out-
side the expertise of any A!E or of the consultants available in the con-
struction industry (as, for example, a high-speed lift installation or other
specialist products or processes23), his duty may be limited to the exercise
of reasonable care in the selection of such products or specialist services. 24
AIEs should clearly, in their own interests, wherever possible consult
with and obtain their client's instructions in all such doubtful areas of
design or selection and, as indicated supra, endeavour to obtain additional
protection for their client through separate direct warranties of suitability
in favour of the owner, particularly in the case of suppliers or specialists
whose products are relatively untried, or where the likely loss, should they
prove to be unsuccessful, will be relatively heavy.
To the extent, however, that an owner on advice himself chooses to 2·12!
employ consultants, or orders provision to be made in the main contract
for matters connected with design, such as a soil survey, to be sub-contrac-
ted to specialists, he may not be relying on the architect's skill or judg-
ment, and different considerations will, it is submitted prevail. In a case
where an architect or engineer has himself called in a consultant, he will
normally himself have a right of recourse, if sued, against the consultant
for damages,25 but in other cases (and in particular that of specialist sub-
contractors) there will be no remedy available to the architect or engineer
( unless he is in a position successfully to invoke the Hedley Byrne principle
I previously discussed in Chapter 1, which may not be easy).
As a broad generalisaton, it seems clear that, where an AIE arranges for
a consultant to be directly employed by the owner, his own responsibility
will (apart from obvious duties of co-ordination with the work under his
own control) cease in that particular area. 25a The only problems which may
r arise will be in the precise delineation of that area.
I ILLUSTRATIONS
If (1) Specialist nominated sub-contractors had, in combination with a firm of 2-12]
consultant structural engineers, patented a special form of concrete floor.
t 22 Bevan Investments Ltd. v. Blackhall & Struthers [1973J 2 N.Z.L.R. 45, illustrated supra,
where the architect was liable for a structural engineer he had engaged to do the design.
! 23
See also supra, Section 4(6), paras. 2·074-2·076, and see the Pyrok case supra.
l 24 See, for a particularly hard case in an area known to be outside the architect's expertise and
where the client might be expected to have considerable experience, Richard Roberts
I 15
Holdings Ltd. v. Douglas Smith Stimson Partnership (1988) 46 BLR 50 (Judge Newey
Q,C),
See the part of the judgment in the Moresk case, quoted supra, Section 4(6), para. 2·074.
25
' See supra, para. 2·093,per Slade L.J. in the Investors in Industry case, and see University of
Regina v. Pettick (1991) 79 D.L.R. 3d 615.
\
 306 ARCHITECTS, ENGINEERS AND SURVEYORS [CHAP. 2
This was not acceptable to the owners, and the specialists put forward a
revised design of floor to the owner's architects and engineers to which the
final floor finishes would be applied without any intermediate structural con~
crete screed, which was a feature of the earlier design. The floors were
required for a hospital. The specialists requested confirmation from their own
consultants that the new proposed floors would meet certain deflection
requirements under a particular code of practice, without intimating that a
more stringent requirement had been imposed by the owner's own design
team. The consultant correctly confirmed that the floors did conform to the
original code of practice specified. By reason of the absence of the intermedi-
ate concrete screed, the floors when laid gave an unsatisfactory appearance of
unevenness though they were structurally safe. The main contractors sued the
owners for delay and loss caused by delayed variation instructions, and the
owners in turn sued their own design team and the specialist sub-contractors,
who themselves joined their own consultants alleging a duty to warn them
that the revised design would not produce a satisfactory appearance or finish
suitable for a hospital floor. Held, by the Court of Appeal (Robert Goff L.J.
dissenting), that the specialists' consultants were not liable to the specialists
since, as structural engineers, they had not been required to advise as to what
the floor would look like once the floor finishes had been applied. Matters of
visual appearance for aesthetic effect were in the province of the architect and
not within that of the structural engineer. Per Robert Goff L.J. dissenting, the
l
profile of the flooring is an aspect of the structure, and the structural engineer
is the man with the expertise to ascertain that profile, and if there is a risk that
the profile will be unacceptable it is his duty to warn his clients: HQlland,
Hannen & Cubitts v. Welsh Health Technical Services Organisation (1985). 26
Z.122 (2) Structural engineers noticed serious failures of workmanship in fixing
concrete cladding, in the form of concrete mullions, to the face of the building,
and reported to the architects that the work was structurally unsafe. The
I
architect took no adequate steps to prevent further defective work, while the
engineers remained on site, since they had other work of their own to super-
vise. Substantial repairs for further similar defects were ultimately required,
and the architects when sued sought contribution from the structural engin-
eers. Held, by the Court of Appeal, that the concrete mullions were in the
architect's area of responsibility, and the structural engineers were absolved
from further responsibility by reporting what they had seen to the architects:
Kensington Area Health Authority v. Wettern Composites Ltd. (1985). 27- 28
2-123 Finally, reference should perhaps be made to the RIBA Conditions of
Engagement, which, by Clauses 1.12 and 1.24, provide for the possibility
of employing consultants by agreement, and state that, whoever is their
paymaster, the consultants will be solely responsible for "the detailed
design and supervision of the work entrusted to them". Further, by Clause
1.13, the architect may recommend specialist sub-contractors to design
and execute any part of the work, and that he shall be "responsible for the
direction and integration of their design, and for general supervision, but
that nominated sub-contractors shall be solely responsible for the detailed
design entrusted to them". The exact effect of these provisions, where
20 35 BLR 1.
11-:111 [1985] 1 All E.R. 346.
f
SECT. 6] DUTIES AND LIABILmES, ETC. 307
inc~rporated into the architect's contract of employment, on his own pro-
fessional responsibilities to his client is unclear.
(b) Examination of site
A necessary preliminary to a successful constructional design must, in 2-1~
nearly all cases, be a sufficient examination of the site with a view to deter-
minin~ the plan area available for proposed works, and the nature of the
subsoil with a view to deciding on the correct design for foundations or
m~thods of undergr?und working. In the case of an architect employed to
bUild a house, he will also require to inspect the foundations during the
progress of the works, particularly at the time when the excavation is com-
pleted, and before foundation concrete is poured. In most Common-
wealth countries, housi~g legislation or local building regulations require
the.approval ?f excavations by the local building inspector before foun-
datto-?s are laid, and most building contracts require contractors to com-
ply with all by-law or statutory requirements,29 but this will not affect the
responsibfl~ty of the arc~itect to the owner for this very important aspect
of supervision, where failure can cause disastrous results. 30 Equally, it is
suggested, where an architect is instructed to build on old foundations, he
must employ reasonable tests of the soundness of walls and stability of
underlying structures.
While not theoretically bound to visit the site personally in the prelimi-
nary stages of his engagement, an A/E who does not do so, or check care-
fully any surveys or site information provided by others against what can
be seen and measured on site, will be at considerable risk, since there are
many matters affecting a project (for example, the presence or location of
tre~s or tree roots, or of made-up ground, or of old drainage systems)
w~ch may be relevant to foundation design or the location of buildings, or
~o importa~tmatters of amenity, access, and co-existence with neighbour-
ing properties.
ILLUSTRATIONS
(1) An engineer wa~ employ~d to prepar~ estimates and plans for a bridge, 2·125
~nd was re~erred for mf?rmation by his clients to their own surveyor, who
tnfonne~ hlD.1 that the soil was good and of the results of his own experiments.
The engineer took no further steps to ascertain the nature of the soil, which
~urned o~t to be bad. He~d, by Abbott C.J., if it was negligent to go by the
1nf?rmat1on of others which turned out to be false, this went to his right of
a~t1on, and he could not recover his fees irrespective of damage suffered by
his employers, but this was a_question f~r the jury to decide~oneypenny v.
Hartland (1824). 31 Best C.J. directed the Jury that in his opinion, supported by
:: See tnfra, P?~a. 2·146 et seq. and post, Chap. 4, para. 4·115.
Cf the position under French law as applied in Brown v. Laurie (1854) 1 L.C.R. 343;
~ 5 L.C.R. 65, Canada. Cf also the Voli case, ante, Chap. 1, para. 1·317.
1
1 C.&P. 351, at p. 354.
 308 ARCHITECTS, ENGINEERS AND SURVEYORS [CHAP. 2
the evidence of Mr. Telford, the engineer should have examined the site for
himself and not have trusted the surveyor's information. {The jury on the
facts found for the plaintiff and appear to have rejected the direction):
Moneypenny v. Hartland (1826). 32
2-126 (2) A company employed C. as architect to make plans and to have quanti-
ties taken out, and paid £200 to C. and £200 to the quantity surveyor. C. did
not measure the site; but, acting on information from an unauthorised person,
made plans on the assumption that the site was smaller than it was. C. made
borings to ascertain the necessary depth for the foundation. Later the error in
the plans was discovered, on which the company brought an action against C.
for the return of the money paid him, as the consideration had wholly failed,
or in the alternative for damages for negligence. Held, that the consideration
had not wholly failed. Held, also, that the company were entitled to nominal
damages for the error in the plans (as they had suffered no loss thereby), and
to £40, the amount of the cost of adapting the quantities to a correct plan:
Columbus Co. v. Clowes (1903). 33
2·127 Bearing in mind, however, that the architect's duty is generally relative,
namely to show reasonable professional skill, and not absolute, in the
sense of a guarantee of the works, and that in England building inspectors
and district surveyors are highly qualified and have unrivalled local
knowledge and experience, it will normally be difficult to establish liabil-
ity in relation to foundations if the evidence shows that the AJE has, after a
full consideration of all the facts, reached a similar view to that of a suf-
ficiently experienced building inspector, a fortiori a distict suveyor. Gen-
erally speaking, however, a building inspector's statutory function is
limited to approval of the actual depth and state of excavations rather than
to a critical analysis of the A/E's design. There may also be relevant mat-
ters known to the AJE and not to the building inspector. In this particular
field, it is not unusual to find that structural engineers or other specialist
consultants are called in to advise on the design of foundations or to make
surveys and reports on the soil conditions. Where this is the case it will
certainly be in the interests of the architect, and very probably of the
building owner as well, if they are employed directly by the latter.34
2·128 In engineering contracts, which are generally more concerned with sub-
soil conditions than building contracts, the engineer's responsibility is a
heavy one, the heavier, and not the lighter, it is submitted, where "Clause
12" (United Kingdom) or "changed conditions" (United States) clauses
entitling the contractor to additional payment are present in the construc-
tion contract.35-36 It is remarkable that projects of the greatest importance
in this field often appear to be carried out with little or no thorough site or
geological survey and a totally inadequate number of boreholes, and yet
32 2 C.&P. 378.
n [1903] 1 K.B. 244. .- .,
34 See the recent N.S.W. case of Sheldon v. McBeath illustrated infra, para. 2·193'.;-:.
JS--36 See post, Chap. 8, Section 1(2)( d), and see, for the concealed policy anomalies underlying
these clauses, C.C.P.P., paras. 23-25 to 23--27 and 27-34 to 27-37.
SECT. 6] DUTIES AND LIABILITIES, ETC. 309
tendering contractors are in practice required to price the work, which
must depend to a great extent upon an accurate assessment of the site
conditions, in a period of time permitting nothing but the most cursory
visual examination of the site. One reason why litigation against engineers
.by their employers in this context is comparatively rare may be the diffi-
culty of proving damage resulting from the breach of duty, since it can
usually be shown that if the unfavourable conditions had been discovered
beforehand the contract price would inevitably have been greater.
The standard or degree of investigation in order to provide a prudent 2·129
assessment of site conditions must depend upon the particular facts,
including the known geology and history of the site, the local experience in
the area, information to be derived from superficial examination of the
site and, in a difficult case, from bore hole surveys or laboratory tests.
Clearly an architect's knowledge will be less than that of a structural
engineer, and his in turn less than that of a specialist soils engineer. How-
ever, each should have sufficient knowledge to recognise that a particular
site may require investigation by someone with greater skill than himself,
or a more detailed investigation than that previously carried out (for ex-
ample, with regard to the number and location of bore holes in a survey),
and may fail in their respective duties to their client if they do not make
appropriate arrangements or discuss the matter with and warn their
clients of the extent of risk balanced against the costs of further investi-
gation. Some cases illustrating these situations and the respective
liabilities of architect and structural engineer have already been con-
sidered.37 Failed foundations, perhaps because of the greatly increased
scope for claims in tort by later owners under the Anns principle38 have
formed a high proportion of claims brought against A/Es of recent years.
Again, it does seem to be a tendency of the courts to treat failure of foun-
dations as virtually synonymous with negligence by an AJE, ignoring the
I often unpredictable nature of soil conditions, as also the policy disadvan-
tages of applying too strict standards or of extending areas of liability
It exessively.39
( c) Delivery of drawings, information and instructions in time
(
In the absence of any express term, the obligation to supply drawings 2·130
and information must be to do so in reasonable time, which of course begs
the question, what is a reasonable time for this purpose? This is probably
the commonest cause of claims by contractors against owners. The prac-
tice of architects and engineers in the United Kingdom of supplying rela-
tively generalised drawings for pricing purposes at the time of the con-
31
See, e.g. the two Canadian cases of City ofBrantfordv. Kemp (1960) 23 D.L.R. (3d) 640 and
District of Surrey v. Church (1977) 76 D.L.R (3d) 72; affd. 101 D.L.R. (3d) 218, illustrated
supra, para. 2·045 and see ante, paras. 1·285-1 ·287. See also Auburn Municipal Council v.
ARC Engineering [1973] N.S.W.L.R. 513.
36 Overruled in England in 1991 in Murphy v. Brentwood D.C., see ante, Chap. 1, Section
12(6).
39
See as to this the remarks of Lord Keith of Kinkel in Rowling v. Takara Properties Ltd.
[1988) A.C. 473, at p. 502, P.C. See for a recent Australian example Sheldon v. McBeath
[1993J Aus. Tort Rep. 81-209, N.S.W., C.A., illustrated infra, (k) Supervision.
 310 ARCHl'IECTS, ENGINEERS AND SURVEYORS (CHAP. 2
tract and of supplementing them with detailed or working drawings after
the contract has already been referred to, 40 and obviously contains the
seeds of possible disturbance and disruption of the contractor's pro-
gramme. There is, perhaps inevitably, a lack of legal authority on the exact
nature of the architect's or engineer's duty in this regard, no doubt
because, in the vast majority of cases, if a contractor can show that he has
in fact been held up for lack of information, he will be awarded damages
without more ado, and because, on the other hand, even if a point of time
at which information should theoretically be available can be shown to
have passed, it will not avail the contractor if he has not suffered damage
thereby. The inquiry in any particular case almost invariably becomes one
of fact, therefore, and the precise identification of the point of time at
which the contractor needs the information, which is usually necessary to
establish the quantum of his damage, is also a question of fact which can-
not be of assistance in other cases on different facts.
Under the RIBA standard forms of contract, the duty was expressed
before 1963 as a duty to furnish the contractor "within a reasonable time
... with slich further drawings as are reasonably necessary to enable him to
carry out all Architect's Instructions and with any further details which in
the opinion of the architect are necessary for the execution of any part of
the work", 41 and in the post-1963 forms "as and when from time to time
may be necessary ... with such drawings or details as are reasonably
necessary either to explain and amplify the Contract drawings or to enable
(him) to carry out and complete the works ... " 42 Again, by Clause 8 of the
1955 ICE form, the engineer is empowered to issue "from time to time
during the progress of the works such further drawings and instructions as
shall be necessary for the purpose of the proper and adequate execution
... of the works" .43 It is not, therefore, possible to define this duty with any
precision, but it is submitted that the duty needs to be assessed in the light
of the following criteria ( among others):
2-131 (a) by far the most important, the contractor's actual progress, if slower
than that shown by or to be inferred from any programme or the
stipulated contract period (this will also go, of course, to questions
of causation or damage);
(b) the stipulated contract period or intermediate dates (dates to be
inferred from these will normally take precedence over "optimis-
tic" earlier dates shown in any post-contract programme furnished
by the contractor, and over the wording of most contract provisions
governing the submission and approval of such programmes, it is
submitted44;
40
See supra, para. 2·004.
41
Clause 2.
42
Clause 3(4). Compare Clause 4 of the post-1980 forms. . .,
41
See also Clause 7(1) of the ICE conditions which requires notice from the OOntractor.
.. For the often attempted misuse of programmes for this purpose, see post, Chap. 9, Section
(8), paras. 9.040-9·041.
SECT. 6] DUTIES AND LIABILITIES, ETC. 311
(c) the need of a contractor for reasonable advance knowledge of the
work for pre-planning purposes on his part, which obviously will
vary considerably according to the subject-matter of the infor-
mation in question;
(d) whether or not the information relates to a variation45;
( e) any agreed or indicated programmes showing the intended order of
working or dates of completion of parts of the work;4sa
(f) requests or notice by the contractor indicating his need for the
information in question.
It is submitted that, unless an act or requirement of the owners or some 2-132
circumstances quite outside the architect's control make it impossible, an
architect must, as a matter of business efficacy, impliedly under take to his
client that he will give instructions in time so as to comply with the express
or implied requirements of the building contract (which it should be
remembered he will normally have recommended to the owner in the first
place) and so avoid any claim whether for damages or under the pro-
visions of that contract against the owner-in other words that, subject to
the exceptions mentioned, the times for giving instructions to be implied
in the building contract and in the architect's contract of employment are
identical.
Pleaders often attempt to express the duty in terms of economic and 2·133
expeditious progress by the contractor. This was rejected in the following
cases:
ILLUSTRATIONS
(1) In an engineering contract the contractors alleged all implied term that
all necessary instructions and details should be given to the contractor "in
sufficient time to enable the contractors to execute and complete the works in
an economic and expeditious manner and/or in sufficient time to prevent the
contractors being delayed in such execution and completion". Held, by
Diplock J., that it was clear from the terms of the contract that instructions
would be given from time to time in the course of the contract, and that what
was a reasonable time did not depend solely on the convenience and financial
interest of the contractors. Reasonableness had also to be regarded from th~
point of view of the engineer and his staff and of the owners themselves.
Other relevant matters affectingreasonabless would be the order in which the
works were to be carried out approved by the engineer, whether requests for
particular details had been made by the contractors, whether the details
related to variations or to the original works, and also the contract period.
This list was not exhaustive, and what was a reasonable time was a question of
fact having regard to all the circumstances of the case: Neodox Ltd. v. Swinton
and Pendlebury Borough Council (1958).46
As to which see the McAlpine case, infra.
4.'i
4
s. For programmes generally, see post, Chap. 9, Section (8).
·~ 5 BLR34. See further post, Chap. 4,paras.4· 174--4·175, and for a different view, the dicta of
Wright J. in Wells v. Army and Navy Co-operative Society there referred to.
 312 ARCHITECTS, ENGINEERS AND SURVEYORS (CHAP.2
2·134 (2) A contractor for a motorway using a traditional FIDICTICE style con-
tract pleaded three alternative formulations of the time for supplying infor-
mation and giving instructions with regard to variations, viz: (a) at a
reasonable time (which he contended meant a time convenient and.profitable
to hjmself); (b) at a time so as not to cause inconvenience loss or expense; or
( c) so the works could be arranged and executed efficiently and economically.
The Court were asked for declaratory relief defining the implied term. Held,
by the Appellate Division of the Supreme Court of South Africa (a) by a
majority, that the contractor was not entitled to declaratory relief in specific
terms; but (b) that under this type of contract valid variations might be
ordered at any time before completion, and irrespective of the state of pro-
gress of the work. Per Corbett A.J .A., the employer was obliged to issue such
drawings or give such instructions as might be reasonably required by the
contractor in order to enable him to execute the works as defined in the gen-
eral conditions. Each such drawing and instruction should be issued or given,
as the case might be, within a reasonable time after the obligation arose. This
formulation covered both contract and varied work, and related only to the
instructions without which the contractor could not proceed. It had no appli-
cation to the variation order itself. Per Jansen J.A. (agreeing with Corbett
A.J.A.), the duty in regard to contract work (i.e. further necessary drawings)
would arise when it was known that a particular drawing or instruction was
required. The same duty might also arise following the issue of a variation
instruction, but the time for giving the variation instruction itself is not gov-
erned by this principle and should be distinguished: A. McAlpine & Son v.
Transvaal Provincial Administration (1974).47
[Note: Corbett A.J.A.'s judgment, as further emphasised by Jansen J.A.,
appears to be entirely correct, and the clearest available analysis to date of
this implied tenn. The majority appear to have preferred not to go beyond a
simple "reasonable time" formulation, but there is every indication in the
other judgments of agreement with the formulation of Corbett A.J.A as fur-
ther explained by Jansen J.A.]
2·135 As between owner and contractor, the late ordering of variations presents
few problems, as the McAlpine judgments above indicate, since in the
great majority of United Kingdom and Commonwealth standard forms
(including that in the McAlpine case) the valuation provisions are "open-
ended", that is to say, they expressly permit allowances or departures
from the contract prices wherever this is appropriate, as would be the case
with a variation ordered late so as to cause disruption of economic work-
ing. As it happens, this is in contrast to many traditional United States
"change order" clauses, which unrealistically appear to contemplate
either prior agreement on price, or variation valuation at the contract
prices only. However, as between owner and AJE, with which the present
discussion is primarily concerned, any liability of the AJE will naturally
depend on whether the reason for a later variation, and hence of any sub-
sequent more detailed information, implies negligence or fault on the part
of the A/E either in failing properly to pre-plan the work or due to a defec-
tive design on his part requiring subsequent correction, for example. The
'('
47 [1974[ 3 S.A.L.R. 506.
SECT. 6] DUTIES AND LIABILITIES, ETC. 313
measure of damage in such cases will obviously depend on the particular
circumstances.
Difficult questions of fact can arise as to the time by which the con- 2·136
tractor is entitled to expect information from the architect or engineer to
enable orders to be placed with nominated sub-contractors and sup-
pliers.48 It is clear that an owner will usually have discharged his obligation
if the information is made available in time to permit the sub-contractor to
quote delivery or completion dates consistent with the contractor's pro-
gramme or progress. But shortages or lengthened delivery dates have a
habit of occurring very suddenly in industry, and the first that the parties
may know of any difficulty may be when the sub-contractoi-, on being
asked to quote or receiving an order, announces that he cannot supply or
do the work in the required time. It does not necessarily follow in such a
case, it is submitted, that there has been any breach of duty by the archi-
tect. Relevant facts in determining what was a reasonable time for such
information to be given would include, it is suggested:
(a) whether the goods and services concerned were well known in the
industry to be in short supply or the subject of long delivery dates,
so requiring very early nomination by the A/E or perhaps pro-
visional orders being placed even before the appointment of the
main contractor;
(b) whether the availability of the goods, by their nature, ought to be
expected to fall within the contractor's knowledge (for example,
reinforcement steel, or bricks);
( c) whether, in the light of both the above, he had made any request for
the information or an early nomination;
(d) whether, on the other hand, the matter was peculiarly within the
owner's sphere (for example, complicated pipes and specials
requiring to be specially made for the contract) and, if so, whether
reasonable inquiries and assurances as to availability had been
made and obtained by the architect or engineer in good time.
In modern standard forms the Contractor has an express right to refuse to 2°137
place an order with a nominated sub-contractor if satisfactory dates
cannot be obtained, but if not exercised this may well raise an estoppel
or waiver and dispose of his right to recover damages. In extreme cases,
the position may be such that the architect should in practice place an
order and give information well in advance before the main contract is
let in order to secure delivery dates consistent with the contract period,
and indicate the identity of the selected sub-contractor ("sourcing" in
United States terminology) in the main contract specification or other
documentation. However, though it is the general practice of most archi-
tects and engineers in the United Kingdom to make use· of the PC and
Provisional Sum provisions of the standard forms which assume, however
48
See also the discussion post, Chap. 4, paras. 4· 186 et seq.
 314 ARCHITECTS, ENGINEERS AND SURVEYORS [CHAP.2
unrealistically, that all such work will be carried out by sub-contractors
appointed under a power to nominate exercised after the contract is let.49
In this the standard forms, and not the architects, are at fault, since there
are substantial advantages to sub-contracting (in eliminating cross-claims
against the owner by contractor or specialist) from an owner's point of
view, and it would be prudent to distinguish between pre- and post-con-
tract selection of sub-contractors and suppliers.50
(d) Instructions as to methods of working and temporary works
2·138 Finally, it is desirable to indicate the precise nature of the instructions
which a contractor is entitled to require from an architect or engineer in
these areas of his work. Unless the contract expressly stipulates to the
contrary, the contractor is entitled to choose his own methods of working
or temporary works; the corollary of this is that the contractor is not
entitled, when faced with difficulties, to demand or require instructions as
to how to overcome them.s 1 The architect's duty is normally confined to
stipulating the final permanent result required, and if this has already been
done, he is under no further duty to assist, and if inclined or requested to
do so should normally be careful to adopt a permissive attitude rather than
to give mandatory instructions. Contractors in difficulties, however, fre-
quently demand instructions and even threaten to discontinue working
unless told what to do. This attitude has no legal justification, and even if
instructions are given they will not entitle a contractor to extra payment
unless the contractor is in a position to show that he wished to take anoth-
er and cheaper course of action which would have been effective to prod-
uce the required final result.
ILLUSTRATIONS
(1) A contractor constructing a sewer was passing underneath road in a cause" expression used by the trial judge did not remove the contractor's
heading when his workings broke into a leaky old sewer whose approximate
position was shown on the plans. It was a very wet time of year, the old sewer
was in fact carrying water, and his workings were flooded. An emergency
meeting with the engineer was held, at which the contractor asked for instruc-
tions and it was agreed to proceed to a position off the site where its location
was known and "stank off" the old sewer, then sink a manhole further along
the line of the new sewer and work back to the road, completing the crossing
of the road in open cut. The contractor asked about payment and was told
"I'm not talking to you about money. The inquest will come later." Held, by
Paull J ., this was no more than a joint decision about the best way to deal with
49
See post, Chap. 13, Section 1(2).
so As does the Singapore SIA private sector contract: see C.C.P.P., pp. ?86-591, 628.
~
1
See the discussion ante, Chap. 1, paras. 1·293-1·294, 1·295 et seq., 1·312-1·313 and 1·383-
1·384 and the important case of Clayton v. Woodman & Son (Builders) [1962] ~ Q.B. 533
there referred to, and see also the further quotations infra, Subsection (k), P~as. 2· 196-
2· 197. See also C.C.P.P., paras. 5-22 to 5-28, and the express provision in Clause 2 of the
Singapore SIA conditions reproduced in C.C.P.P., p. 556.
SECT. 6] DUTIES AND LIABILITIES, ETC. 315
the situation. The engineer was not bound to give any instructions, and the
contractor was not entitled to extra payment: Pearce (C. J.) & Co. v. Hereford
Borough Council (1968).si
(2) Engineers designed a dam with a pre-stressed concrete circular struc- 2-139
ture requiring careful backfilling with earth in layers around the perimeter
due to its exceptional lightness. Their contract required them to supervise the
construction "including resident supervision for continuous daily inspection
and guidance of the contractor". There were other powers of general super-
vision and direction in the construction contract, and to stop progress in order
to ensure proper execution of the work. The backfill was to be deposited in
layers and carefully consolidated "to lines and grades indicated on the draw-
ings as indicated by the engineer". On completion of the structure before
backfilling, tests showed leaks on 30 per cent of the perimeter, which pre-
vented backfilling of this part for the time being. The resident engineer told
the contractor not to backfill the remainder beyond 10 feet from the bottom,
but by the next day the contractor had backfilled the 70 per cent. watertight
part up to 24 feet. The resident engineer asked the contractor why he had
disregarded instructions, but ended the discussion with the words "It is up to
you, Bill, you are doing the work". Two days later the dam collapsed due to
the extent of this differential backfilling. Ultimately, the contractor refused to
continue working when ordered to re-execute the work, except on a "without
prejudice" basis, which the owners agreed to but not the engineers. He was
then dismissed and the work completed by another contractor. Under a com-
plicated arrangement the contractor paid sufficient money to his sureties for
them in turn to pay the owner his full losses, in exchange for the owner's
agreement to assign or subrogate his own rights against the engineer. Held,
that the engineers were responsible for their resident engineer's failure to
insist that the contractor should stop work and, if this was refused, to report
the matter to his own superiors and the higher management of the contractor;
that this was the "prime cause" of the accident; and that the engineers were
liable for the negligence of their representative: City of Prince Albert v. Un-
derwood McLellan (1969).53
[Note: This case went to the Supreme Court of Canada, which affirmed the
trial judge, but was principally concerned with the defence that, under the
arrangements which had been made, the owner had suffered no damage.
Both the Saskatchewan Court of Appeal and the Supreme Court were clear,
however, that the contractor had been in the wrong and that the "prime
responsibility. 54 Cartwright C.J.C. and Spence J. dissented on the "no dam-
age" point, which seems a persuasive one.55 It is difficult not to sympathise
with the young resident engineer, who was not yet fully qualified as a civil
engineer at the time of the incident, and who had mistakenly applied the gen-
erally accepted view of the limited powers of A/Es in regard to methods of
working and temporary works and whose principal error was in not consult-
ing his superiors. The case shows the potential for liability of a professional
firm where it offers services, in this case resident supervision, by its assistants,
in unwise language, and where the partners themselves are not at fault.56
(3) A contractor laying a line of pipes was expressly required by the con- 2-140
tract to submit for approval his proposed working methods for effecting a
52
66 L.G.R. 647.
53
3 D.L.R. {3d) 385.
54
See at p. 397,per Hall J.
"See Mark Rowlands Ltd. v. Berni Inns [1986J Q.B. 211.
56
See supra, para. 2·093, and see paras. 2·023-2·024.
 316 ARCHITECTS, ENGINEERS AND SURVEYORS [CHAP. 2
tunnel crossing of a river, and after two attempts at the crossing had failed,
ultimately refused to continue working without specific instructions from the
engineer. The owner then terminated the contractor's employment for failure
to proceed expeditiously. Held, by the New Brunswick Court of Appeal, that
there was no duty to give instructions, and that the termination had been
valid: City of Moncton v. Aprile (1980).s1
[Note: This case is clearly a correct application of the general principle.]
Thus in Kingston-upon-Hull Corp. v. Harding,58 where contractors'
sureties argued that they were released by a jury's finding that there had
been a failure properly to supervise which had led to skimping of the work
(in a very strong Victorian contract, where the engineer had power to
order the removal of defective work, all the work was to be carried out and
executed under his superintendence and to his satisfaction, and his
decision as to the manner of working was to be final and conclusive), Lord
Esher M.R. said:
"The question is, what is the meaning of the provision as to superintendence
by the plaintiff's engineer? It was contended that the meaning really was that
the corporation was to direct in what manner the work should be done. When
one considers the position of the corporation and the contractors and what
the latter have to do, I think it is obvious that that was not the meaping. The
corporation never meant to undertake to direct in what manner the work
should be done, nor did the contractors agree to submit to their directions.
They were to do the work as they thought fit, and in the manner which their
experience taught them was the best. The meaning of the provision was only
that the corporation should have a right to observe and see how the work
from time to time was being done ... it was merely an option given to the
corporation whether they would superintend or not. Therefore according to
the contract, the fact that they did not exercise that option did not relieve the
contractors from the obligation to do the work properly."59
It is submitted that this passage reflects a correct and realistic appreci-
ation of the situation and rights of the parties under such terms.
2-141 The effect of this is that, if an architect or engineer sees the contractor
using or proposing to use a method of working which he considers poten-
tially unsafe or likely to fail in its intention, his duty to the owner will
require him to balance the advantage to the owner of the method he him-
self prefers against the fact that by intervening and giving an instruction he
may expose the owner to a financial claim, if the contractor can show that
his own method would have been equally efficacious (unless, of course,
the contract expressly prescribes the method of working or provides, as,
for instance, some specifications do in engineering contracts, that the con-
tractor's price is to include for any one of various methods to be chosen at
the discretion of the engineer).w It is submitted that his client's
.1729 N.B.R. 63.
~ [1892] 2 Q.B. 494, illustrated post, paras. 5·021-5·023.
s9 At pp. 502-503. See also the more modem quotations, post, para. 5·022.
60
See post, Chap. 7, Section 1(2)(g), paras. 7037-7·040 and the Neodox case there illustrated.
SECT. 6] DUTIES AND LIABILITIES, ETC. 317
interest may require the architect to intervene in the contractor's methods
of working or temporary works, if he has power to do so under the con-
tract, in the following situations:
(a) where the contractor's methods of working are contrary to what is 2-142
specified ( almost always the basic reason for specifying a particular
working method or practice expressly in the specification is its rel-
evance to the satisfactory quality of the final permanent work).
Here there will, of course, be little doubt as to the power to enforce
the contract, since there is breach of an express term of the contract;
(b) where, in the absence of express designation of the require working
methods, those being used by the contractor are likely to imperil
the quality of the permanent work ( and usually will, therefore, con-
stitute a breach of the implied term of good workmanship, it is sub-
mitted).61 Here an implied power to intervene may be less evident;
(c) where the contractor's methods are unsafe, and an accident would
delay the project to the serious prejudice of the owner,62 or might
damage adjoining property, exposing the owner to claims whether
for property damage or personal injuries, for example;
(d) to assist a contractor who has got into difficulties by relaxing the
specification or varying the permanent work where the owner's
interest in speedy completion is sufficiently important (though on
terms that no additional payment will be due from the owner).
The difficulty facing many..A/Es, however, is that the great majority of 2·143
standard forms throughout the world not only make no express provision
to cover these very common real life situations, or for their financial
consequences; may not even state clearly whether the A/Es powers to vary
the work will extend to temporary works or methods of working at all; and
may contain no saving clause ( as every contract drafted in the owner's
reasonable interest should) with regard to. the financial consequences
where a power to give instructions or order variations is exercised as a
result of fault on the part of the contractor. 63 All that the A!E, and indeed
the courts, may have to guide them in these cases are generalised and
vague provisions to the effect that, for example, all work under the con-
tract shall be carried out to the satisfaction and under the directions of the
NE. It is one of the most serious omissions in the traditional draftsman-
ship of construction contracts in both the Commonwealth and the United
States, and a reflection of the contractor influence in the drafting of those
contracts, that these elementary and everyday matters are not dealt with
expressly, with the result that it is by no means uncommon for owners to
find themselves actually receiving claims for additional payment, or even
suffering an adverse termination of the contract, as a result of
6 1 Seepost, Chap. 4, paras. 4·124-4·125 .
62
See the Prince Albert case, supra, although that case might also involve the quality of per-
manent work.
63
See the GC/Wks/1 contract, Clause 9(4)(c), for a rare example.
 318 ARCHITECfS, ENGINEERS AND SURVEYORS [CHAP. 2
instructions given ( or not given) in situations arising directly from incom-
petent working methods or defective work on the part of the contractor or
his sub-contractors. 54 Appropriate powers over methods of working or
temporary works in these situations have, however, been provided for in
the SIA private sector contract in Singapore.65
Nevertheless, even in the absence of express powers A/Es must, it is
submitted, endeavour to act to protect the owner's interests, and if necess-
ary consult the owner and obtain legal advice, particularly in the situations
(b), (c) and (d) above. Their position as against their client will not be
strengthened, of course, if they have recommended a form without the
necessary powers.
(e) Special duties.in regard to nominations
2-144 The preceding subsection has considered the question of the time for
effecting a nomination of a sub-contractor or supplier, but it is submitted
that certain anomalies in the system of nomination have now become so
serious and notorious that positive action is now called for by the architect
in more important nominations if he is to discharge his duty to his client
and obtain reasonable protection of his interests. The anomalies arise:
(a) when the architect or engineer nominates a sub-contractor or sup-
plier whose price expressly includes for design services which
would otherwise need to be performed by a consultant66;
(b) where a non-traditional manufactured product is selected, or a sub-
contractor or supplier is nominated to provide it, whose products or
techniques are so specialist in character that a definitive check on
their design or suitability by independent consultants is not practi-
cable either before or during construction67 ; and
(c) in the case of the RIBA/JCT forms of contract and following the
decision of the House of Lords in.Bickerton v. N. W. Metropolitan
Hospital Board,68 when a nominated supplier or sub-contractor
repudiates his obligations under the sub-contract and refuses to
complete work which is likely to affect the contractor's general pro-
gress seriously if suddenly discontinued.
2·145 It is submitted that an architect advising a private client in fact fails in his
duty if he recommends the RIB A/JCT standard forms for use by his client
without sufficient warning or who does not, in the above cases:
M For the inadequacy of the standard forms in these respects, see post, Chap. 4, paras. 4-030-
4-035 and C.C.P.P., para. 23-29.
6.I Clauses 1(2), (3), (6), (8) and 2ofthatcontract (C.C.P.P.,pp. 553-557 and 626) (Methods of
Working) and see Clause 11 (Defective Work)(/bid. at pp. 564-5).
M See supra, paras. 2· 116---2· 119, and the Moresk and London Borough of Merton cases there
referred to. ~ (1985) 30 BLR 26, C.A.; and John Jarvis Ltd. v. Rockdale Housing Association (1986) 36
• 1 See supra, the London Borough of Merton case.
M [1970] 1 W.L.R. 607. For it and the subsequent case-law see post, Chap. 13.
SECT. 6] DUTIES AND LIABILITIES, ETC. 319
(i) in the case of (a) above, take special care to see that the sub-con-
tractor's price is genuinely competitive, and also specifically
inform the owner that the price includes a design element;
(ii) in all important cases, obtain formal undertakings from the sub-
contractor to the owner as to the suitability of the work or goods
in question, expressed to be in consideration of the sub-contract
being awarded to the sub-contractor, and also for the due per-
formance of all obligations under the sub-contract;
(iii) in the case of important non-traditional products, obtain an
express warranty of suitability from the parent company of the
manufacturer or a substantial merchant or supplier for the benefit
of the owner before deciding to use them;
(iv) ensure that the terms of nominated sub-contractors' or suppliers'
quotations include no unacceptable exemption clauses restricting
liability for delay or defective work;
(v) ensure that appropriate warranties identical with those given by
sub-contractor or supplier are inserted into the main contract
documentation as well69; and
(vi) explain that these, or similar dangers of nominated sub-contract-
ing for owners under this form of contract are unique to its own
special wording, 70 and that other contracts offer full protection
and totally opposed policies.71
The foregoing remarks apply particularly to the pre-1980 RIBNJCT
contracts, which have been widely followed in the Commonwealth. The
1973 ICE Conditions, and post-1980 RIBNJCT forms contain elaborate
nomination schemes which more openly require the owner to underwrite
due performance by the sub-contractor and indemnify the main contrac-
tor, but have not been widely followed elsewhere.
( f) Knowledge of legislation, building regulations, by-laws and rights of
adjoining owners
It is obvious that a building or project designed without regard to any 2·146
relevant public legislation, by-laws, or the rights of adjoining owners may,
while structurally a well-planned design, be quite useless to the owner,
since the work may be prohibited, or if carried out may expose him to
fines, demolition orders, or litigation. An architect or engineer will there-
fore require to have a reasonable working knowledge of the law relating to
these matters, and also of the requirements as to service of notiees on local
or other authorities or adjoining owners and deposit or submission of
plans for planning approval or by-law consent.
69
See further on this,post, Chap. 4, paras. 4·109-4· 110, and Chap. 13, Sections 1(2) and 2(2).
mSee, e.g. the catastrophic results for the owner in, e.g., Gloucestershire County Council v.
Richardson [1969] 1 A .. C. 480; Fairclough Building Ltd. v. Rhuddlan Borough Council
BLR48, C.A. See also C.C.P.P., Chap. 21 and para. 30-26; and (1987) 3 Const. L.J. 274.
71
See, e.g. Clauses 31(2) and (3) and 38(6) of the GC/Wks/1 government contract.
 320 ARCHITECTS, ENGINEERS AND SURVEYORS [CHAP. 2
Despite the fact that the standard forms contain express undertakings
by contractors that their work will comply with all relevant by-laws and
statutory provisions, it has already been seen72 that in two decisions the
courts have recognised that it is the practice in the industry for architects
to assume responsibility for the substance and formalities of compliance
with the by-laws.
ILLUSTRATION
2·147 By-laws forbade the construction of a W.C. entered from a room used for
human habitation, unless used exclusively with a bedroom or dressing-room,
and also required the service of notices before work commenced. The builder
constructed two bathrooms containing toilets in accordance with the design
of the architect. At the time the builder knew of the by-law, but the plans
showed-the adjoining rooms as bedrooms or dressing-rooms, and not till the
work was far advanced could he know that the work would, in fact, infringe
the by-law. The contract was in the then standard RIBA form, by Clause 3 of
which the builder expressly undertook to comply with all by-laws and require-
ments as to notices. After the work was finished, the architect did serve a
notice on the local authority, but they condemned the work, only allowing it
to remain unaltered on the undertaking of the building owner to cure the
defects, when his wife gave up occupation, by erecting a partition within the
bathroom. Held, by the Court of Appeal, (i) that the owner was entitled to
recover from the builder as damages for breach of Clause 3 the cost of build-
ing the partition, notwithstanding the custom in building operations that the
architect was responsible for seeing that work complied with the by-laws; but
(ii) that the architect, having informed the builder in correspondence that he
would be responsible for serving all necessay notices, was liable in tort to the
builder for the lateness of the notice, and must indemnify the builder against
the owner's claim: Townsend Ltd. v. Cinema News (1959).73
2-148 In England, by-law control over buildings is effected by Part II of the
Public Health Act 1936 and subsequent legislation in 1961 and 1984. The
objects of the legislation are the health safety and amenities of the occu-
piers and users of buildings. 74 Section 61 of the 1986 Act placed a duty on
local authorities to make by-laws regulating the construction of buildings
subject to the approval of the Minister, and most local authorities have
found it convenient to adopt as the model for their by-laws the Building
Regulations made by the Minister, which under the Act of 1961 have
effectively replaced the by-laws in most areas.
It is clear from the general framework of the Acts that their principal
concern is to supervise and control the design and specifications of new
72
See ante, Chap. 1, Section 7, paras. 1·206--1·207.
73
[1959] 1 W.L.R. 119. N.B.: This case is further illustrated post, Chap. 4, para. 4·281, on the
question of illegality. The basis of the decision against the architect (unrep.) is explained
further ante, Chap. 1, para. 1·283. Clearly the architect could have had no defence to an
action by the building owner for negligence. \~.'.
7 1sReg. D3.
~ Per Lord Wilberforce in Anns v. Merton London Borough Council [1978] A.C. 728, at p.
752.
SECT. 6] DUTIES AND LIABILITIES, Ere. 321
~uildings in advance oftheir construction, and only secondarily with ques-
tions of subsequent defective work resulting in non-compliance with the
by-laws. Thus, by section 64 of the 1936 Act (see now Section 16 of the
Building Act 1984), the local authority is under a mandatory duty either to
pass or reject the plans and specifications deposited with it while, under
section 61A,poweris conferred to require notices and to inspect to ensure
by-law compliance. While by-law breaches are enforceable by fines, the
limitation period for these expires only six months after completion or
even earlier ,15 so it is a serious criticism that the Acts are not an effective
sanction against subsequent contract-breakers, however widespread or
serious their breaches,76 provided their defective work escapes detection
during construction. However, by section 65 the owner of a building can
be required (presumably at any time, though this is not made clear) to
demolish or alter it so as to ensure compliance.
A by-law offence is committed as soon as work which infringes the by- 2-149
laws has been done and there is no further intention to return in order to
ensure its proper compliance with the by-law requirements.77
At first sight, the technical language of both by-laws and Building Regu-
lations appears to be strange, since virtually all the individual regulations
or by-laws are expressed in generalised terms requiring satisfactory per-
formance of its intended function by the work in question; thus foun-
dations shall be "taken down to such a .depth or be so designed and
constructed as to safeguard the building against damage ... and safely sus-
tain and transmit to the ground the combined ... load in such a manner as
not ~~ cause any settlement or other movement which would impair the
stability of ... the building"78 while materials "shall be applied used or
fixed so as to adequately perform the functions for which they are
designed" and be "of a suitable nature or quality in relation to the pur-
poses for and conditions in which they are used". 79 These generalised by-
1~":' provisi?ns are then frequently followed by "deemed to satisfy" pro-
V1s1ons, which themselves often refer back to BSC codes of practice, but
many of those are in turn often expressed in similar generalised terms of
satisfactory performance.
It may be inferred, however, that this form of wording by the early 2-150
draftsman was not accidental, but was deliberately used with the praise-
wort_h.y intention of permitting technical innovation in design and pre-
venting the grant of an unfettered discretion on by-law authorities to
refuse approval. Thus on a rejection of plans for alleged non-compliance,
proof by expert evidence that a disputed design will be satisfactory for its
purpose will thereby entitle an aggrieved owner to secure approv~l of his
plans by injunction or other judicial remedy on the ground that the by-law
15
Building Act 1984, Section 35, and see Sunley Homes Ltd. v. Borg [1970] 1 Q.B. 115.
1
• See "Defective Work: The New Flavours", (1990) 6 Const L.J. 87.
11
Antino v. Epping Forest District Council (1991) 53 BLR 56 (Q.B.D.C.) and see Torridge
District Council v. Michael Turner (1991) 59 BLR 31, Q.B., D.C.
19
Reg. Bl.
 322 ARCHITECTS, ENGINEERS AND SURVEYORS [CHAP. 2
requirement has been satisfied, it is submitted, notwithstanding that the
design may not comply with a current code of practice, for example. It also
follows that approval of a design which in the event fails (so producing an
automatic if retrospective breach of the relevant by-law) may not necess-
arily have been negligent. This situation is clearly envisaged by the Act
itself, since where an owner is required to demolish or to do work under
section 65 this may only be done by order of a court, with an express power
to order compensation if the original work was properly carried out in
accordance with approved plans.
2-151 It is a further characteristic of both the earlier by-laws and the later
Building Regulations under the Public Health Act 1961, as well as the
Acts themselves, that they do not make clear precisely which party-first
owner or developer, contractor, owner-consultant or sub-con-
tractor-owes the public duty, enforceable by fine, of by-law compliance.
Many earlier by-laws imposed the general duty of by-law compliance on
"a person who erects any building": compare regulation lOA(i) of the
1972 regulations. The service of the required notices prior to inspection
would seem to be the direct responsibility of the builder under some of the
by-laws,80 but the initial deposit of plans and specifications prior to build-
ing would seem to be the responsibility of all parties involved, and it has
been held that the owner is liable to third persons, notwithstanding his
engaging a competent builder and consultant, for by-law breach. 81
Disregarding these public liabilities, it will clearly be the responsibility
of the A/E to his client to ensure by-law compliance of the finalised plans
and specifications prior to construction commencing, but matters can sub-
sequently transpire on site without fault on anyone's part which may
require changes to ensure by-law compliance, and by virtue of his daily
presence on site the initial onus of notifying the by-law authority or
reporting the matter to the architect may well fall on the builder.82 Thus,
old drains or special ground conditions encountered during excavations
often require immediate action and consultation with the local authority,
and it is normal for such matters to be taken up immediately by the builder
with the sanitary or building inspector, though the architect may of course
be informed or become involved later. There is, however no reason to
suppose that the A/E's duty to his client to design or to supervise work so
that it conforms with the by-laws will be subject to any other than the usual
tests of professional negligence.
2·152 With regard to liability for by-law breach in tort to third persons, this of
course became a major potential area of financial liability for A/Es while
the Anns principle, permitting recovery of anticipatory repairs by a sub-
80
Compare Townsends (Builders) Ltd. v. Cinema News and Property Manag~ment Ltd.
(1958) 20 B.L.R. 118, illustrated supra, and ante, para. 1·283. See also Investors m Industry
Commercial Properties v. South Bedfordshire District Council [1986] Q.B. 1034, at pp.
1044-1047.
s1 Investors in Industry Commercial Properties v. South Bedfordshire District Cow:,.cil, supra,
but see now Murphy v. Brentwood District Council [1991] 1 A.C. 398 apd see "Anns
Beyond Repair", (1991) 107 L.Q.R. 220, 233-4,246. ·,;.
82
See, e.g. Perry v. Tendring District Council (1984) 30 B.L.R. 118.
SECT. 6] DUTIES· AND LIABILITIES, ETC. 323
sequent occupier on discovery of breach, continued to apply, even though
this depended on negligence and not on any strict liability. 83 This liability
even appeared to survive the initial reversal of the Anns doctrine by the
House of Lords in the D. & F. Estates case. 84 However, the final overruling
of Anns in Murphy v. Brentwood District Counci/85 will now limit this area·
of liability of AIEs to claims for personal injuries or damage to· other prop-
erty under the earlier Donoghue v. Stevenson principle,86 and a new statu-
tory duty under section 38 of the Building Act 1984, when ( or if) it comes
into force, would seem to add nothing to this. Liability for repair costs will,
however, continue in the case of dwelling-houses only, provided always
that the defect qualifies under the Defective Premises Act 1972, with its
comparatively short limitation period of six years from completion, by
rendering the building unfit for habitation. 87
It should be added finally that under many English standard forms by-
law compliance is made an express contractual responsibility of the con-
tractor which, while accompanied by compensatory provisions if the
breach is discovered and remedied during construction, may prove a strict
and onerous obligation in other cases. This subject of by-law compliance
as between owner and contractor is considered later.gs
An architect should also inquire of the owner whether there are any
restrictions affecting the land to be built upon, or its use for the purpose of
the proposed building or work, and he should consider and advise the
building owner as to any interference with right to light and air, or to sup-
port of adjoining buildings. 89
If an architect designs or constructs work without proper reference to 2-153
the rights of adjoining owners ( except under specific instructions from the
owner, or unless he has called the owner's attention to the effect c;,f the
work on the apparent rights of adjoining owners) he may render himself
liable for negligence.
On the other hand, the obligations of an architect as to legal knowledge
will not be of the same standard as those of a legal adviser, and will be
correspondingly lightened or removed if the owner takes legal advice or
has legal advisers available in relation to the contemplated project.
ILLUSTRATIONS
(1) An architect prepared plans and drawings which in the event could not
be used, since they complied with the wrong zoning code classification appli-
83
Ibid., and see the Anns case itself.
84
D. & F. Estates Ltd. v. Church Commissioners [1989] A.C. 177, and see the analysis in
(1989) 105 L.Q.R. 46, at p. 75.
85
[1991] 1 A.C. 398 and see (1991) 107 LQ.R. 228.
Sb [1932] A.C. 562, see ante, Chap. 1, Section 12(3).
81 See ante, Chap. 1, Section 12(7).
88
Post, Chap. 4, para. 4·115.
89
For a case on the duty to advise on rights of light, see Armitage v. Palmer (1960) 175 E.G.
315. See also Wethered v. French (1967) 203 E.G. 431.
 324 ARCHITECTS, ENGINEERS AND SURVEYORS [CHAP. 2
cable to his client's site. The client refused to pay his fees and counterclaimed
for damages, but the architect replied that he had been given the incorrect
zoning classification by the client's own lawyer. Held, by the Supreme Court
of Florida, the architect's responsibility was discharged if he acted on legal
advice, and he was entitled to his fees: Krestow v. Wooster (1978). 00
2-154 (2) An architect advising experienced property developers was instructed
to make a planning application on their behalf for an office development. At
the time, due to credit restrictions, no such development was permitted with-
out an office development permit {ODP), which was in practice unobtain-
able, but ODPs were not required for developments of less than 10,000 square
feet. Government circulars, of which the architect was aware, indicated that
in computing this permitted area ancillary non-office areas of the develop-
ment, such as a car park and a residential flat, would have to be included, but
when the architect met the local planning officers during early negotiations he
was told that their policy was to disregard such areas and, though surprised,
he accordingly submitted plans which exceeded the permitted area in these
two respects, and the permission was granted and the development com-
pleted. In the event, however, the restrictions were enforced, and the build-
ings could not be used for offices for some years until they were lifted. The
architect had kept his client informed throughout of all details of the negotia-
tions. When he sued for his fees the developers counterclaimed for their
losses, alleging negligence in failing to advise them to take legal advice before
submitting his plans, and in failing to realise that the planning authority was
disregarding the statutory restrictions, so that a planning permission so
granted might be of no effect. Held, by the Court of Appeal, overruling Ralph
Gibson J. (who had found negligence though he considered that other archi-
tects and even some lawyers might have been similarly misled by the planning
authority's error), that it was not negligent of the architect to believe that the
character of the areas to be included was a matter of opinion, or that the
planning authority had a discretion in the matter: B.L. Holdings Ltd. v.
Robert I. Wood & Partners (1979). 91
[Note: Despite a meticulous and fair judgment by Ralph Gibson J. in first
instance, this is a not untypical example of the tendency of many judiciaries to
find negligence proved where professional services turn out to be unsuccess-
ful. Fortunately, a unanimous Court of Appeal expressed themselves strongly
in the opposite sense on the facts of the case.]
2-155 There is no doubt that the general principle is that where a professional
man, such as an architect, agrees to act in an area where some knowledge
and understanding of the principles of law applicable is required if the
work is to be done properly, then he must have a sufficient working knowl-
edge of those principles of law in order reasonably to protect his client's
interest. Thus of ecclesiastical surveyors, Jervis C.J. said that they:
"could not be expected to supply minute and accurate knowledge of the law,
but we think under the circumstances they might probably be required to
know the general rules applicable to the valuation of ecclesiastical
property. " 92
90 360 So. (2d) 32.
91
12BLR 1.
92
lenkins v. Betham (1855) 15 C.B. 168, illustrated infra, para. 2·204.
DUTIES AND LIABILffiES, ETC. 325
As has been seen, what is a sufficient knowledge for this purpose is a
matter of degree. Clearly, in a case where the error of law relates to the
interpretation of the contract which the architect is himself administering,
a fortiori if he has recommended its use, the degree of required knowledge
is likely to be more strict. 93 However, too severe a view was clearly taken, it
is submitted, in a recent case where an English court was prepared to hold
an architect liable to his client for refusing to issue a variation order to a
main con!ractor in order to overcome faults of design and workmanship
by a noininated sub-contractor. In that case the Court was probably influ-
enced by the presence of a direct warranty from the sub-contractor to the
owner, which meallt that the architect's liability would be likely to prove
nominal only, and it is, moreover, submitted infra that the architect's view
of the law had in fact been correct and the court mistaken. 94
(g) Excess of cost over estimates
In the earliest stages of the employment of his architect or engineer, the 2· 156
owner will in practice usually indicate or impose limitations on the cost of
the proposed project. Even if no mention of this is made, it is suggested
that an architect owes a duty to design works capable of being carried out
at reasonable cost having regard to their scope and function. There will,
therefore, in most cases be an express or implied condition of the employ-
ment that the project should be capable of being completed within a stipu-
lated or reasonable cost, and an NE will be liable in negligence if, in fact,
the excess of cost is.sufficient to show want of care or skill on his part. Thus,
in Moneypenny v. Hartland95 Best C.J. said:
"A man should not estimate a work at a price at which he would not contract
for_ it; for if he does, he deceives his employer ... If a surveyor delivers an
~stimate gr~atly below the sum at which a work can be done, and thereby
induces a pnvate person to undertake what he would not otherwise do then I
thin~ he is not entitled to recover: and this doctrine is precisely applic~ble to
pubhc works. There are many in this metropolis which would never have
been undertaken at all, had it not been for the absurd estimates of
surveyors."
ILLUSTRATIONS
(1) The architect estimated from a sketch plan that a building would cost 2-157
£1,545. Some modifications were made by the building owner; but the lowest
'llSee the case of Townsen4 v. Stone Toms (1984) 27 BLR 26, discussed supra, paras. 2·094-
2·095, and ~ee a!so the ~tt1tu?e o~ the Court of Appeal to two other mistakes by a certifier in
regard to mtenm certification m Lubenham Fidelities v. South Pembrokeshire District
94
Council (1986) 33 BLR 39, discussed in (1987) 3 Const. L.J. 172, at pp. 173, 178.
Holland Hannen v. Welsh Health Technical Services Organisation (1981) 18 BLR 80 illus-
trated and doubted infra, Subsection (2)(l), paras. 2·200-2·201 and post, Chap. 4, S;ction
1(2)(a)(i), para. 4·095.
w; (1826) 2 C. & P. 378.
 326 ARCHITECTS, ENGINEERS AND SURVEYORS [CHAP.2
tender received was £2,056. The building owner declined to accept it, and
refused to carry out the plans. The architect then offered to make reductions,
and subsequently applied for remuneration and, being refused, brought an
action. Cockburn C.J. said to the jury: "These are the questions for you:
(1) whether it was an express condition that the works shown on the revised
plan should be capable of being executed for the estimated sums? If not, then
(2) whether there is an implied condition in such cases that the work shall be
capable of being done for a sum reasonably near to the estimated sum? 1;so,
then (3) do you think that the plaintiff's estimate was so reasonably sufficient
as that the defendant ought to have employed him?": Nelson v. Spooner
(1861).%
(2) F. was instructed to prepare designs for a building in Victoria not to
exceed in cost£4,000. He prepared plans, and tenders were invited; the lowest
tender was£6,000. Held, that F. was not entitled to recover his remuneration
for the work done: Flannagan v. Mate (1876). 97
H58 (3) An architect estimated that a school building he had designed would
cost $110,000. He knew the estimate was for the purpose of preparing a by-
law to raise the necessary funds. Toe lowest tender was for $157,800. He then
eliminated 40 per cent. of the cubic content of the school, and said the remain-
der could be carried out within the limit. The lowest tender was $132,900.
Held, bytheCourt of Appeal of British Columbia, thathehad been negligent,
and was properly dismissed and liable to pay damages: Savage v. Board of
School Trustees (1951). 98
( 4) An architect was employed to. advise on the proposed construc~oi:1 of a
school addition. His contract provided that he would procure prehm1nary
estimates, but not guarantee their accuracy, and would if requested .revise
them as preparation of drawings poceeded. The school board had the right to
call for re-design if the tender price exceeded the estimate by more than 5 per
cent. His first estimate after preparing his drawings was $193,000, but some
members of the school board who had experience with school construction
questioned the estimate and asked him to reconsider it. His second ~stimate
was $223,000. The project was then put out to tender, but the lowest tender
was $228,000. An earlier cheaper version of his plans was then put forward,
which the board had previously rejected, but they maintained their position
and ultimately terminated his employment, commissioning a new design else-
where. The architect had made no inquiries at all, whether of contractors or of
other architects or of his own experienced partner, when giving his estimates.
The board counterclaimed for damages, but at the hearing abandoned the
claim other than for the return of a preliminary instalment of fees already
paid. 'Held, by the Court of Appeal of Alberta, following Moneypen'!y v.
Hartland that the architect was not entitled to any remuneration at all, smce,
by reaso~ of his breach, the employer had derived no benefit from his ser·
vices: Pratt v. St. Albert School District (No. 6) (1969).'19
(5) An architect was asked by his client~ to estimate the cos! of renovation
H59
of a listed building, and obtained an estimate from a quantity surveyor of
'lli2F.&F.613.
•1 2 Viet. L.R.(Law) 157.
•s 3 D.L.R. (2d) 39, Canada.
99 5 D.L.R. (3d) 451, affd. by the Supreme Court of Canada (1969) 7 D,~.R.(3d) 560;
distinguished in Kidd v. Mississauga (1979) 97 D.L.R. (3d) 535 (over-run,of surveyors
fees, where damages were deducted) illustrated post, para. 4· 131.
SECT. 6] DUTIES AND LIABILITIES, ETC. 327
£238,000 in February 1974, at the height of the post-war inflation in England,
but gave no indication that it was a current cost estimate with no allowance for
future inflation during construction. In March 1974 the client gave the go-
ahead, and detailed drawings were prepared between April and August. In
July the client had been informed that costs would be within the estimate, but
in August the quantity surveyor wrote to the client to say that the value of
extras ordered so far would be £65,000, to which the client replied that a figure
of £300,000 was not to be exceeded. In September a detailed cost analysis
showed that the ultimate cost would be£440,000 (inflation reached an annual
rate of 35 per cent. at its peak during the 1974n5 period) after allowing for
inflation during the prospective construction period, and the client aban-
doned the project. He did not ask for damages. Held, by the Court of Appeal,
the architect was not entitled to any of his fees: Nye Saunders & Partners (a
firm) v. Bristow (1987). 1
The principle of the above cases is that if the estimating error is so seri-
ous that the services amount to a total failure .of consideration, and so are
of no value to the owner, the architect will not be entitled to his fees. So,
too, if the owner would not have proceeded with the project had he known
the true cost. However, should the owner decide to sue for damages, he
would, it is submitted, be bound to give credit, on general principles, for
the amount of fees payable had the contract been properly performed.2 In
addition to the above cases, reference should also be made to the ana-
logous liability in tort, under the Hedley Byrne principle, of a builder who
gave an early inaccurate estimate of final cost under a cost-plus contract,
and who subsequently failed to warn his client of a substantial over-run of
cost which subsequently developed.3
Where, however, an architect has obtained tenders which are substan- 2-160
tially in excess of the express or implied limitation, he should normally, it
is suggested, be given an opportunity of obtaining further tenders (with-
out·expense to the owner) unless it is obvious that no tender is likely to
satisfy the limitation, or the breach is so serious as to justify the client in
treating the contract as repudiated. 4-s Whether any proposed modifi-
cations or omissions of the architect to get down to the price are reason-
able or not may be a diftfcult question of fact. 6
Clearly the measure of damage for breach of this duty may often not be
very great, since if discovered an owner will have lost little but a delay in
his project coming to fruition. In cases where the excess over estimate is
not appreciated until work is completed (as, for example, in a "cost-plus"
contract, or where variations have been ordered the cost of which has
been underestimated) the measure of damage may be difficult to assess,
1 37 BLR 92.
2
See post, Chap. 8, Section 2(1), and see, e.g. Hutchinson v. Harris (1978) 10 BLR 19, C.A.
J Abrams v.Andiffe [1978] 2N.Z.L.R. 420, illustrated ante, Chap. 1, Section 12(2)(a), para.
1·286.
4-.1 For an analogous case, see per WrightJ. in Columbus Co. v. Clowes [1903] 1 K.B. 244, at p.
247, quoted supra, para. 2·111.
6 See, for a comparable case, Evans v. Carte (1881), Hudson, Building Contracts (4th ed.),
Vo12,p. 78.
 328 ARCHITECTS, ENGINEERS AND SURVEYORS [CHAP. 2
since against the higher price the owner has had to pay, work done, to _a
corresponding value, has been carried out.7 But the A/E may well los~ ~s
right to remuneration under the principle in Moneypenny's case, it 1s
submitted.
(h) Preparation of quantities
2-161 If undertaken by the architect or engineer, the liability of an A/E to his
client for performing this service should in theory be the same as that of
the quantity surveyor. . fer (the very eventuality, it might have been thought, which a measured
However, this poses a special difficulty, since the two English Standard
Methods of Measurement which govern the preparation of bills of quantiR
ties in the building and civil engineering industries have over the years
become more and more complicated and esoteric, to a point where the
owner's reasonable interest in a measured contract, as well as the realities
of pricing by tendering contractors, appear to have been long forgotten.
Undoubtedly every professional quantity surveyor can be expecte~ to
regard himself as professionally obliged to comply as exactly as possible
with his own professional institution's standard method of measurement,
which he will have been trained to regard as his professional bible, so that
by the traditional yardsticks of professional negligence, based on the.pra~-
tice of other competent professional men exercising the same art,8 it will
clearly be difficult to establish any such liability against him _in the courts.
The lack of reported cases against quantity surveyors on this ground can
be attributed partly to the ignorance of owners and their advisers of the
arcane pitfalls concealed within these more than 100 page documents, b~t
also by the specious though superficially attractive argument that errors m
the preparation of the bills give rise to no damage, since, had they been
properly prepared, the tendered contract prices would have been higher.
These initial difficulties are compounded by the fact that the powerful
quantity surveyor and contractor influences on the drafting of .t~e stan-
dard forms of construction contract in England have led to provwons for
incorporation of standard methods which not only attempt to give them
overriding force in regard to the preparation and interpretation of the bills
of quantities, but also seek expressly to ~rmit claims fa~ addit~onal pay-
ment in the event of any failure of the bills to comply with therr rules or
requirements. 9 The English standard forms in both ind~stries also
expressly permit departures of unidentified extent from th~ pnces quot~d
in the bills should the ultimate "as built" quantities differ 1n any material
degree from the billed quantities.10
1 See the analogous case of Wilkes v. Thingoe Rural District Council, infra, para. 2·202.
s See supra, paras. 2·086et seq.
9 See Clauses 12(1) and (2) and 2.2 of the 1963 and 1980 JCT~R~BA forrr.is respech~e.ly,
Clause 5(1) ofGC/Wks/1 and the new Clause 55(2), adopting similar wording and policies
to the JCT/RIB A forms, introduced for the first time in the fifth edition of th~ICE contract
in 1973. . . ,:.
10 See the above JCT/RIBA clauses and Clause 56(2) of the ICE fifth edition.
SECT. 6] DUTIES AND LIABILITIES, ETC. 329
Both these forms of incorporation, and the by now extreme and unreal- Z.162
istic complication of the two standard methods, are unique to the English
standard forms and standard methods (or any very closely related Com-
monwealth forms, such as those in Malaysia, Hong Kong and Singapore),
but have no parallel elsewhere in the Commonwealth or the English-
speak:ing world. 11 They are gravely damaging to owners, since they permit
a host of ingenious claims for additional payment based on failures of
compliance with the standard methods, and expressly permit departures
of uncertain extent from the contract prices if the ultimate quantities dif-
contract, that is, a contract whereby an owneragrees to pay agreed rates
and prices should the "as billed" quantities differ from the contract esti-
mates, was specifically designed to meet). Few properly advised owners
would agree to a contract permitting either of these two types of claims, if
their significance was explained, and any legal adviser or AIE will be fail-
ing in his duty, it is submitted, if they fail to warn the owner of these conse-
quences, as also of the exposure to the "unbalanced bid" and loading and
other pricing abuses to which measured contracts are notoriously subject,
although few United Kingdom owners are likely to receive any such warn-
ing ( or indeed anything but unthinking, if not strong, support for such
contracts from their various professional advisers)." Certainly no NE
could possibly be accused of negligence who prepared bills and a contract
documentaton for re-measurement far more protective of the client's
reasonable interest, and in particular:
(a) limiting the incorporation of the Standard Methods to the parts of 2·163
those documents which indicate the precise methotjs of calculation
for computing the quantities of work (as, for example, the method
of calculating a cubic yard of excavation, or of a foot run of pipes to
take account of bends) but excluding from incorporation the
increii.singly lengthy parts of the Standard Methods which require
excessively detailed sub-division of work for contract pricing pur-
poses by enjoining separate pricing of a host of minor or ancillary or
contingent work processes. 12 Any incorporation of a printed stan-
dard method should in any event be made subordinate to the "one-
off" bills, specification or other contract documentation 12a;
(b) consistently with ( a) above, making much greater use of large com-
posite items of work sufficient for contract pricing purposes, and
fewer ancillary or contingent items such as in the past have given
rise to standard method "omitted items" claims 13;
. u See, particularly the unusually well-informed and critical cited comments of Brooking J. in
the Full Court of Victoria in the Sist Constructions case, and the discussion infra, paras.
2·226-2·227.
12 See the SIA contract, Clause 13(1)(c), C.C.P.P., p. 570.
J2a]bid.
13 See post, paras .. 8·024 et seq., and see C.C.P.P.,paras. 24-21(c), 27-22.
 330 [CHAP. 2
I
ARCHITECTS, ENGINEERS AND SURVEYORS
(c) limiting re-measurement only to the stated bill items, all other
undescribed work actually or contingently necessary for com-
pletion of the work shown in the drawings and specification being
deemed to be included in the billed and priced items14;
(d) in the case of simple re-measurement ( as opposed to diffei;ences in
f
I steps to ascertain the tenant's solvency.
quantities arising from variations) permitting no change in prices or
cost allowances, with re-measurement at the bill rates and prices
only, and any such change of price or cost allowance to be restricted
to the quantities arising as a result of variations ordered by the
owner15•
2-164 (e) prescribing far more exactly the items of work in the preliminaries
or general sections of the bills, with precise indications whether
each such item is to be subject to adjustment for time or for quanti-
ties differences or, on the other hand, fixed 16 ;
(f) perhaps most importantly of all, requiring the successful tenderer
to give a detailed make-up of the cost elements of his prices, and in
particular of the preliminary or general items (in the absence of
which unverifiable arguments as to the original alleged internal
costs and pricing form the invariable basis of contractors' claims for
additional payment on re-measurement). This requirement is
equally desirable for a proper valuation of variation claims under
most variation valuation clauses. 17
The United Kingdom standard forms in both industries do not suf-
ficiently protect the owner in any of the above respects. This subject is
dealt with in greater detail post, Chapter 8, Section l(Z)(a) and (b),"' and
at a number of points in C.C.P.P. 18
It is suggested that A/Es who decide to recommend contracts using bills
of quantities to their clients should familiarise themselves with the argu-
ments underlying the above suggestions and criticisms, and be prepared to
explain and justify to their clients any decision to use the standard forms as
currently drafted in both industries for purposes of re-measurement.
(i) Recommending builders
2·165 An A/E naturally does not guarantee the solvency or capacity of a con-
tractor, but it may be that it is his duty to make reasonable inquiries as to
the solvency or competence of the contractor if he, rather than the con-
tractor owner, is responsible either directly or indirectly for the selection
14 Compare SIA contract, Article 5 and Clause 13(1)(a), C.C.P.P., P· 570.
15 Clause 13(1) ibid.
16 See C.C.P.P., para. 24-15 (p. 418), and SIA, Clause 5(2), C.C.P.P., p. 560.
17
1 SIA contract, Clause 5, C.C.P.P., pp. 559-560.
7 ' Paras. 8·016 et seq.
1g SeeChap.26 and,forthe1963 and 1980 standard form, par~s.29-12 to29-14 and30:-13 to
30-21 respectively; and see also para. 8-06. For the disadvantages and drafting of
measured contracts, see paras. 23-20 to 23--23, 24-20 to 24-21, and 26-14 to 26-16. For
preliminary and general items, see paras. &-05, 8-12, 23...Zl, 24-20, 24-21(9; 26-05 and
26-08 For drafting suggestions, see paras. 23-23, 24-21(c) and (d), 27-21 and 30-20. For
the ICE conditions, see para. 30-21.
331
SECT. 6] DUTIES AND LIABILITIES, ETC.
of the contractor chosen to carry out the work, particularly in an area in
which he is accustomed to practice and may be expected to have local
knowledge: cf Heys v. Tinda/ 19 where a jury held that the employment of a
house agent to let property imported an obligation to take reasonable
However, there can be no doubt that, apart from a possible affirmative
duty of care of the above kind, an AIE will be liable to his client if he
carelessly gives a positive recommendation in favour of a contractor.
ILLUSTRATION
Architects wrote to their client saying that two firms of tendering con- 2·166
tractors were "very reliable", and she chose one of them. In fact, the chosen
builder was wholly unreliable, leaving the work in such a state that it needed
to be effectively reinstated from slab level. The client had paid some£2,000 on
interim certificate, and she subsequently incurred costs of somewhat under
£4,000 in an arbitration against the builder before he became insolvent. The
trial judge found that the architects had been in breach of their duty of care to
their client, and that the disastrous state of the works, was due to the
unreliability and incompetence of the builder, but disallowed these particular
two sums on the ground that they arose from the insolvency of the builder.
Held, by the Court of Appeal, as a matter of causation the losses concerned
were caused by the builder's lack of competence and the state in which he had
left the work, and the two sums were recoverable: Pratt v. George Hill &
Associates (1987).20
Again, reference should also be made to the liability of an architect in tort
under the Hedley Byrne principle in a case where he negligently misin-
formed an unpaid sub-contractor, who was considering leaving the site, as
to the sufficiency of the money then due and owing to the main contractor
under the main contract with the owner.21
(j) Recommending form of contract
Obviously it is the duty of an A!E, if more experienced advice is not 2·167
available to his client, to advise and recommend to him a form of contract
giving him adequate protection of his reasonable interest as owner. An
experienced legal adviser asked to advise an -owner on the choice of a
suitable form of contract could not, it is submitted, properly advise in
favour of using the JCT/RIBA or fifth edition ICE contracts as currently
drafted. Such a legal adviser could not shelter, it is submitted, as an AJE or
quantity surveyor might seek more plausibly to do, behind the fact that his
19
(1860) 30 L.J.Q.B. 362.
211
38BLR25.
i i Day v. Ost [1973] 2 N.Z.L.R. 385, illustrated ante, Chap. 1, Section 12(2)(a), paras.
1·285-1·287.
 ~·
332 ARCHITECTS, ENGINEERS AND SURVEYORS [CHAP. 2
own professional institution, as one of the constituent bodies of the stan-
dard forms, has either expressly or impliedly approved or sanctioned the
use of the form (see, for example, the statement on the face of the ICE
form that the three sponsoring bodies (which include the Association of
Consulting Engineers) "have, as sponsoring authorities, approved this
revised, fifth edition of the document") and that the vast majority of his
own professional colleagues adopt and use the contract without question.
Nor could he shelter, it is submitted, behind the undoubted fact that in the
United Kingdom both local and central government, and other public
authorities such as hospital boards, have progressively abandoned the use
of their own forms of contract (including the still current, and in parts
dramatically more protective of the owner's interest, central govenment
contract GC/Wks/1) in favour of these two sets of forms, which despite
their superficial appearance of professional sponsorship are in reality
documents negotiated with and subject to the veto of the contracting as
well as the professional sides of the two industries.
The A/E or other professional adviser recommending these forms will
also be able to point out in his own defence that the Office of Fair Trading,
and the Treasury, and other public departments with an interest in
budgetary control and value for money, appear to have shown no interest
in the substantive content of the forms. The forms in both industries, as
they have currently evolved, have been progressively designed to produce
the lowest possible and most apparently attractive tendered price, with
the maximum of provisions making possible additions to that price of
uncertain extent during the course of the construction period-it may
fairly be said that the contract price under both forms represents little
more than a "best possible scenario" price, and that for practical purposes
they are "price-plus" contracts.22
2-168 A legal commentator is nevertheless bound to comn;ient on these tend-
encies, and on the anomalous and unreasonable provisions in the standard
forms which give rise to them, because there is a real danger that, in such a
relatively specialist and esoteric field, and if continued for a sufficiently
long period clothed in the apparent respectability of professional sponsor-
ship and with virtually no other more consumer- or taxpayer-orientated
authorised forms available, and given their almost universal use as a result
of sustained special interest pressures throughout the two industries,
these contracts will come to be regarded as the norm, and their provisions
gradually assume the status of substantive law by being implied into con-
tracts where not openly expressed, or preferred in cases of doubtful
interpretation, supported by such attempted justifications for doing so on
the part of the judiciary as the course of legal argument may have sug-
gested.23 There are already signs of this emerging·in the English higher
judiciary (as opposed to the official referee's courts): as, for example, the
n See the entries in the C.C.P.P. index under "Government,standard forms, la~Js:·'ofinterest
in provisions of", and see the C.C.P.P. preface, p. vi. ,,.
23
See C.C.P.P., general introduction, para. 02.
SECT. 6] DUTIES AND LIABILITIES, ETC. 333
attempted justifications or explanations for increasing quoted rates and
prices on re-measurement by the Privy Council in Mitsui Construction
Ltd. v. Attorney General of Hong Kong24 or of a contractor's right of deter-
mination of the contract against the owner for delay caused by the defec-
tive work of a nominated sub-contractor in John Jarvis Ltd. v. Rockdale
Housing Association25 (the views of Bingham L.J. in the latter case in stark
contrast to the excoriating criticisms of such a policy by the House of
Lords some 18 years earlier).26
The new 1980 RIBA/JCTmain contract form is examined in C.C.P.P.,21
in the light of earlier criticisms of the 1963 form originally written in 1975,
also in C.C.P.P.28 In fact, difficulties of comprehension have led to a con-
siderable reluctance to use the 1980 form in the industry, so that the 1963
forms and their subsequent revisions are more frequently found at the
centre of disputes at the present day. It is submitted that there are in fact
no improvements, and if anything a deterioration, in the degree of protec-
tion afforded to owners by the post-1980 forms.
The main respects in which the RIB A/JCT contracts will require expla- 2·169
nation and justification by A/Es recommending them to their clients are as
follows:
(i) the uncertain effects on the final contract price of claims arising
from the provisions for re-measurement and incorporation of the
standard method, already explained under para. (h), supra, and
the lack of protection, particularly in the form of a required
make-up of prices, against the pricing abuses to which measured
contracts are notoriously subject.28a To these should be added the
potential for injustice and anomaly, to which both owners and
contractors alike are subject, due to the provisions giving priority
to the printed contract conditions over the "one-off" bills of
quantities (which in these forms include the specification.)29;
(ii) the grossly inadequate architect's powers in regard to defective
work (no power to vary the work without additional payment, no
power to conduct investigations resulting from the discovery of
defective work without additional payment, no power to accept
defective work unremedied subject to deduction of price, only
the frequently impractical power to order demolition or removal
and a "spot check"-style reimbursable power of opening up) and
24
(1986) 33BLR 1, atpp.14-15, the reasoning analysed and criticised by the editor in (1987)
3 Const. L.J. 3, at pp. 11-14.
25
(1986) 36 BLR 48, at pp. 57 and 62, analysed and doubted in (1987) 3 Const. L.J. 274, at
pp. 277; 283.
6
' In Westminster Corporation v. John Jarvis Ltd., quoted infra, paras. 2·169-2·174.
27
See Chap. 30.
is See Chap. 29.
28
' See infra, para. 2·226 and the well-informed and critical remarks of Brooking J. in the Full
Court of Victoria there quoted.
29
See English Industrial Estates Corporation v. George Wimpey & Co. Ltd. [1973] 1 Lloyd's
Rep.118, C.A., illustrated and explained ante, Chap. 1, para. 1·227, and see C.C.P.P., para.
30-27. .
 SECT. 6]
334 ARCHITECTS, ENGINEERS AND SURVEYORS [CHAP. 2
the absence of any express powers at all in regard to temporary
works or methods of working. 30 Perhaps the most extraordinary
example of devious draftsmanship in the forms relates to a very
necessary power, which was undoubtedly intended to be a part of
the forms at an earlier date, namely the express power to accept
(v)
defective work unremedied but subject to reduction of price. The
original wording was apparently left in place in the 1963 forms,
with a misplaced "and" which might have been thought to be
inadvertent31 ; but later, in the 1980 forms, supplemented by new
wording elsewhere in the contract, an astonishing and unex-
plained power or discretion to order the owner to make
additional payment for the repair of defective work has been cre-
ated (in the proceeds of which sub-contractors, including nomi-
nated sub-contractors, who have done defective work are
apparently to share), coupled with a clear negative indication that
no power to accept unremedied work exists at all: see this remark-
able history and draftsmanship exposed and analysed in detail in
C.C.P .P .n (however, it is gratifying to record that the earlier criti-
cisms have in fact been met by a new Clause 8.4, introduced by an (vi)
amendment in 1990),
:Z.170 (iii) the absence of any express provision to the effect that architect's
instructions arising from breach of contract or default of the con-
tractor or any sub-contractor should not give rise to additional
payment or other owner liabilities-contrast, for example, the (vii)
clear provisions to this effect in Clauses 9(4)(c) and 31(2) and (3)
of GC/Wks/1. These latter brief.and obviously justified clauses
would at a stroke have made impossible the anomalous claims for
additional payment, or even termination of the contract against
the owner, which have succeeded in the English courts, based on
architect's instructions given as a consequence of defective work
or of abandonment by sub-contractors33 ;
(iv) an unacceptable immunity of the contractor for defective work
after the final certificate under Clause 30(7)( a) of the 1963 forms,
apparently abandoned in the 1977 revision (no doubt in the light (viii)
of the recently passed Unfair Contract Terms Act34) but replaced
by a strange new wording, the precise object of which is unclear,
DUTIES AND LIABILITIES, ETC. 335
but which, in combination with a revision of Clause 1(1) by the
1977 revision, may well trap owners whose A/Es have
incautiously inserted a requirement for the A/E's approval or sat-
isfaction into the specifications or other contract descriptions of
the work. This new wording is continued in the 1980 forms 35 ;
unacceptable powers of the contractor to determine the contract Z.171
without prior warning, and with attendant severe remedies for
breach of contract, such as seizing materials and goods already
paid for, in situations in no way the owner's moral or legal respon-
sility, such as relatively short periods of delay caused by force
majeure (by definition an event beyond the control of either
party), or damage to the works by insured risks, such as fire or
vandals, (which would otherwise be the contractual responsibility
of the contractor independent of fault), or by the opening up of
works to discover the extent of and best methods of dealing with
previously discovered defects, or by nominated sub-contractors'
defaults. A unilateral contractor's determination clause based on
such grounds finds no parallel elsewhere in the world, including
civil law countries36;
certain equally unacceptable grounds for extension of time. 37 In
particular, no savings are made in the extension of time clause, in
significant and pointed contrast to the contractor's determination
clause, for insured risks or architect's instructions caused in either
case by the default or breach of contract of the contractor38;
the particular extension of time for nominated sub-contractor's
delays in Clause 23(g) of the 1963 forms and Clause 25.4.7 of the
1980 forms. This identical provision was described in 1969 as
"included in this contract without any regard to the manifest
injustice and, indeed, absurdity implicity in it",39 and in 1970 as
"inserted and drafted without any clear appreciation of its pur-
pose or scope ... I cannot believe that the professional body, real-
izing how defective this clause is, will allow it to remain in its
present form". 40 Nearly 20 years later the words remain unaltered
in the 1980 form. 41
the omission to list failure to give full possession of the site as a 2·172
ground for extension of time. Paradoxically, in view of the rather

10 For defective work, see post, Chap. 5, paras. 5·029-5·031, and C.C.P.P., para. 23-29 to
23-30, 29-08 to 29-10, and 30---03 to 30.04. For methods of working and temporary work,
see supra, para. (d), and C.C.P.P., paras. 23-30,27-301027-31, 29-08 to29-10and 30-11.
31 See Clauses 5 and 15(2) and (3), C.C.P.P., para. 29-27.
32 See paras. 30---06 to 30-11 (see also para. 29-27(2). This extraordinary anomaly was finally
removed in the 1987 revision after surviving commentators' criticisms since 1969.
33 See, e.g. Bickerton (T.A.) & Son Ltd. v. North West Metropolitan Regional Hospital Board
[1970] 1 W.L.R. 607, H.L.; Gloucester County Council v. Richardson [1969J l A.C. 480;
Fairclough Building Ltd. v. Rhuddlan Borough Council (1985) 30 BLR26 (C.A.) and John
Jarvis Ltd. v. Rockdale Housing Association (1987) 36 BLR 48, C.A. ~/.'.
l4 Jt has been submitted ante, Chap. l, paras. 1·243-1·244 that such provisions might well be
invalidated under that Act.
35 Clauses 2.1 and 30.1.1.l, C.C.P.P., para30-25.See the recent case of Colbart Ltd. v. Kumar
(1992) 59 BLR 89, analysed and doubted in (1993) 9 Const. L.J. 7.
31; See C.C.P.P., paras. 29-21 and 30-24, and the comments of Professor Lorenz in the Inter-
national Encydopedia of Comparative Law there referred to.
31 See C.C.P.P., paras. 29-17 to 29-19.
38 See C.C.P.P., para. 30---05.
39 PerSalmonL.J. in John Jarvis Ltd. v. Westminster Corporation [1969] 1 W.L.R.1448, atp.
1458, C.A.
40 Per Lord Wilberforce in WestminsterCorporationv.JohnlaroisLtd., [1970] lW.L.R. 637,
at p. 650, H.L.
• 1 For a full analysis of this anomaly, see C.C.P.P., paras. 21-06 to 21-07 and 30-26.
 336
ARCHITECTS, ENGINEERS AND SURVEYORS
unusual law relating to the invalidation of liquidated damages
clauses under the prevention principle,42 this apparently, from an
owner's point of view, harmless omission is in fact gravely preju-
dicial to him, since on most important or complex projects, such
as hospital contracts, for example, there may often be short tem-
porary interruptions of possession of parts of the site, perhaps for
only one day, due to the requirements of the owner, or the pres-
ence of some other direct contractor. Moreover, many other
grounds entitling a contractor to an extension of time, such as late
instructions, or delays by other contractors, which cause disrup-
tion, can be said to be interruptions of possession as well, so pro·
viding a further argument for invalidation of the liquidated
damages clause. From the draftsmanship of the 1980 contract,
which appeared to respond to commentaries noting this omission
and its dangers for owners by including a new right of extension of
time, it is again clear that what is intended is to maintain the omis·
sion while appearing to cure it. This is because the new and con·
voluted "ingress and egress" wording of Clause 25.4.12 of the
1980 contract, on a careful examination, only appears to apply to
one particular and rare class of interference with possession, and
not that of any part of the site itself, but only of access across
adjoining land belonging to the owner-a highly unusual situ-
ation, with which there seems to be no special reason to deal. This
is a further example, it is submitted, of the deviousness of the
draftSmanship of these forms, noted by the judiciary.43 The only
explanation for this wording appears to be that it is intended to
retain a valuable and unmeritorious escape route for contractors
from the liquidated damages clause, of which there is evidence
that contractors in the United Kingdom are well aware. 43a
2-173 (ix) the highly unsatisfactory insurance provisions of the contract,
which the 1980 JCT Guide expressly confirmed had been arrived
at after discussions with the insurallce industry, and which
appeared to have been drafted with little consideration or analy-
sis of the extent of the owner's commercial interest in securing
compulsory insurance by the contractor. Thus, the required
insurance of the works covers an excessive and extremely expens-
ive list of non·catastrophic risks in which, for that reason, the
owner has no commercial interest, and which favours at the pric-
ing stage those contractors who habitually provide inadequate
supervision or cut corners and minimise protective work on site,
at the expense of more responsible competitors.44 Again, the
provisions for insurance of adjoining property against damage
42
See post, Chap. 10, Section 2(1).
4
>See the quotations infra, para. 2·175.
43"See this lacuna in the extension of time clause finally reaching the courts in B~Ifour Beatty
Building Ltd. v. Chestermount Properties Ltd. (1993) 62 BLR 1.
44
For this further explained, see C.C.P.P., paras. 29-16, 30-22.
SECT. 6] DunEs AND LIABILITIES, ETC. 337
[CHAP. 2
not due to negligence are little more than a gift of the premiums to
the insurance companies concerned.45 Moreover, no provision is
made for insurance "excesses", which would substantially reduce
the cost to the owner. Again, in conjunction with the contractor's
determination clause, the provisions permitting the contractor to
cease work ~til a claim is paid are an extremely dangerous trap
! for owners, smce acceptance of major claims by insurers is often
delayed. 46 The optional insurance of the works clause, whereby
the owner undertakes to insure and express provision is made for
f all risk of damage to the works to pass to him, is such as no adviser
of the owner should accept, since, apart from insurance, it over·
I
turns and reverses the substantive contractual liability of the con-
tract~r. The owner's interest in regard to insurance is fully
explained post, Chapter 15, and in C.C.P.P.,47 as are also the defi-
ciencies in the RIBA/JCT insurance provisions.48
(x) extremely unsatisfactory provisions in regard to nominated sub- 2-174
contracting. In the 1963 forms, the controversial Bickerton
interpretation required an owner to nominate a second sub-con-
tractor in replacement of one who had abandoned or repudiated
the sub-contract. The fact that the draftsman made none of the
?ther pro~sions whic~ would have been necessary on that
1nterpretat1on, such as 10 the extension of time variations 0 and
loss and expense clauses, or governing the terlcination of sub-
cont,racts by the o~ner or main contractor, has led to expensive
and In many case~ mconclusive litigation,49 but ultimately appears
to have resulted m the owner becoming liable to the contractor
for all the financial consequences of a sub·contractor repudiation,
through a doubtful application, not yet confirmed in the House of
Lords, of the traditional postponement instruction provisions
in the 1963 forms. 50 The 1980 contract, on the other hand, now
cre~tes a system for nomination which is so complicated, and so
easily obstructed, that, but for the fact that nominated stib-
c~ntracting is so risk-free and profitable to many contractors,s1 it
IDight be tempting to regard it as designed to prevent A/Es and
owners from using nomination at all.52 The practical results of
both forms are potentially catastrophic for owners, as the English
~ i~~rs 19(2)(a) and20.2 of the 1963 and 1980forms, and see C.C.P.P.,paras. 9-27(8) and
'
6
See C.C.P.P., paras. 20-16 and 30-22.
47
See paras. 23-31 to 23-33 and 27-51 to 27-52.
48
See paras. 29-16 and 30-22 to 30-23.
49
See, e.g. Percy Bilton Ltd. v. Greater London Council [1982J 1 W.L.R. 794, H.L. illustrated
po~t, para.13·074, and analysed in C.C.P.P., paras. 21-20 to 21-21. '
50
Fairclough Building Ltd. v. Rhuddlan Borough Council (1985) 30 BLR 26, illustrated post
para. 13·076, and see C.C.P.P., para. 21-23 21-34 to 21-37.
51
See C.C.P.P., paras. 21-31 to 21-32, where'the commercial background is explained
52
The 1980 provisions are summarised in C.C.P.P., para. 30-26. See also C.C.P.P., Cha~s. 21
and 22, and the analysis in (1987) 3 Const. L.J. 274.
 338 ARCHITECTS, ENGINEERS AND SURVEYORS [CHAP. 2
l SECT. 6]
hospital boards have found to their particular cost, and are to be
contrasted with the startling simplicity of draftsmanship and fun-
damentally opposed policies of the GC/Wks/1 contract53 (which
there are signs that the Government, under industry pressures,
has decided to weaken).
Z.175 Discussing these contracts more generally, the provisions of the RIBA/
JCT contracts have been described as "the farrago of obscurities which go
to make up the RIBA co_ntract" ,54 and as "unnecessary, amorphous and
tortuous ... it seems lamentable that such a form ... should be so deviously
drafted with what in parts can only be a calculated lack of forthright clar-
ity" ,55 and "it has produced problems which have given this Court, as well
as other courts in the past, difficulties of interpretation which defy the
experienced intelligence of the counsel concerned with these matters, and
even more the efforts of the courts concemed".56 Those comments were
made of the 1963 forms, but no informed observer familiar with the 1980
forms would conclude that they applied with any less force, partly because
most of the provisions attracting these criticisms have appeared substan-
tially unchanged in the later forms. Added to that, however, the most
striking characteristic of the 1980 forms has been a new and opaque for-
mat, using a complicated and often puzzling system of numbering appar-
ently attractive to quantity surveyors, and distinguished particularly by a
style or technique of draftsmanship involving excessive and unexplained
cross-referencing, thus making the contract extremely difficult, even for a
highly informed reader, to assimilate and, for the layman, however intelli-
gent, virtually impossible to understand. This curious technique not only
makes the task of assimilating or interpreting a particular clause
extremely laborious, but it can also serve very effectively to conceal the
real intention and purpose of a provision from any first-time reader. Per-
haps the most distinguished member of the English judiciary with substan-
tial practitioner experience of construction contracts was the late Lord
Salmon. His verdict on a (different) contract before him was characteristi-
cally witty, but unequivocal:
"Indeed, if a prize were to be offered for the form of a building contract which
contained the most one-sided, obscurely and ineptly drafted clauses in the
United Kingdom, the claim of this contract could hardly be ignored, even if
the RIBA form of contract was amongst the competitors."57
13 See Clauses 31(2) and (3) and 38(5).
,. Per Edmund Davies L.J. in English Industrial Estates Corporation v. George Wimpey &
Co. Ltd. [1973} l Lloyd's Rep. 118, at p. 126.
ss Per Sachs L.J. in Bickerton v. North West Metropolitan Regional Hospital Board [1969} 1
All E.R. 977, at p. 989, C.A.
S6 Per Danckwertz L.J. in Bickerton, supra, at p. 996. ."
s1 Peak Construction (Liverpool) Ltd. v. McKinney Foundations Ltd. (1970) 69 L.G.R. 1, at
p.3.
DUTIES AND LIABILITIES, ETC. 339
A/Es should, it is submitted, bear these authoritative comments and 2·176
views in mind before deciding to recommend the RIBA/JCT contract to
clients, particularly to private clients who lack personal knowledge of
the industry and place reliance on the A/E's advice. It should perhaps be
added that the RIB A/JCT can have no legitimate complaint if there has to
be speculation as to the motives or apparent objectives to be deduced
from the draftsmanship of their contracts, since their almost invariable
policy, like that of the constitutent bodies of the ICE conditions, is not to
offer any detailed explanation or justification of the wording of their
forms, or for the frequent amendments made to them.
Turning to the ICE fifth edition, while its principal characteristic is its 2-177
traditionally obscure, prolix and somewhat archaic draftsmanship, it can
be acquitted of charges of deviousness. Like its predecessors, there is no
provision for a fixed price lump sum contract, and no attempt made to
protect the owner against the pricing abuses to which measured contracts
are notoriously subject,51a particularly in the form of a required make-up
of prices.57h On the contrary, engineers will need to explain to their clients
that it contains:
(i) an "open-ended" and frank invitation to claim additional pay-
ment of uncertain extent on re-measurement for any failure of
the bills to comply with the standard method of measurement
(Clause 55(2)). Not only is the monetary extent of such claims
uncertain, but, as in the case of the RIBA/JCT provision µpon
which this clause is closely modelled, it is by no means clear pre-
cisely what types of claim, whether for undescribed permanent or
contingent temporary works, are intended, or what the principles
are which the engineer or an arbitrator is to apply when "cor-
recting the error or omission", as he is required to do by the
clause58 ;
(ii) an equally open-ended and frank invitation to claim higher prices
than those quoted, also of uncertain extent, if the as-built quanti-
ties differ substantially (Clause 56(2));
(iii) an open-ended claim for additional cost, based on the principle of
"reasonable foreseeability by an experienced contractor" for
what is, apparently, any instruction given by the engineer even if
only calling for contract compliance. This appears to be a "catch-
all" provision, and its object can only be guessed at. There has as
yet been no ruling on its meaning. It is an extraordinary provision
for a professional adviser to suggest to a client fot inclusion in his
contract (Clause 13(3));
57• See supra, para. 2·226, and the remarks of Brooking J. in the Full Court of Victoria there
quoted.
lTI> For this explained in greater detail, see C.C.P.P., paras. 23-18, 23-23; 24-20---21(c); and
30--21; see also the Singapore S.I.A contract, Clause 5, C.C.P.P., p. 559.
sM See C.C.P.P., paras. 30-15 to 30-16, where this difficulty is explained.
 340 ARCHITECTS, ENGINEERS AND SURVEYORS [CHAP. 2
2-178 (iv) a similar absence of any general provision denying additional
payment for instructions given as a consequence of contractor
breach or default (for example, as in GC/Wksll, Clauses 9(4)(c)
and 15(3));
(v) a similar open-ended "reasonable foreseeability" claim should
the engineer respond to the invitation offered to him in Clause
14(3)-(6) by making an inquiry of the contractor as to his calcu-
lations or details of his working methods or temporary works
{whereupon he becomes contractually obligated either to
approve the contractor's proposals formally, or to give specific
differing instructions entitling the contractor to a claim, and is not
permitted to adopt the neutral position which in many cases his
duty to his client would call for. 59 Specific powers similar to those
in Clauses 1 and 2 of the SIA Singapore (building) contract would
appear to be even more necessary and desirable for both owner
and A/E in a civil engineering context;
(vi) seriously inadequate powers in respect of defective work, to the
same degree as those in the RIBA/JCT contract (prior to its new
Clause 8.4 introduced by an amendment in 1990, see supra), with
a similar need for improved powers;
2·179 (vii) a complicated scheme for nomination of sub-contractors,
whereby the owner can only recover the losses caused by nomi-
nated sub-contractor default in cases where the sub-contractor is
solvent and able to recoup the main contractor (Clauses 59A and
59B). In other cases, the owner will have to meet the losses him-
self, including payment for any extra work carried out by the main
contractor and the cost of completing by a new sub-contractor. In
cases of termination of the sub-contract ( over which the owner
has no positive control), this will include the legal costs of the
main contractor, if not recovered from the sub-contractor. This is
in complete contrast to the legal position established by the
courts in the early cases on nominated sub-contracting, and re-
stated in the express provisions of the GC/Wks/1 contract,59a
though at least the owner would not appear liable to compensate
the main contractor for the latter's own "private" disruption and
other costs occasioned by the sub-contractor defaults%;
2·180 (viii) the well-known "reasonable foreseeability" Clause 12 (or
"changed conditions" (United States) clause), based upon
unfavourable physical conditions. While widely used in engineer-
ing contracts outside England (though not in Malaysia and in
some Australian government contracts) the clause in its present
form with its "unforeseeability" test can be highly damaging to
owners, with no balancing pricing benefit for them, as well as
introducing an undesirable element into competitive pricing,
$
9
See supra, paras. 2·141-2·143. $'la See supra, n.53.
19
• b See Clauses 58 & 59, and the editor's "The ICE Conditions of Contract", pp. 196 et seq.
SE=. 6] DUTIES AND LIABILITIES, Ere. 341
since it encourages a class of successful tenderer whose claiming
skills exceed his engineering skills, and may Well drive respon-
sible and skilled contractors who price more realistically out of
business. 60
Of the above deficiencies in the fifth edition, (i)-(iv) must be unacceptable 2-181
to any owner if properly explained, it is submitted. No legal adviser could
possibly advise their use by·a client in his contract. That in (v) is a really
serious defect, particularly in civil engineering contracts, and one of which
the engineer should himself, once it is pointed out to him, be fully aware,
since methods .of working and temporary works tend to be of greater
importance in engineering contracts, and the occasional need for a neutral
position in such situations is well understood by many engineers. That in
(vi) is, again, a serious deficiency which any competent engineer should
understand once it is explained to him. That in (vii) is perhaps more con-
troversial, but at the very least an owner is entitled to be advised as to the
consequences of such a scheme for sub-contracting, and the counter-
balancing need to secure effective direct warranties from any important
sub-contractor or supplier.61 That in (viii) is again likely to be regarded as
controvers~al by many engineers, but there are far superior methods of
compensating contractors for adverse working conditions, which must
produce a pricing benefit if adverse conditions are not encountered, and it
is a criticism of the engineering profession that they do not seem to
appreciate the adverse impact of this clause on competitive tendering and
the general health of the industry, quite apart from the threat which it
poses to the legitimate budgeting requirements and preferences of many
responsible employers.62
(k) Supervision
There are three principal areas of an A/Es responsibility to his client 2·182
during the course of supervising a construction contract. These are, first,
the prevention, detection and correction of defective work by the con-
tractor; secondly, the niore difficult and delicate r6le of intervention or
non-intervention (particularly bearing in mind the contractor's funda-
mental obligation to complete the works for the agreed price, including
whatever contingent expenditure may be necessary to overcome difficult-
ies),63 if the contractor's working methods or temporary works prove
.unsuccessful or cause concern, and involves a judgment whether or not, in
his client's best interest, to intervene and give instructions; and, thirdly,
should there be any indications of potential failure of the permanent
design, intervention to correct it.
60
See on this C.C.P.P., paras. 23-25 to 23-27, 27-34 to 27-37.
1
• See supra, paras. 2· 144-2· 145, for the A/E's duties with regard to nominations.
61
For these clauses see post, para. 8·060, and see C.C.P.P. paras. 23-25 to 23-27, 27-34 to
27-37, and 28-14 where more satisfactory methods of obtaining contractual compensation
for the contractor, if that is desired, are suggested.
63
See post, Chap. 4, Section l(l)(b) and see, e.g. C.C.P.P., paras. 27-Z3 to 27-24.
 342 ARCHITECTS, ENGINEERS AND SURVEYORS [CHAP. 2
The second of these, namely the control exercised over methods of
working or temporary works, has already been discussed supra in the pre-
sent context of the duty owed by the NE to the client64 and ante, Chapter 1
in the context of an alleged duty owed by the NE to the contractor in
these situations. 65
The third area, namely correction of original design errors, has also
been discussed supra.66 With regard to the detection of defective work,
some modern cases have also already been referred to and illustrated.67
Obviously, an A/E who undertakes to supervise the works must exer-
cise due care during construction to ensure that the materials and work-
manship conform to the contractual requirements.
ILLUSTRATION
2·183 An architect was employed by the plaintiff on the usual terms to plan and
supervise the building of a house. The house was completed and the archi-
tect's fees paid. The plaintiff went to live in the house, and soon after dry-rot
was observed. The plaintiff then had the cement floor of the offices taken up,
and discovered that the bottoming of the floor had not been executed accord-
ing to contract, but consisted to a large extent of miscellaneous rubbish. The
architect visited the building about once a week, but he never inspected the
bottoming of the floor before the cement was laid down, and without inspect-
ing it gave orders to the plasterer to proceed with the work on the floor. Held,
that his duties were to give reasonable supervision, and that meant such su-
pervision as would enable him to certify that the work of the contractors had
been executed according to contract, and that having failed to give such
supervision he was liable in damages to his employer on account of work
which he had passed, but which in fact did not conform to the contract: Jame-
son v. Simon (1899). 68
In the above case, the Lord Justice Clerk said:
"There may, of course, be many things which the architect cannot be
expected to observe while they are being done-minute matters that nothing
but daily or even hourly watching could keep a check upon. But as regards so
substantial and important a matter as the bottoming of a cement floor of
considerable area, such as this is shown by the plans to have been, I cannot
hold that he is not chargeable with negligence if he fails.before the bottoming
is hid from view by the cement to make sure that unsuitable rubbish of a kind
"' See supra, paras. 2· 138-2·140.
65 See ante, Chap.1, Section 12(2)(d), para. 1·297 et seq., and 12(3), para. 1·310 et seq., and
12(10)(c), para. 1-383 et seq. See also C.C.P.P ., paras. 5-19, 5-22 to 5-?,7, and see the Cana-
dian case of City of Prince Albertv. Underwood and McLellan (1969) 3 D.LR. (3d) 585,
illustrated supra, para. 2· 139.
66 See para. (a)(i), paras. 2·108-2·109, and the case of London Borough of Merton v. Lowe
(1981) 18 BLR 1 there illustrated.
67 See, e.g. KensingtonArea HealthAuthority'I. Wettern Composites (1984) 31 BLR57 ,supra,
para. 0. _ 12
us 1 F. (Ct. of Sess.) 1211. See Leicester Board of Guardians v. Trollope (1911r75 J.P. 197;
illustrated infra, para. 2·188 and ante, para. 2·027.
SECT. 6] DUTIES AND LIABILITIES, ETC. 343
that will rot when covered up with wet cement has not been thrown in in
quantities as bottoming contrary to the specification."
The current (1989) RIBA conditions of appointment are a masterpiece 2·184
of brevity on this topic:
"1.21. Administer the terms of the building contract during operations on the
site. 1.22. Visit the site as appropriate to inspect generally the progress and
quality of the work. 1.23. With other consultants ... make where required
periodic financial reports."M
The normal practice of architects (though it may legitimately, it is sug-
gested, vary considerably according to the nature of the contract, the dis-
tance of the site from the architect's place of business, and the confidence
reposed in the contractor) is to visit a site for which they are responsible
about once a week. In larger contracts, the architect may arrange for an
assistant architect from his own firm to be present on occasions when he
himself is not, and perhaps somewhat more frequently than he would visit
himself; and, on larger projects, a clerk of the works, 70 usually paid and, at
least nominally, employed by the owner, may be present on the site either
full time or for a varying number of days each week. Engineering contracts
of any size usually have a full-time resident engineer, sometimes from the
firm of the engineer in charge of the contract, usually on terms that the
owner pays the firm a proportion or all of his salary, or sometimes separ-
ately engaged for the project and directly employed by the owner. 71 Thus it
will be seen that the A/E's personal supervision of any contract of sub-
stance is usually supplemented by that of other subordinate persons. In
addition, in many larger building contracts there may be a structural
engineer acting in a supervisory r6le as well as the architect ( or indeed
other consultants such as heating engineers), whether employed by the
owner or by the architect. From the legal point of view it is submitted that
A/Es will usually be fully responsible to the owner for their own
employees' mistakes or errors, but in general will not be responsible for
errors by persons paid and employed by the employer, such as clerks of
works and resident engineers separately engaged, unless the matter was of
a kind that they should have seen or dealt with personally but chose
instead to leave to the subordinate in question, or unless they failed to give
proper instructions to the subordinate.72 The rather special case of
employees "seconded" to the owner probably needs to be considered
on its special facts in each case, including any agreed terms of the
arrangement. 73
1
91982 (July 1989 revised) edition.
10
See supra, Section 2(4), para. 2·027, and see the case of Kensington Area Health Authority
v. Wettern Composites (1984) 31 BLR 57 there illustrated.
11
See supra, and see also the case of City ofPrinceAlbertv. Underwood McLellan, illustrated
supra, para. 2·139.
See supra, (a)(ii), "Delegation", para. 2·023-2·028.
13 See Mersey Docks & Harbour Boardv. Coggins & Griffith (Liverpool) Ltd. [1947] A.C. 1,
applied in the case of a clerk of works in the Kensington Area Health Authority case.supra.
 344 ARCHITECTS, ENGINEERS AND SURVEYORS [CHAP. 2
2· 185 Thus in the task of supervision the architect or engineer, though he may
be assisted by professional assistants or clerks of works or both,74 ca~not
escape responsibility, except perhaps in the smallest matters of ~etrul, by
delegation ( unless the contract of employment expressly so provides). He
may make use of assistants, piovided he retains cont:ol of the wor~ and
does not cease to exercise his own supervision and Judgment. So 1t has
been said75:
"If an architect is entrusted with the general direction and superintendence
of the work his duties could not be performed if he were expected to go over
individuaUJ every matter in detail, and if his cert~ficate were to b~ ~eld bad by
a court of law because he has not himself gone into every detail.
And again:
"Where a man employs an agent, relying upon his peculiar aptitude for the
work entrusted to him, it is not competent to that person to dele~a~e the trust
to another but where the act to be done is of such a nature that 1t 1s perfectly
indifferent' whether it is done by A. or B., and the person originally entrusted
remains liable to the principal, by whomsoever the thing may be done, the
76
maxim delegata potestas non potest delegari does not apply. "
2·186 This distinction between the act (which can be delegated) and the
responsibility (which cannot) is well illustrated by the duty of m~asure-
ment, which need not normally be carried out personally by an architect or
surveyor.
ILLUSTRATIONS
(1) On a reference to two surveyo~s to settl~ the terms of a m!ning le~se,
one of the surveyors did not go down into the mine, but founded his valuation
on the report of a competent agent whom he had sent t<;> inspe~ it and upon
his own knowledge of the neighbourhood. Held, that this fact dtd not render
the award bad: Eads v. Williams (1854). 77
(2) A building contract stipulated that the Y:70rk ~hould be measured w~en
finished, and priced at the schedule rates, or m stnct accordance therewith,
the contractor to pay half the expenses of the measu_re_ments and schedule.
An action was brought for the price of the work. In his Judgment Lord J?eas
said: "The measurement was made, it seems, by sworn _measure:s or skilled
persons in their employment. It is not understood that m every 1nstan~e the
sworn measurer, who may be the head of an extensive business, goes ~mself
to the ground, in place of sending a skilled a~ist~t to report to him !he
details, he adopting the result if it appears to him satisfactory and accepting
78
the responsibility": Kirkwood v. Morrison (1877).
14 See supra, paras. 2·023-2·030.
75 PerGroveJ. in Clemencev. Clarke(l880),Hudson,BuildingContracts (4th ed.), Vol.2, at
p. 58.
16 Per WilliamsJ. in Hemmingv. Hale (1859) 7 C.B.(N.S.) 487, at p. 498.
"24 L.J.Ch. 531, C.A. See also Caledonian Ry. v. Lockhart (1860) 3 Macq. 8~8\· ,
18 5 R. (Ct. ofSess.) 79, at p. 82. See also Clemencev. Clarke,post, Chap. 6, Sectmn,5(5), para.
6·127.
SECT. 6] DUTIES AND LIABILITIES, ETC. 345
The following cases illustrate the principle that a matter of such import- Z.187
ance that the architect should see to it for himself cannot be delegated to a
subordinate. They do not, it is submitted, prevent an architect saying:
"This matter could not have been seen byme on my normal periodic visits,
though no doubt it must have been seen by the clerk of works, who failed
to report it to me."
ILLUSTRATIONS
(1) S.,an engineer, was employed to superintend work to be executed for a
local board. The local board made a claim against S. for negligence. S. set up
(inter alia) that the local board had appointed a clerk of the works who was
not reliable, and that S. remonstrated against the appointment, and that S.
was not responsible for errors of the clerk of the works. The official referee
found that if S. relied on the clerk of the works, he was liable, as S. knew that
the clerk of the works was not reliable: Saunders v. Broad.stairs Local Board
(1890)."
(2) B. employed L. as his architect to superintend the rebuilding of prem-
ises after a fire. B. appointed C. clerk of works. C. thought that certain beams
did not require to be replaced, and L. adopted C. 's view without inspecting
them. The beams turned out to be insufficient. Cave J. charged the jury that
the question whether new beams were required was one for the architect and
not for the clerk of works, and that the responsibility was on L. if he adopted
C's view without inspecting them: Lee v. Bateman (Lord) (1893). 80
(3) An architect undertook to supervise a building contract. The clerk of 2·188
works, for currupt purposes of his own, permitted the builder to deviate from
the design, by laying the ground floor without the necessary precautions
against damp, and assisted in concealing the deviation,and the architect, rely-
ing upon the clerk of works, failed to detect the deviation and to have it recti-
fied. As a result of such deviation dry-rot set in. When sued, the architect
pleaded that the owners had appointed an unfit and improper clerk of works,
and that the damage was due to the negligence and fraud of the owners' ser-
vant, or alternatively that the owners were bound to employ a fit and proper
clerk of works. Held, by ChannellJ ., that, while personally not greatly, if at all,
in default, the architect was liable in damages to the owners for negligence:
Leicester Board of Guardians v. Trollope (1911).ai
(4) An owner's claim against an architect for negligent supervision was
reduced due to the owner's clerk of works' contributory negligence: Kensing-
ton Area Health Authority v. Wettern Composites (1984). 82
The following passage from the judgment of Channell J. in the Leicester
case indicates, it is submitted, a correct approach to this problem:
79
Hudson, Building Contracts (4th ed.), Vol. 2, p. 164.
80
The Times, October 31.
81 75 J.P.197. (Cf. The architect's responsibility in tort when relying on the opinions of others,
ante,Chap. l,paras.1·318-1·319and the case ofClayv.A.J. Crump Ltd. [1964] 1 Q.B.533,
there illustrated.)
82
31 BLR 57, illustrated fully supra, Section 2(4), paras. 2·025-2·028. The claim was brought
in tort- see ante, Chap. 1, Section 12, para. 1·377
 346 ARCHITECTS, ENGINEERS AND SURVEYORS [CHAP. 2
"I think there is no difficulty in seeing what are the respective functions and
duties of an architect and of a clerk of works ... the clerk of works has to see to
matters of detail, ... the architect is not expected to do so ... the architect is
responsible to see that his design is carried out. That fairly indicates what the
respective duties of each are, but it leaves. one in each case to ~ay whether the
matter complained of is a matter of detail or a matt~r of seet~g whether the
design is complied with ... Here a protection was devised and 1t was an essen-
tial part of the design. Now the architects admitte? that they to_ok no steps !o
find out whether that was carried out, or whether 1t was not. It 1s not a case 1n
which they enquired even of the clerk of works, in which they pointed out to
the clerk of works ... It is a very large area of building .... If in this case the
architect had taken steps to see that the first block of buildings was done all
right, and then in the next block he had left it to the .clerk of works with
instructions to see that it was done in the second block 1n the same way ... I
should then have had some doubt whether he would have been liable ... "
2·189 Again, it has been said of the effect on an architect's supervision respon-
sibilities where a clerk of works is engaged:
"I cannot assent to the suggestion that, an architect undertaking and being
handsomely paid for supervision, the limit of his duty is to pay occasional
visits at longer or shorter intervals to the work, and paying those visits to
assume that all is right which he does not observe to be wrong. It may well b.e
that when he stipulates for and obtains the assistance of a cler~ of works his
implied undertaking is less stringent. He may in that case be entitled to accept
the reports of the clerk of works as correct, and of course in no case can the
architect be bound to that minute supervision which is only possible to a per-
son continually on the ground. But, speaking generally his (the ~rchitect's)
obligation is so far as reasonably possible, to see that the work 1s duly and
properly ex;cuted, and whether he has failed i~ that duty in .any parti~ular
case is a question of circumstance and a question not for his professional
brethren but for the court. " 83
In spite of the above passage, it is submitted that the presence of a cler~ of
works will undoubtedly entitle an architect to visit less often than he might
otherwise do but since clerks of works are normally employed on larger
projects, that' may be a counter-balancing factor weighing in the opposite
direction. Moreover, the above passage should not, it is submitted, be read
as suggesting that professional evidence will not be necessary in such a
case to assist the court in arriving at a conclusion.
2· 190 Another factor calling for a higher degree of supervision will be where
bad work by the contractor has already been seen or reported:
"I think that the degree of supervision required of an architect must be gov-
erned to some extent by his confidence in the contractor. If and when ~ome-
thing occurs· which should indicate to him a lack of competen~ 10 the
contractor, then, in the interest of his employer, the standard of his super-
vision should be higher."&!
!ll Per the Lord Justice Clerk in Jameson v. Simon (1899) 1 ·F. (Ct. of Sess.) 1211, at p. 126,
quoted with some reservations by Judge Smout Q.C. in the Kensington Area Health Auth-
ority case (1984) 31 BLR 57, at p. 80.
M Sutcliffe v. Chippendale and Edmondson (a firm) (19'?1) 18 BLR 149, at p. 1~-3/per Judge
Stabb Q.C. and see Kensington Area Health Authority v. Wettern Composites (1984) 31
BLR 57, illustrated supra, para. 2·027.
SECT. 6] DUTIES AND LIABILITIES, ETC. 347
In the Sutcliffe case,85 Sir William Stabb Q.C. accepted evidence that the
quantity surveyor owed no duty in respect of defective work and that it
was the architect's function to instruct him whether or not to disallow the
value of defective work from interim certificates; but it is submitted that a
quantity surveyor who sees or should have seen defective work when
visiting will owe a duty to his client at least to report it to the architect for
action or final decision by the latter.
It has already been suggested that the terms of the contract between the
owner and contractor are, at the very least, a relevant factor in determin-
ing the extent of the duty of supervision. 86 This must be all the more true in
the vast majority of cases where the architect himself recommends the
contract in question to the owner.
The terms of the post-1963 RIBA standard forms, under which the final :Z.191
certificate of the architect finally debarred the owner from complaining of
defects in the work unless notice of arbitration had been given before the
certificate, have already been commented on,87 as also the more obscure
finality in the post-1977 and 1980 forms. It is submitted that an acceptable
degree of supervision afforded by architects under other less onerous con-
tracts will not be sufficient to give the owner reasonable protection of his
interests in the light of the removal of his common law protection in regard
to defective work effected by such clauses, and that the inference must be
that an architect recommending a contract in this form is implicitly under-
taking to give a higher degree of supervision which will to some extent at
least compensate his client for the loss of these rights. A clause like Clause
30(7)(b) of the 1963 forms, expressly removing contractor liability for
defects which could be detected, "at any reasonable time during the carry-
ing out of the works", must call for supervision of the most painstaking
character to achieve this degree of protection, it is submitted.
Itis also self-evident that the terms of engagement of an AfE will be of 2·192
great importance in interpreting his duties, though these contracts are fre-
quently informally concluded, or only generalised expressions may be
found in any written or printed conditions of engagement. It does seem
that in Canada language which was both unrealistic and unwise had been
used in professional conditions of engagement, which appeared to exag-
gerate the functions and role of the engineer, particularly in the context of
temporary works and methods of working. Whether or not this is so, it was
undoubtedly the root cause of two very doubtful decisions in Canada ( one
under the Quebec Civil Code) which would otherwise appear to have
imposed an unreasonable degree of responsibility on consulting
engineers. sa
Thus in one case the engineer's contract with the owner offered "super-
vision ... for inspection and guidance of the contractor". 89 Another engin-
!15 See supra.
116
See supra, Section 6(1 )(b ), para. 2·093.
87
Ante, paras. 2·169-2·174. See also post, Chap. 6, Section 6(6).
s,i See C.C.P.P., paras. 5-19 to 5-27 and the cases of Demers v. Dufresne Engineering [1979)
S.C.R. 146 and Trident Construction v. Wardrop [1979] 6 W.W.R. 481 there discussed.
89
City of Prince Albert v. Underwood McClellan, illustrated supra, para. 2· 139.
 348 ARCHITECTS, ENGINEERS AND SURVEYORS [CHAP. 2
eer offered to be "available at all times to the [client], the contractors and
the sub-contractors in order to provide them with the information, advice
and instructions they need in carrying out the work". 90 In another case, the
engineer offered "guidance, assistance and supervision to resident engin-
eers, inspectors, contractors and sub-contractors to ensure construction of
the works in accordance with the drawings ... ". 91 The last emphasised
words indicate more correctly the true purpose of an engineer's instruc-
tions, and the sentence as a whole can be construed as applying the words
"guidance, assistance" to resident engineers and inspectors rather than
contractors and sub-contractors, but nevertheless, even this latter word-
ing is easily capable of misunderstanding and does not reflect the realities
if it suggests a duty owed to the contractor.
2-193 If an owner succeeds in establishing a breach of the duty to supervise, so
that defective work escapes attention, it is legally quite irrelevant that the
owner may in addition to his action for professional negligence also have a
right of action against the builder. The owner may choose to proceed
against either or both, and secure judgment for the whole sum in each
case, notwithstanding that the measure of damage, namely the cost of
repair, may be identical. 92
There is n:o doubt that there is a tendency at the present day for the
courts to demand a standard of success by architects in detecting defective
work which, particularly in major contracts, seems too demanding and
unfair. An architect may have many other important problems demand-
ing attention and decision when visiting a site, and may well, it has been
authoritatively stated, decide to rely on the builder to do his work prop-
erly on that occasion while dealing with the problems.93 The view that he
should make a thorough examination of every part of the building in a
large contract on each site visit seems unduly perfectionist. Thus in Aus-
tralia it seems to have been thought that the architect owes a duty to the
owner to be present whenever concrete is poured so as to ensure that
reinforcement is properly placed.
ILLUSTRATIONS
(1) An- architect was visiting twice a wee!'· He visite~ on ~ ~riday when
formwork for the concrete apron of a swimming pool was tn pos1tton, but steel
not yet fixed. After he left, the reinforcement w~s wrongly fixed.' and concre~e
poured on the Friday and Saturday, and an accident occurred Just before his
next visit when the form work was struck and the concrete collapsed. Held, by
the High Court of Australia, that the architect was liable to the owner for
oo Demers v. Dufresne, supra. The wording is discussed i!1 detail in C.C:P.P., par_a. 5-23.
91 Trident Construction v. Wardrop, supra. The wording ts set out and discussed m C.C.P.P.,
para. 5-26.
92 See ante, Chap. 1, Section 12(10)(c), paras. 1-379-1·380. ~-
•J See per Lord Upjohn in East Ham Borough Council v. Bernard Sunley Ltd. [19661 A.C.
406, at p. 443.
SECT. 6] DUTIES AND LIABILITIES, ETC. 349
sums recovered from the owner by an injured workman: Florida Hotels Ltd. v.
Mayo (1965).•
[Note: Although discounted by the High Court of Australia, it seems highly
~elevant t~at th~ owner in this case was not using any main contractor, which
m the United Kingdom at least would certainly appear to call for a greater
degree of supervision by an A/E.J
(2) A contractor failed to construct footings for foundations and brick piers
as called f~r by t~e engi';leefID:g drawings and the architect, apparently relying
o~ the e~gtneer s pronuse to inspect and ensure that the work complied with
his drawm~s, and also on the report of the Council inspector, did not himself
person~y1nspect the tre~ches. Cracks appeared later and the owner brought
proceedings more than six years after the foundations were constructed but
within six years of practical completion. Held, by the New South Wales Court
of Appeal, ~rming the tri~l judge, that the architect was bound to inspect
~he construction of the footings, and was not entitled to rely on any actual or
intended inspecti_on by the engineer or the Council building inspector as a
performance of his personal duty, and also that the duty was a continuing one
at least unti~ practical completion: Sheldon v. McBeath (1993).94•
[Note: Without a fuller report it is not possible to reach a concluded view
~bout this case. The report does not make clear whether the engineer was
independently engaged by the owner or was privately engaged by the archi-
tect. Nor is there any apparent recognition that the engineer's expertise in
such a matter (and indeed many building inspectors') would be likely to be
greater than that of an architect. Once the foundations had been covered and
filled in the c?ntinu.ation of the duty until practical completion also presents
conceptual d1fficulties, and any further practical opportunity to identify and
rectify the defect unlikely.]
Attention has already been drawn at a number of points in this book to a Z.194
modern tendency in all countries, no doubt encouraged by contractor
interests, to look to the A/E as the "captain of the ship" and the person
primarily responsible should seriously defective work be discovered. Cur-
rent suggestions from the contracting side of the industry in the United
Kingdom are that, if better standards of workmanship are required, own-
ers s~ould instal more elaborate and expensive systems of inspection and
quality control. This is, it is submitted, an interested argument. On the
contrary, it is suggested that courts, arbitrators, owners and contract
draftsmen should recognise the powerful commercial pressures operating
on contractors and sub-contractors to minimise expenditure on trouble-
so~~ details of_good practice and workmanship, and the frequent oppor-
tumtles for doing so undetected afforded by the covering-up of work
which is inherent in most construction, and by the often long periods
before any indication of the defects is likely to emerge, and should look
primarily to the supervisory staff of the contractor as the only really effec-
tive sources of control, disregarding unreal contentions that the A/E is
more highly qualified than the contractor µI methods of construction or
94
113 C.L.R. 588, Australia. See the fuller illustration and the rather special facts and criti-
cism of this case, ante, Chap. 1, paras. 1·318-1·319.
94
' Australian Tort Rep., paras. 81-209.
 350 ARCHITECTS, ENGINEERS AND SURVEYORS [CHAP. 2
workmanship, or that in the course of the visits he is likely to make it will
be possible for him to exercise effective control so as to secure detailed
compliance. 94b The pre-1980 RIBA conditions of engagement undertook
that, the architect "will endeavour to guard the client against defects and
deficiencies in the work of the contractor, but shall not be required to
make exhaustive or continuous inspections to check the quality or quan-
tity of the work". 95 This should not be dismissed as special pleading.
2-195 An example of these realities is to be found in the case of the external
cladding or facings of modern large buildings. The post-war design sys-
tems evolved for these, in the United Kingdom at least, often feature an
independent thin external wall of facing, sometimes of great height, such
as stone or pre-cast concrete units, bedded at intermediate course inter-
vals on corbels or nibs, or into recesses into the main face or frame, with
systems of metal cramps and dowels tying back the facing units to metal
slots cast into the main structure. Such a system involves almost immedi-
ate covering up course by course as work proceeds, and depends on con-
scientious workmanship and accurate alignment of the individual parts
and components of the system. Similarly, for example, though much less
life-threatening, the more traditional systems of flashings and damp-proof
course at window reveals, and metal ties and absence of bridging rubbish
between cavities in double-skin walls, need to be carefully carried out if
penetration by driving rain and damp is to be avoided. Yet the law reports
have containd numerous instances of recent years of widespread and quite
obviously deliberate and dangerous defects revealed by subsequent open-
ing up, with every legal defence, both of limitation leading to counter-
balancing allegations of fraudulent concealment, and of final certificate
immunity, put forward in an effort to avoid liability, and with the archi-
tect's alleged responsibility often in the forefront of the argument. These
two areas of building work are, of course, particularly rapidly and effect-
ively covered up and removed from view. In the case of facings, for exam-
ple, where the danger of personal injury is so much greater, there have
been astonishing deficiencies disclosed when falling facing units, or move-
ment of the units, have subsequently had to be investigated often, of
course, some years later.96 In one of these cases an astonishing 75 percent.
of the required abbey ties over the entire face of a tower block were omit-
ted. 97 In another, 90 per cent. of the concrete supporting nibs, which were
misaligned and so in the way, had been crudely hacked back so as to leave
concrete reinforcement protruding, thus removing virtually all the exter-
nal vertical support of the facings and exposing it to rapid corrosion, in
94 bSee for this subject (1990) 6 Const. LJ. 87.
95 Clause 1.60.
96
See East Ham Borough Councilv. Bernard Sunley & Sons Ltd. [1965} l W.L.R. 30, C.A.;
[1966] A.C. 406; Lewisham London Borough Council v. Leslie (1978) 12 BLR 22, C.A.;
William Hillv. BemardSunley & Sons Ltd. (1982) 22BLR 1, C.A.;KensingtonArea Health
Authority v. Wettem Composites (1984) 31 BLR 57; Gray v. Bennett·,(1987) 43
BLR63.
91
The Lewisham case, supra.
SECT. 6] DUTIES AND LIABILITIES, ETC. 351
what was described by experts as "destructive and mindless vandalism". 98
In one section of the work in another case, a third of the required dowels
were not provided, and in another section in the same case well over half
of the abbey slots were missing.w In another case, with a "startling total-
ity" of defects, where concrete mullions were to rest on corbels and be tied
back to abbey slots, 85 per cent. were not resting on corbels due to dam-
aged corbels or misalignment, 25 per cent. of the ties were missing or
defective, and required horizontal "soft joints" were not provided at all.'
In all the above cases these defects escaped the attention of the normal
supervisory services provided by A/Es, clerks of works and, at least in
some cases, structural engineers. The fact that defects of this extent could
escape their combined attention is strong evidence, it is submitted, of the
necessarily limited value of periodical professional inspection by A/Es in
large building projects, and of the maximisation of profit, which must have
been very substantial, when the work was originally carried out, whether
by contractors or their under-controlled sub-contractors. The cases also
highlights the unwisdom of A/Es, in their own interest let alone that of
their clients, in automatically recommending contracts like the RIBA/
JCT contracts (the 1963 versions of which were used in nearly all the
above cases) containing final certificate provisions expressly drafted so as
prematurely to terminate the contractor's liability to the owner for defec-
tive work. 2
Finally, it is perhaps desirable to reiterate that the A/Es duty of super- 2·196
vision is owed to his client and not to the contractor,3 and that in regard to
working methods or temporary works his powers to intervene or give
instructions may in any event be non-existent under many standard forms,
including the RIB A/JCT forms, even should he wish to intervene.4 Thus,
in the leading case of Clayton v. Woodman SalmonJ. said in first instance:
"[Counsel] submitted that the [architects] had no right to instruct the [build-
ers] as to either the manner in which the work was to be done or the safety
precautions to be taken. He contended that the form of specification and
contract make it plain that it is for the [builders] to decide what safety pre-
cautions are necessary and to make provision for them in the tender. He
further submitted that there is no contractual nexus between the architects
and the builders, and that the law imposes no duty on the architect to advise
the builders and their servants about their safety. So far as the law is con-
cerned, [the architect] would be within his rights were he to stand by and
without protest or warning watch the plaintiff doing something' which the
architect knew to be highly dangerous. Still less could the architect be liable
if, through lack of care or knowledge, he failed to appreciate the risks
a Gray v. Bennett, supra.
9
99
The William Hill case, supra.
I
See the Kensington Area Health Authority case, supra.
2
See supra, paras. 2· 167-2·168.
'See ante, Chap. 1, paras. 1·293 et seq., 1·312 et seq., and 1·379 et seq.
4
See also supra, paras. 2·138-2·143.
 352 ARCHITECTS, ENGINEERS AND SURVEYORS [CHAP. 2
involved in the plaintiffs' acts. I agree substantially with all those
submissions. " 5
And in A.M.F. International v. Magnet Bowling Mocatta J. said of Clay-
ton's case:
2·197 "That case, in both courts, further establishes that an architect has no right to
instruct a builder how his work is to be done or the safety precautions to be
taken. It is the function and right of the builder to carry out his own building
operations as he thinks fit. The architect, on the other hand, is engaged as the
agent of the owner for whom the building is being erected, and his function is,
inter alia, to make sure that in the end, when the work has been completed,
the owner will have a building properly constructed in accordance with the
contract and any supplementary instructions which the architect may have
given." 6
The above cases and language are, it is respectfully submitted, seminal
statements of the .greatest importance. While concerned primarily with
questions of methods and safety of working, exactly the same principles
apply in the case of the detection of defective work during supervision. No
duty in this regard is owed to the builder, who will be responsible for the
cost of repair, however late in the day (subject to the period of limitation
and the possible binding effect of a final certificate) the defect is dis-
covered, and notwithstanding that it might have been easily detected and
swiftly and cheaply repaired at the time the effective work was do:n,e. 7
(I) Administration of contract
2·198 The terms of the building contract require an architect to take a number
of actions in all of which he will owe a duty of care to the owner. There is a
dearth of authority on some of these duties. For example, the exact nature
of an architect's duty to the owner in ordering variations under a power in
the contract has not been considered by the English courts. 8 It is submitted
that there is a duty to consult the owner beforehand, in all but trivial or
emergency matters, so as to obtain his prior approval of the variation and
its probable cost.9 In addition, he will need to check the contractor's final
account on completion, in association with any quantity surveyor on mat-
ters of quantum, but himself determining any matters of contractual
entitlement or liability.
It has already been pointed out that an architect or engineer will not be
liable if, in the course of administering the contract v~-d-v~ the builder, he
honestly adopts one of two possible constructions in interpreting the con-
s [1962} 2 Q.B. 533, at p. 539. And see also quotations from Pearson L.J.'sjudgment in the
Court of Appeal in the same case in [1962] 1 W.L.R. 585, at pp. 593, 595, ante, Chap. 1,
paras. 1·312-1·313 and the case itself there illustrated, paras. 1·318-1·319.
6
[1968] 1 W.L.R. 1028, at p. 1046.
7
See post, Chap. 5, paras. 5·021-5·023, and the further passages from the AMF and East
Ham cases there cited, and the Kingston-upon-Hull case there illustrated. ' ·,
8
See, however, the Holland and Hannen case, illustrated infra.
9
Gordon v. Miller (1838) 1 D. (Ct. of Sess.) 832.
SECT. 6] DUTIES AND LIABILITIES, ETC. 353
tractual obligations of the parties. 10 It is suggested that this may be the
underlying reason for the otherwise difficult decision illustrated below.
ILLUSTRATION
The defendant entered into a contract with a builder for the construction of 2·199
a house at a price of £1,910, the plaintiff being nominated as the architect. The
contract provided by clause 1: "The contractor shall carry out and complete
the works in accordance with this contract in every respect with the directions
and to the reasonable satisfaction of the architect." By clause 12: "Any
defects, shrinkage or other faults which shall appear within the defects liabil~
ity period stated in the appendix to these conditions and shall be due to
materials and workmanship not in accordance with this contract ... shall
within a reasonable time after receipt of the architect's written instructions in
that behalf be made good by the contractor." The specification under the con-
tract provided that the whole of the materials and workmanship were to be
the best of their kind and to the full satisfaction of the architect. At the end of
the defects liability period (six months) the plaintiff issued a final certificate.
Some two years after the completion of the house the plaintiff sued the
defendant for his fees and expenses. The defendant counterclaimed for dam-
ages, alleging that the plaintiff had not exercised due skill and care in super-
vising the work and in ensuring that the house was constructed with proper
materials and good workmanship. On the counterclaim the County Court
judge found that there was a certain amount of inferior material and scamped
workmanship but, taking into account the fact that the house was being built
down to a price, he held that a certain tolerance must be expected and that the
plaintiff had not failed in his duty, although another architect might have
required a higher standard, and he gave judgment for the plaintiff on the
counterclaim. Held, by the Court of Appeal (Denning L.J. dissenting), that
the judge was right in taking the view that there must be some tolerance in
building down to a price; the question of the adequacy of the work, provided
that the architect used his skill and acted reasonably, was one for the County
Court judge; no case of professional negligence had been made out and
consequently the appeal must be dismissed: Cotton v. Wallis (1955).ll
The following is a further and, it is submitted, doubtful decision where 2·200
architects had taken a firm position on behalf of their client, with which
the court subsequently disagreed.
ILLUSTRATION
Specialist sub-contractors of international standing were nominated by an
architect for the supply and installation of aluminium window assemblies of
the sub-contractors' design. During construction it was found that rainwater
wsupra, paras. 2·094-2·095 and 2·146--2·155 and see the Townsend and Lubenham cases
there referred to.
II [1955] 1 W.L.R. 1168.
 354 ARCHITECTS, ENGINEERS AND SURVEYORS [CHAP. 2
penetration was taking place, which the Court subsequently found had been
due to the design, together with the choice of an unsuitable sealant compound
by the specialists, as well as, to a much lesser degree, poor workmanship. The
specialists put forward remedial proposals with which the architects agreed
and which the architect encouraged the main contractor to approve and
adopt, and the windows were ultimately satisfactorily completed. However,"
there had been delay while the contractor demanded variation instructions
which the architects had refused to give, on the ground that the matter was the
responsibility of the main contractor. 12 The contractors then brought an
action against the owners claiming an extension of time and loss and expense.
Held, by Judge Newey Q.C., that, by Clause 3(3) of the pre-1980 RIBA/JCT
main contract form the architects were obliged to give variation instructions
on behalf of the owners, since they were "reasonably necessary ... to enable
the contractor to carry out and complete the Works"; or alternatively by
reason of an implied term for co-operation, since the rainwater pen-
etration was preventing completion of the remaining work. While the
architects' failure to issue a variation instruction, when they believed that the
sub-contractors' remedies would be satisfactory and had no alternative pro-
posals of their own, might possibly be excused on the grounds that they were
labouring under a mistake of law as to the main contractor's responsibilities, it
was impossible to believe that architects in charge of a great building project
brought to a stop by an unexpected difficulty were entitled to adopt a passive
attitude, and their omissions had amounted to a breach of their contract with
the owners, though the damages would be nominal if the owners were able to
recover in full under the direct warranty given to them by the sub-contractors:
Holland & Hannen v. WelS'hHealth Technical Services Organisation (1981).13
2-201 [Note: It is difficult to support this finding. It is submitted post, Chapter 4,
that the availability of the sub-contractor's direct warranty in favour of the
owners probably led to an inadequate analysis by the court of the main con-
tractor's responsibilities to the owner in respect of the sub-contractor's work,
and that the interpretation of Clause 3(3) of the main contract as well as the
implication of the alleged term were both unjustified in the light of the com-
pletion responsibilities of the main contractor and of the "chain of liability"
principle when applied to nominated sub-contracts. At the very highest, the
architects appear to have been acting in the interest of their clients through-
out and under an understandable mistake of law it is submitted. 14 Moreover, it
is difficult to believe that their clients would be unaware of the stand being
taken on their behalf, or that they would not have approved of it. The case, in
the context of the owner's liability to the main contractor, was, however, men-
tioned by VinelottJ. and by Judge Forbes Q.C. in two subsequent cases with-
out disapproval, though distinguished and not applied by the latter in a lump
sum design-and-build type of main contract. 15]
(m) Comprehensive design
:Z.202 An architect will, it is submitted, be failing in his duty if, without warn-
ing the owner, he fails to provide for work (whether deliberately or by
negligence) which is necessary for a satisfactory final result, and which will
have to be added by way of variation to the building contract.
12
The case is illustrated in more detail post, Chap. 4, Section (1)(2)(a)(i), paras. 4·093-4·099.
IJ [1981] BLR 80.
~ _.,
1
• As to which see the cases supra, Section 6(2)(f).
15
London Borough of Merton v. Leach (1985) 32 BLR 51, at p. 81; Davy Offshore Ltd. v.
Emerald Field Contracting Ltd. (1991) 55 BLR 1.
SECT. 6] DUTIES AND LIABILITIES, ETC. 355
ILLUSTRATION
An architect let contracts for a number of houses for a local authority and,
under pressure to effect economies and bring costs within a governmental
"yardstick", made provision for a smaller number of cookers than there were
houses. There were other similar omissions in the bills. Held, by Casswell
O.R., he was liable to his employers, who, had they known of the true cost of
completion, would have effected savings elsewhere: Wilkes v. Thingoe Rural
District Council (1954). 16
[Note: It may not be easy in such cases to determine the measure of dam-
age, if any; but the A/E will usually not be entitled to his fees if his client would
not have committed himself to the project had he known the true position. 17]
On analysis, this is really only one sub-category of defective design. It
can arise, for example, from a negligent failure to inspect the site properly,
and so to appreciate that more substantial foundations or site works will
be needed, and that for that reason earlier estimates of cost will become
falsified. All these factors (failure to examine the site sufficiently, inad-
equate design, requiring substantial additional work, and falsification of
earlier estimates of cost) can be present and overlap in any one case. 18
(n) Surveys
(i) Liability
Apart from their employment in building contracts, architects or engin- 2·203
eers (and indeed quantity surveyors) may be employed to make surveys,
valuations and reports. 19 Skill in valuation has always been difficult to
assess by evidence, and while a wide ·disparity between a valuation and
subsequent price or cost will be some evidence of negligence, attention in
valuation cases is more likely to be focused upon the method or principle
of valuation adopted.
"The valuer will not be liable merely because his valuation may prove to be in
excess of the amount which the purchaser might realise on the sale of a house.
The valuer will only be liable if other qualified valuers, who cannot be
expected to be harsh on their fellow professionals, consider that, taking into
consideration the nature of the work for which the valuer is paid and the
object of that work, nevertheless he has been guilty of an error which an
average valuer, in the same circumstances, would not have made and as a
result of that error, the house was worth materially less than the amount of
the valuation upon which the mortgagee and the purchasers both relied). " 20
16
Unreported. Ex Rel. the editor
17
Moneypenny v. Hartland (1826) 2 C. & P. 378, see supra, Subsection (2)(g), para. 2·125.
ig Seen, e.g. Moneypenny v. Hartland, supra, which is regarded as a leading case both in
regard to inspection of the site and negligent estimates of cost.
19
Cf. Parsons v. Way and Waller, illustrated infra, para. 2·204.
20
Smith v. Bush [1989) 2 W.L.R. 790, at p. 803, C.D.,per Lord Templeman.

356 ARCHITECTS, ENGINEERS AND SURVEYORS [CHAP. 2
In surveys, where the condition of property and its state of repair is being
investigated, the test of reasonable skill in conducting the survey is easier
to assess from expert evidence.
ILLUSTRATIONS
2-204 (1) Ecclesiastical surveyors were employed, one for one party and one for
the other, to value dilapidations. The valuers for the rector met the valuer for
the executrix of the late incumbent, and valued the dilapidations at too small a
sum, having, through ignorance, valued as between incoming and outgoing
tenant, instead of as between incoming and outgoing incumbent. Held, that
they were liable for negligence in the exercise of their profession: Jenkins v.
Betham (1855). 21
(2) Trustees invested money on the mortgage of a brickfield. They acted
upon the report of a competent valuer, bona fide, but without any inquiry of
their own. The security failed. Held, that the trustees were entitled to rely
upon the valuer on the pure question of valuation, but should have examined
the basis on which the report was made, that is, whether the concern was
valued as a going concern or otherwise, and were not entitled to substitute the
valuer's judgment for their own judgment as trustees: Learoyd v. Whiteley
(1887)."
(3) M. was employed to value a mineral water factory and three licensed
houses. His methods might have been better, but there was no evidence of any
absolute rule as to the proper methods of valuation in such a case, and the
methods adopted were such as a man of position, honestly endeavouring to
do his duty, might fairly adopt. Held, that M. was not guilty of negligence:
Love v. Mack (1905). 23
(4) The plaintiff's employers engaged the defendants to survey a house
which he was interested in purchasing. The defendants submitted a report to
the plaintiff informing him that there was nothing seriously wrong with the
house, that about £150 to £200 would be required to be spent on it above the
usual decorative repairs, and that the price asked for was a fair one. Relying
upon this report, the plaintiff paid a 10 per cent. deposit, signed a contract,
and agreed upon the date for completion. A building society then made sev-
eral inspections and refused to make any advance upon the property. Having
received an adverse report from a second surveyor, the plaintiff decided it
would be imprudent to complete and so forfeited his deposit. In an action
against the defendants for negligence, Lynskey J. held them liable for the
amount of the forfeited deposit: Parsons v. Way and Waller (1952). 24
The present discussion is limited to building or valuation surveys car-
ried out for prospective vendors or purchasers.
21
15 C.B. 168.
22
12 App.Cas. 727.
n 92 L.T. 345.
24
[1952] C.P.L. 417.
~'
SECT. 6] DUTIES AND LIABILITIES, ETC. 357
(ii) Measure of damage
The measure of damage for a negligent survey is usually, in a case where i.205
a purchaser buys on the faith of a report, the difference in value between
the property if it had been in the reported condition, and the value had the
true condition been known.
However, it has been stated in the Court of Appeal that, while diminu-
tion in value appears almost always appropriate in cases where property is
acquired following a negligent survey, this should not be mechanistically
applied in cases where it may appear inappropriate in the light of the over-
riding compensatory principle that the innocent party is entitled to be put
in the position in which he would have been had the contract been duly
discharged. 25
ILLUSTRATIONS
(1) In an action for damages arising from a negligent survey, the proper 2·206
measure of damage is the amount of money which will put the plaintiff into as
good a position as if the surveying contract had been properly fulfilled. The
plaintiff, on the faith of a surveyor's report, paid, in 1952,£25,000 for a house
and 137 acres of land. On entering into possession it was discovered that the
surveyor had been negligent in failing to notice that the timbers of the house
were rotten. To carry out the necessary repairs would have cost £7,000 at 1952
prices,26 but the Court found that the value of the property in 1952 in its true
state was £21,000. Held, by the Court of Appeal, that the proper measure of
damage was the difference between the value of the property in its assumed
good condition (£25,000) in 1952 and its value in the bad condition (£21,000),
which should have been reported to the plaintiff, and he was therefore
entitled to recover £4,000: Philips v. Ward (1956). 27
(2) An insurance company lent money on the faith of a negligent surveyor's
report. Held, by Devlin J., that the measure of damage was not the full differ-
ence between the value in its reported and actual condition, as the company
still had the standing and covenant of the borrower available to them: Eagle
Star Insurance Company Ltd. v. Gale and Power (1955). 28
(3) A negligent survey failed to reveal damp in the basement of a house,
which the purchasers then bought for £13,500. Held, by Lawton J., applying
2.1 Per Bingham LJ. in the solicitor's negligence case of County Personnel (Employment
Agency) Ltd. v.AlanR. Pulver & Co. (1987] 1 W.LR. 916, atp. 925, and see per Megaw L.J.
in Dodd Properties (Kent) Ltd. v. Canterbury County Council [1980] 1 W.L.R. 433, at
p. 451. See, however, Bingham L.J.'s later judgment in the surveyor's negligence case of
Royscot Trust Ltd. v. Rogerson [1991] 2 Q.B. 297, C.A.
u The plaintiffhad not, however, carried out the repairs, and his reasons for not doing so may
not have been accepted by the Court. This fact appears to have escaped attention when the
case has been used to argue that damages for cost of repair should not exceed the cost at the
date of the breach: see post, Chap. 8, Section 2(2)(a) and the East Ham case there referred
to.
27
[1956] 1 W.L.R.471. SeealsoStewartv. Brechin 1959S.C.306,Scotland,andHoodv.Shaw
(1960) 176 E.G.1291, wherePaul!J. awardedcostofremovalduringrepairs while allowing
difference in value as the main measure of damage.
211
[1955] J.P.L. 679.
 358 ARCHI'IECTS, ENGINEERS AND SURVEYORS [CttAP. 2
Philips v. Ward, that the measure of damage was the difference of value, and
that in this case the difference was the same as the cost of repair, namely £550:
Freeman v. Marshall (1966). 29
2·207 (4) A purchaser bought a house on the faith of a negligent survey which did
not disclose dry rot. On discovery of the dry rot, the purchaser decided to sell
the house without repairing it. The purchaser's own valuer witness con-
sidered that a rather high price had originally been paid for the house, but that
the sale price was a fair one having regard to the condition of the premises.
Held, by Paull J., accepting the purchaser's evidence, that the purchaser was
entitled to the difference between the purchase price less £200, and the selling
·price: Hardy v. Warmsley-Lewis (1967). 30
(5) A house-owner, who bought in 1977 after a survey, moved in and found
septic tank and roof problems which made the house very uncomfortable,. and
which the survey should have detected. He was awarded the cost of repatr by
the trial judge at a time when, due to financial stringency, he had still not
carried out the repairs. Shortly after receiving notice of appeal by the sur-
veyors, he finally sold the house. On the appeal, it was conceded by his coun-
sel that, since he had now sold the house, cost of repair could not be the basis
of assessment, and the issue was whether the reduced value in 1977 when he
purchased should be used, or the 1981 reduced value when he sold. Held, by
the Court of Appeal, the 1977 reduced value should be used, with interest
from that date (pointing out that the interest would be some compensation
for inflation): Perry v. Sydney Phillips (1982). 31 ••
[Note: It should be noted that Oliver and Kerr L.JJ. expressed no op1n1on
as to whether cost of repair would have been the correct measure but for the
sale of the house, and the case is not authority for diminution of value in that
situation, it is submitted, although Lord Denning M.R. did state without
qualification that his earlier decision in Phillips v. ~ard required the ~amage
to be based on the price the owner would have given, had he received an
accurate report, against the price actually paid. In view of the financial strin-
gency element, the choice of the 1977 date, together with interest, is no~ easy
to reconcile with the earlier Radford and Dodd cases,32 although these dtd not
involve negligent surveys.33]
It has also been held in diminution of value cases that where, on the
strength of a survey, a purchaser buys favourably below market value, his
loss will to that extent be reduced or eliminated. 34 If so, this would suggest
that if he bought unfavourably his damage should be correspondingly
increased. This too may need reconsideration.
2-208 It is submitted that the automatic application of diminution of value to
pre-purchase negligent survey cases may be too simplistic, even as a mat-
ter of presumption. It can easily happen that defects do not manifest them-
selves for perhaps some years after a survey, and the owner may then have
<9 200 E.G. 777.
JO 203 E.G. 1039.
J1 [1982] 1 W.L.R. 1297. See also Doe v. Essex, Goodman & Suggitt (1985) 32 BLR 140.
J2 Dodd Property (Kent) Ltd. v. Canterbury City Council [1980) 1 W.L.R. 433, C.A.; Radford
v. De Foberville [1977] 1 W.L.R.1262, both analysed and discussed in C.C.P.P., Chaps.11
and 12 and illustrated and discussed post, paras. 8·130, 8·132 and 8·149. ,· _.,
i i See the discussion and doubts expressed as to this case in C.C.P.P., paras. 9-c-09 to 9-12.
34 Ford v. White & Co. [1964] 1 W.L.R. 885.
SECT. 6] DUTIES AND LIABILITIES, ETC. 359
to carry out repairs to extricate himself from his situation and obtain the
same quality of building as the earlier report had warranted, and if it is
reasonable and not wholly idiosyncratic and there is a genuine intention to
do so, it is difficult to see in principle on what basis he should be treated as
having cut his loss by selling the property, let alone at some smaller
reduction in value at an earlier artificial date. 35 One important reason why
diminution in value may differ from repair cost may, of course, be that the
nature of the defect is such that immediate repairs are not required, and
only the future incidence of repairs has been advanced. Another may be
that a majority of purchasers, and so the market generally, may attach less
importance to a particular defect than a minority. How soon the full extent
of the defects becomes known, and the nature of the quandary in which
that may then place the owner, must also be highly relevant. It seems at
least possible that, as in cases of defective work by contractors, the prima
facie measure of damage for defects not disclosed by a survey should be
the cost <_Jf repair, subject to facts showing unreasonable failure to mitigate
damage by the purchaser, in which the urgency and reasonableness of the
repairs and the disproportion between cost of repair and cutting a loss by
selling need to be balanced.36 It will also be relevant if the purchaser would
not have completed had he received a competent report, where it can be
argued that he should receive all costs reasonably incurred in extracting
himself from that situation, it is submitted.
ILLUSTRATIONS
(1) On the face of her surveyor's report, which had failed to detect a severe 2-209
infestation by damp and by death watch beetle and movement in the walls, a
purchaser brought a property in the country for £300,000. Had she known of
the defects, she would not have bought the house at all. Two years later the
extent of the defects was discovered, and urgent repairs were needed, put by
the opposing sides at£40,000 and£70,000 respectively. The purchaser sued on
a cost of repairs basis, while the surveyors claimed loss of value discounted
back to the time of purchase. Held, by Judge Bowsher Q.C., distinguishing
Philips v. Ward and Perry v. Sydney Phillips, and citing the County Personnel
and Dodd Properties cases, it was artificial to say that the plaintiff's damage
was to be measured in relation to a loss which she could have taken two years
before she learned that there was a loss. The plaintiff did not have an opportu-
nity to cut her loss then, she had acted reasonably throughout in deciding not
to doso and to repair, and in the absence of evidence as to the loss of value at
the time of discovery, she was entitled to the cost of repair, together with
£8,000 as damages for distress and inconvenience: Pamela Syrett v. Carr &
Neave (1990). 37
"Compare Hollebone v. Midh_urst and Fernhurst Builders Ltd. [1968] 1 Lloyd's Rep. 38,
illustrated post, Chap. 8, Section 2(2)(a).
~ See generally post, Chap. 8, Section 2(2)(a), where the measure of damage for defective
work is exhaustively discussed.
37
6 Const. L.J. 305; (1991) 54 BLR 121.
 360 ARCHITECTS, ENGINEERS AND SURVEYORS [CHAP. 2
2·210 (2) Husband and wife plaintiffs, following a negligent survey by the defend-
ant, purchased a house for £177 ,500. The defects were mostly of a mainten-
ance character, such as re-tiling the roof, re-pointing, and replacement of
windows, frames, and floor boarding. Had its true condition been known its
value at the time of purchase would have been £162,500. The judge found that
the plaintiffs would not have purchased the property had they known of the
defects, but when they were discovered some four months after taking pos-
session, at a time when its value, in its true condition, had risen to £185,000,
they decided to stay and had the repairs carried out at an actual cost of
£33,000, which they sought to recover. They also had a further £85,000 of
work, of which no complaint was made, carried out at the same time. Judge
Bowsher Q.C. held that it was reasonable for them to do so, and awarded the
£33,000 cost of repairs. Held, by the Court of Appeal, overruling Syrett's case
and Scott Baker J. in Hipkins v. Cotton, 38 and applying Philips v. Ward and
Perry v. Phillips, that the cases laid down a prim a facie principle that the mea-
sure of damage for a negligent pre-purchase survey was reduced value, in the
absence of any warranty as to the state of the house given by the surveyor.
Philips v. Ward did not depend on the defects having been discovered early
and an opportunity lost to cut the loss by an early sale of the property. If the
survey had revealed the house's true condition, the plaintiffs would either not
have bought the house, and thus suffered no damage, or else would have
offered to acquire it at the reduced value. In the absence of any warranty their
loss was therefore the difference of £15,000 between the price actually paid
and its diminished value at the time of the purchase had its true condition
been known and, in a case of re-sale, might include costs incurred and thrown
away; but the subsequent carrying out of repairs at greater cost, even though
reasonable, was not relevant. Per Ralph Gibson L.J., not following Perry v.
Phillips on this point, calculation of diminished value might require to be
updated from the time of purchase to the time of discovery. Held, further, that
a contract for a survey was not a contract to provide peace of mind or freedom
from stress so as to justify general damages for mental distress. 39 Perry v. Phil-
lips showed that modest damages for mental distress could be awarded, but
only if the result of physical discomfort or inconvenience resulting from the
breach of contract. Here the house was being bought as a second weekend
dwelling, and the inconvenience had been caused during periods when the
plaintiffs had chosen to occupy the house in order to oversee the contractors
carrying out the repairs and the £90,000 of other work which they had decided
to have done, and the sum of £4,000 awarded under this head to each plaintiff
should be reduced to £750: Watts v. Morrow (1991). 40
2·211 Ralph Gibson L.J.'s closely reasoned judgment in Watts v. Morrow,
supra in support of diminution of value as the measure of damage is likely
to be in the forefront of discussion in future pre-purchase survey cases, but
it is submitted that it may not represent the last word on the subject. The
judgment places great emphasis, as did Lord Denning M.R. in both Philips
v. Ward and Perry v. Phillips, on the absence of any warranty given by the
surveyor as to the state of the house: "the surveyor gives no warranty that
there are no defects other than those in his report. "41
[1989] 2 E.G.L.R. 157.
:Ill
39
See also Hayes v. Dodd [1990] 2 All E.R. 815, at p. 826,per Purchas I.,.J.
40
(1991] 1 W.L.R.1421.
41
Per Lord Denning M.R. in Perry's case, supra, at p. 1302A-1302B.
SECT. 6] DUTIES AND LIABILITIES, ETC. 361
"From (the owner's) point of view it would indeed be better if the surveyor
could be treated as having warranted that no repairs beyond those described
as indicated in the survey report would be required within some period of
time. No such warranty, however, was given in this case ... and in the absence
of such a warranty, there is no basis for awarding the cost of repairs." 42
It is submitted that on closer examination this may not be a valid ground
for distinguishing between the measure of damage in the case of a negli-
gent survey on the one hand and of a contractor doing bad work on the
other. In the first place, an express or implied term in a surveyor's contract
of employment warranting due care in preparing a pre-purchase report on
the state of a property, while certainly not excluding all undisclosed
defects, can fairly be regarded, it is submitted, as an implied warranty that
such defects as would be disclosed on a careful inspection will either be
absent or notified in the report.
In the second place, even if the contract of employment of the surveyor 2·212
contains no warranty other than one of due care, the subsequent sur-
veyor's report may well impliedly warrant in a similar manner that no
defects are present which a careful professional inspection should reveal,
and if as a result of the report the purchaser is thereby induced to enter
into a bargain which he otherwise would not, and subsequently acts
reasonably in carrying out repairs in the situation in which he finds him-
self, it is difficult to see why repair costs should not be recoverable on
Hedley Byrne principles in tort. 43
Reverting to liability in contract, if a buyer has been misled into paying
the full price for a house containing a defect, and the defect is of a kind
which it is reasonable for him to have remedied, it can surely be argued
that the buyer should not suffer a loss because other buyers might not have
attached so much importance to the defect, had they known of it, so pro-
ducing a lesser diminution in market value than the cost of repair. There
seems no good reason why, subject to the same considerations of reason-
ableness which may substitute diminution of value for cost of repair in
ordinary cases in contract or in nuisance or negligence in tort,44 the liability
of a surveyor whose negligent report has exposed his client to unexpected
defects should be different from that of a contractor whose work is defec-
tive. In fact the defects in Watts v. Morrow do not appear to have been
really urgent; there was clearly an element of choice open to the plaintiff
since substantial other work was also carried out, and on its facts another
judge might well have come to a different view as to the plaintiffs' attitude
had they known the true state of affairs following a competent report.
Additionally, it may be noted that there is curiously little discussion in 2·213
the reports as to precisely why diminution in market value should on the
evidence so often differ from cost of repair. Where it is less, presumably
•
2
Per Ralph Gibson L.J. in Watt's case, see supra, at p. 1439.
~For the measure of damages for defective work in tort and contract compared, see post,
Chap. 8, Section 2(2)(a).
••Seethe cases on this post, Chap. 8, Section 2(2)(a).

362 ARCHITECTS, ENGINEERS AND SURVEYORS (CHAP. 2
this implies a sufficiently numerous class of purchasers who would not
attach such urgency to the immediate carrying out of the particular repairs
involved, so that future expenditure on the repairs would be discounted by
a purchaser in immediate cash terms, or he might be prepared to "live
with" the defects permanently. Conversely, the known presence of some
types of defect, may well create a disproportionate drop in value greater
than the ultimate cost of repair because of the urgency and uncertainty
involved, particularly in a poor housing market (for example, known dry
rot or death-watch beetle). In the former case at least, a general rule in
favour of cost of repair, subject to considerations of reasonableness as in
ordinary tort or contract cases, need not be expected to create difficulties,
it is submitted. However, there is no doubt that the current trend in the
Court of Appeal in England, as indicated in Watts v. Morrow, appears to
be in fav~our of diminution of value as the measure of damage, in the
absence of an express warranty of some kind by a negligent pre-purchase
surveyor, in contrast to the cases where a similar defect is due to breach of
contract by the contractor, or to negligence or nuisance or trespass by
third parties in tort.
The question of reduced value as against cost of repair as the appropri-
ate measur~ of value in construction cases generally has produced a vast
jurisprudence in the United States and a number of cases in the Common-
wealth.45 There, a possible distinction has been drawn between a contrac-
tor's liability for defective work and an A/E's liability for a design
producing defective work (which for this purpose may be regarded as not
very distant from the liability for a negligent survey). Moreover, while cost
of repair will prima facie be the measure appropriate for contractor
breaches (since this, in accordance with the basic principle in breach of
contract, will restore the owner to the situation in which he would have
been had the contract been properly performed), in design cases, when
the same principle is applied, an allowance may need to be made for any
increased price the owner might have had to pay had the original design or
advice been satisfactory.46
(3) "Quasi-Judicial" Duties
2-214 "Many matters may arise in the course of the execution of a building contract
where a decision has to be made which will affect the amount of money which
the contractor gets. Under the RIBA contract many such decisions have to be
41 See C.C.P.P., Chaps. 9 to 13 inclusive, and see post, Chap. 8, Section 2(2)(a), paras. 8· 119 et
seq., where the subject is discussed in the wider context of contractors' and third parties'
liabilities in tort and contract respectively. See also Chap. 5, Section 2(6), paras. 5·050 et
seq.
l6 See the final result in County Personnel Ltd. v. Pulver & Co. Ltd. [1987] 1 W.L.R. 916, at p.
925 (a solicitor's negligent advice case) and the full authoritative treatment of.a negligent
design case in the New Zealand Court of Appeal in Bevan Investments Ltd. v'/B/ackhall &
Struthers [1973] 2 N.Z.L.R. 97.
,-.._
SECT. 6] DUTIES AND LIABILITIES, ETC. 363
made by the architect and the parties agree to accept his decisions. For exam-
ple, he decides whether the contractor should be reimbursed for loss under
Clause 11 (variation), Clause 24 (disturbance) or Clause 34 (antiquities);
whether he should be allowed extra time (Clause 23); or when work ought
reasonably to have been completed (Clause 22). And, perhaps most import-
ant, he has to decide whether work is defective. These decisions will be
reflected in the amounts contained in certificates issued by the architect.
The building owner and the contractor make their contract on the under-
standing that in all such matters the architect will act in a fair and unbiased
manner and it must therefore be implicit in the owner's contract with the
architect that he shall not only exercise due care and skill but also reach such
decisions fairly, holding the balance between his client and the contractor.
For some reason not clear to me a theory has developed and is reflected in
many decided cases to the effect that where the architect has agreed or is
required to act fairly, he becomes what has often been called a quasi-
arbitrator. And then it is said that he is entitled to an arbitrator's immunity
from actions for negligence. Others of your Lordships have dealt with the
older authorities, and I shall not say more about them than that they are
difficult to reconcile and often unconvincing. "47
Thus, as between the owner and the contractor, the owner does not war- 2-215
rant that the certifier will be skilful or competent, but only that he will be
honest and independent in exercising that function wherever, under the
terms of the contract, he is required so to act. It will, accordingly, be a
breach of contract, as against the contractor, if the owner applies pressure
and seeks to influence the A/E in reaching his decisions when acting in that
capacity.48 None of this means, however, as many A/Es seem to believe,
that a discretion is conferred on the certifier to moderate or mitigate the
terms of the contract in any way. Oddly, it is very common in the United
Kingdom for A/Es holding this opinion to exercise the discretion they
believe they possess in favour of the contractor rather than their client, for
example, in regard to defective work/'" interim valuation, or granting
extensions of time, where, strictly construed, the terms of the contract
might be adverse to the contractor, but few certifiers claim any such dis-
cretion in favour of their client. Attention has already been drawn to an
extraordinary provision in the RIBNJCT forms which expressly purports
on its face to grant a discretion to the A/E to order the owner to pay for the
repair of defective work, while appearing to negative the important and
valuable power to accept defective work unremedied subject to reduction
in the contract price. 49
The present chapter is concerned, however, with the duty owed by the
A/E to his client. By reason of a House of Lords decision since the tenth
edition, it now seems clear that in the great majority of cases a certifier
does owe a contractual duty of care (although naturally consistent with his
need to be allowed to form an independent judgment without interference
41
Sutcliffe v. Thackrah [1974] A.C. 727, at p. 737,per Lord Reid.
4ll See Sutc/iffe's case, at p. 7370,per Lord Reed.
4Ba See Sutcliffe's case infra, para. 2·219; and see the Stone Toms case there illustrated.
4
~ See supra, paras. 2· 169-2· 174 (now, however, as there stated removed by amendments in
1987 and 1990).
 364 ARCHITECTS, ENGINEERS AND SURVEYORS [CHAP. 2
from his client) ill regard to all matters where he is required to certify, and
that this duty differs in no way from the duties owed by him to his client in
his other activities, such as those of design and supervision. so Indeed, until
the Court of Appeal's decision in Chambers v. Goldthorpe in 1901, there
was a long line of cases to the same effect in the nineteenth century, where
architects had been successfully sued for negligent supervision as a result
of which they had issued certificates of excessive amount in favour of the
contractor.51
2·216 In the great majority of cases an NE is not, when certifying, ruling upon
any dispute formulated between the owner and contractor and referred to
him for settlement and decision, but is merely concerned, without con-
sciously resolving any dispute as such, to decide matters such as value,
quality of work, or extension of time as part of an administrative function
evidenced by his certificate. In all these cases, it is now confirmed that he is
to be regarded as acting as agent of the building owner and not in any
arbitral or "quasi-arbitral" or "quasi-judicial" capacity. 52 Even where the
certificate is to be final and conclusive, this remains the case:
"Finality and conclusiveness do not seem to me to be so characteristic of
arbitration as to suggest that anyone not an arbitrator whose decision is final
and binding is a 'quasi-arbitrator' enjoying immunity from suit in negligence.
Even strictly judicial decisions are generally subject to review by way of
appeal or rehearing. I think that a good part of the difficulty which has arisen
in this branch of the law has come from the use of the word 'quasi-arbitrator'.
'Quasi' is all too apt to confuse, and to mask valid juridical distinctions." 53
Subject only, therefore, to the possible case where an A/Eis called upon
to rule on a formulated dispute between the owner and contractor, the
duties owed to his client by a certifier will differ in no respect from his
other duties, save that, in discharging them, he will not be obliged to obey
his client's instructions in regard thereto, as will certainly be the case in
regard to his other duties.
For convenience, because the expression is familiar in the context of
construction contracts, and because it serves to emphasise the distinction
between certification and arbitration, an A/E, when performing this func-
tion, is described in this book as "the certifier". The status of the certifier
and the contractual effect, as between the parties to a building contract, of
his decisions are fully discussed later in this book.54
so Sutcliffe v. Thackrah [1974] A.C. 727, illustrated infra, para. 2·219.
51
Gordon v. Miller (1838) 1 D. (Ct. of Sess.) 832; Armstrong v. Jones (1869), Hudson, Build-
ing Contracts (4th ed.), Vol. 2, p. 6; Youngv. Ballarat Water Commissioners (1878) 4 Viet.
L.R. 306; Badgeley v. Dixon (1886) 5 A.R. 494, Canada; Saunders v. Broadstairs Local
Board (1890); Rogers v. James (1891); Leicester Board of Guardians v. Trollope (1911),
Hudson, Building Contracts (4th ed.), Vol. 2, pp. 164, 172 and 419 respectively. Most of
these cases were illustrated in the tenth edition.
si See the practical reasons why this conforms to the realities explained in C.C.P.P., paras.
17-06 to 17-07.
53
Arenson v. Arenson [1977] A.C. 405, at p. 422,per Lord Reid.
54
See post, Chap. 6.
DUTIES AND LIABILITIES, ETC. 365
There are, however, two situations which arise in practice which call for 2-217
special consideration of the duty owed by a certifier to his client; namely,
first, cases where, although the Certifying provision in the construction
contract is of the general administrative nature already referred to ( and
whether final and binding or not), a dispute does as a fact arise between
owner or the A/E on his behalf and the contractor and is then formulated
by one or both of them for decision by the certifier prior to his giving his
certificate; and, secondly, where the construction contract itself expressly
refers disputes to the A/E for preliminary decision by him. The classical
and very common example of this latter type of provision is to be found in
Clauses 66 and 67 of the ICE and FIDIC civil engineering contracts
respectively, where all disputes of any kind are required to be settled in
the first instance by the engineer as a precursor to any subsequent right to
proceed to arbitration. These clauses will be considered in Subsection (4),
infra.
Mention should, perhaps, also be made in the present context of the
difficult dicta of the Court of Appeal in North Regional Hospital Authority
v. Crouch 55 where the suggestion was made that an arbitrator, under the
traditional "open up review and revise" wording of the RIBA/JCT arbi-
tration clause, would have some undefined discretion in the interpretation
of the contract requirements, and that in the absence of arbitration the
courts themselves would have no power to review the exercise of that dis-
cretion. That case might be thought to suggest (if so, it is submitted,
wrongly) that the certifier himself might have a similar special discretion
in interpreting the contract requirements.
(4) Negligence in Certifying
Reference has already been made to the line of cases in the nineteenth 2·218
century whereby certifiers were successfully sued-for negligence by their
clients in regard to matters subsequently reflected in their certificates. 56
However, in Chambers v. Goldthorpe57 the Court of Appeal in 1901
(Romer L.J. dissenting) held that a certifier who had issued a final certifi-
cate showing the sums due to the contractor before any dispute had arisen
was entitled to a quasi-arbitral immunity when sued by his client for al-
leged negligent measuring up of the work, and for over 50 years this was
thought to be the law: ( although the case, in a roost valuable decision, was
not followed in South Africa58 where Ogilvie Thomson J. made a clear
distinction between cases where a dispute had been formulated and nor-
mal cert4ication). The Chambers case was, however, followed in a valu-
55
[1984] Q.B. 644, criticised and doubted in C.C.P.P., Chap.17, and discussed post, Chap. 6,
Section 4(2).
S<1 See supra, n.51. Most of these cases were illustrated in the tenth edition of Hudson, pp.
162-164.
51
[1901 J 1 K.B. 624.
51
Hoffman v. Meyer [1956] 2 S.A. 752, at p. 758.
 366 ARCHITECfS, ENGINEERS AND SURVEYORS [CHAP. 2
ation case in 1943.59 Chambers v. Goldthorpe has now, however, been
overruled in the House of Lords.
ILLUSTRATIONS
2-219 (1) An architect knew of defective work by the builder, but gave no instruc-
tions to the quantity surveyors to make deductions from the interim certifi-
cate valuations. Expert evidence was called that interim valuations were
limited to determining approximate value, and that it was quite usual for
architects to postpone final decisions on defective work to a later stage in case
it might be remedied. 60 The contractors became insolvent after the owners
had honoured the interim certificates. Held, by the House of Lords, overrul-
ing Chambers v. Goldthorpe and affirming Judge Stabb Q.C., that in the
absence of any formulated dispute the certifier was not acting in an arbitral or
quasi-arbitral capacity, and was in breach of his contract with his client in not
giving -instructions for deductions from interim valuations and certifying the
unreduced sums: Sutcliffe v. Thackrah (1974).61
[Note: Per Lord Reid: "With regard to the earlier cases ... many, probably
most, of the decisions can be justified on their facts. And there are borderline
cases where it is far from easy to determine whether there was a sufficient
judicial element to require an arbitrator's immunity to attach. If that immuni-
ty is claimed, then it is for the person claiming it to show that the functions in
the performance of which he was negligent were sufficiently judicial in
character."62 Per Lord Morris: "A person will only be an arbitrator or quasi-
arbitrator if there is a submission to him either of a specific dispute or of pre-
sent points of difference or of defined differences that may in the future arise
and if there is agreement that his decision will be binding. The circumstance of
an architect in valuing work that he must act fairly and impartially does not
constitute him either an arbitrator or a quasi-arbitrator. The circumstance
that a building owner and contractor agree between themselves that a certifi-
cate of an architect showing a balance due is to be conclusive evidence of the
works having been duly completed ... does not of itself involve that the archi-
tect is an arbitrator or quasi-arbitrator in giving his certificate. " 63 ]
2-220 (2) An agreement for the repurchase of shares in a company provided that
the price would be at "fair value", defined as meaning the value determined
by the auditors "whose valuation acting as experts and not as arbitrators shall
be final and binding on all parties". The shares were repurchased at a value
alleged to be six times less than the true value, and the seller, who was not in
contractual relations with them, sued the auditors in tort for negligence. Held,
by the House of Lords, that the provision in question did not envisage the
settlement of a dispute, but simple machinery for valuation of the shares, and,
applying Sutcliffe v. Thackrah, the auditors enjoyed no such immunity. Per
Lord Simon of Glaisdale and Lord Wheatley, a dispute needed to be formu-
lated for a valuer to claim immunity. per Lord Kilbrandon, arbitrators had not
(Per Lord Salmon and Lord Frazer, ought not in all cases to have) such an
immunity: Arenson v. Arenson (1975).64
19
Finnegan v. Allen [1943] 1 K.B. 425.
60
See for this the first instance Report sub nom. Sutcliffe v. Chippendale & Edmondson
(1971) 18 BLR 157.
61 [1974] A.C. 727.
62
Sutcliffe's case, supra, [1977] A.C., at p. 738G.
63
Sutcliffe's case, supra, at pp. 752H-753B.
°"' [1977] A.C. 405.
SECT. 6] DUTIES AND LIABILITIES, ETC. 367
(3) An architect deliberately did not take into account in a late interim
certificate certain known defects, on the ground that they were sufficiently
covered by retention still held by the owner under the terms of the RIB A/JCT
1967 contract. Held, by the Court of Appeal, that whether deliberate or care-
less it was it was professional negligence to do so, since his duty was to super-
vise the contract according to its terms: Townsend v. Stone Toms (1984).65
It will be seen from the above cases that a certifier's immunity under a
clause like Clause 66 or67 of the ICE or FIDICcontracts, where the word-
ing requires "any dispute as to any decision, opinion, instruction, direc-
tion, certificate or valuation of the Engineer ... to be referred to and
settled by the Engineer", seems doubtful. While, on the wording of the
judgments from the Sutcliffe case quoted supra, there would appear to be
immunity, under the wording of the majority Arenson judgments there
might not. Bearing in mind that where certificates are binding, immunity
effectively bars the owner/client from any remedy against anyone, it is
submitted that the courts should lean against immunity.
FollowingArenson's case, it was tempting to conclude that contractors 2·221
would be entitled, in the absence of contract between themselves and the
A/E, to sue the certifier in tort for negligence under the Hedley Byrne
principle, but it has already been seen that, without relying upon any such
immunity as is suggested in the Sutcliffe case, the Court of Appeal held
that, under aFIDIC contract, no duty of care was owed by an engineer to a
contractor when considering and rejecting the latter's claim for a decision
under Clause 67 of the contract or when subsequently certifying sums
due.66
It is perhaps unnecessary to emphasise the threat to consumer interest
posed by any such certifier immunity which, in combination with a final or
other binding certificate giving the contractor immunity for defective
work, will effectively deprive an owner of any remedy, whether against his
professional adviser or against the contractor, in respect of defective work
discovered after any binding certificate is issued.
(5) Limitation
Under most Commonwealth limitation legislation in regard to the per- 2·222
formance of professional services, the main problem lies in the ascertain-
ment of the correct starting date of the limitation period for a particular
complaint, which can be considerably extended by the concept of a con-
tinuing professional duty until the end of the engagement, already dis-
cussed supra, in the context of the design duty. 67
In actions in tort for negligence, a reasonable discovery. starting date
was always resisted, and finally discarded by the House of Lords. when
65
27BLR26.
66
See Chap.1, Section 12(2)(d), paras. 1·303-1·304 and the case of Pacific Associates Inc. v.
Baxter [1990] 1 Q.B. 993 there illustrated.
67
See supra, paras. 2·108-2· 109.

I
368
ARCHITECTS, ENGINEERS AND SURVEYORS
examining the new Anns principle of liability in 1983, in favour of the date
when damage first occurs. 68 It has been seen that, in cases of damage to
buildings, unrealistic and unreliable investigations become necessary if
this is to be the test. 69 This was followed in England by the Latent Damage
Act 1986, which provided an alternative period based on reasonab~e dis-
coverability.70 The Supreme Court of Canada had already adopted
reasonable discoverability as the test. 71
On the other hand, in actions brought against A/Es for breach of con-
tract, the test for the start of the period in much of the Commonwealth has
been, as in England, the date of breach, although it has been seen that this
can be dramatically, and in some cases unrealistically extended by the
"continuing relationship" view of professional duties, whereby the start of
the period is postponed until the last possible date in the relationship
between owner and NE when action might have been taken by the A/E to
remedy the breach.72 As pointed out, however, there may be difficulties
about this theory in those cases where a breach is "of a final and irrepar-
able nature", 73 as in some negligent design cases. Where the negligence is
in supervision, on the other hand, this difficulty will not usually be present,
since under nearly all contracts the NE will have been able up to the end
of the contract to secure contract compliance by the contractor without
cost to the owner, but here again there may be cases where covering up, as
in the case of foundations, will, in realistic terms, preclude any possibility
of later remedial action by the A/E.73a
The cases referred to supra also indicate that still later subsequent con-
sultation with the NE when symptoms of defects are seen to emerge may
either revive an originally owed duty or create a new duty (the latter will
certainly, of course, be the case if the later advice is charged for). 74 Later
reassurances by an NE may also give rise to an estoppel to prevent limi-
tation being alleged in appropriate circumstances, it would seem.75
SECTION 7. DUTIES AND LIABILITIES OF QUANTITY SURVEYORS
(1) Bills of Quantities Defined
2-223 It has become almost universal in the United Kingdomforsubstantial pro-
jects to be let on a "measured contract" basis with bills of quantities
68
Pirelli General Cable Works v. Oscar Faber & Partners [1983] 2 A.C. 1, ante, para. 1·348.
oo See ante, Chap.1, Section 12(6)(b) and (c), paras.1·347-1·348 and the cases there referred
to. See also the discussion and cases cited {1989) 105 LQ.R. 46, at pp. 57-59.
10
71
See ante, Chap. 1, Section 12(8), para. 1·364.
City of Kam/oops v. Nielsen {1984) 10 D.L.R. (4th) 64.
n See supra, Section 6(2)(a)(ii), paras. 2·108-2·111.
n See Boehm's case.per Napier C.J.
1
~· Sheldon v. McBeath, illustrated ante, para. 2·193, and discussed in [1994] 111_.C.LR. 76.
1• See, e.g. University of Glasgow v. Whitfield & Laing Construction (1988) 42. B~R 66.
13
See Kalizewska v. Clague (1984) 5 Con. L.R. 62 and Westlake v. Bracknell Dtstnct Council
(1987) 19 H.L.R. 375, and see supra, paras. 2· 108--2· 109.
~·
SECT. 7] DUTIES AND LIABILITIES OF QUANTITY SURVEYORS 369
[CHAP.2
required to be prepared in accordance with the very complicated rules of
the Standard Methods of Measurement in the two industries.
Bills of quantities in the building industry normally devote a separate
bill to each trade necessary for the erection of a building or the construc-
tion of works. For instance, there are usually separate bills for excavation,
for concreting, bricklaying, joinery, paving, tiling, ironmongery, painting,
and so on. Generally, also, there is a bill for what are called preliminary
items such as general mobilisation, supervision, site huts, insurances, spe-
cial liabilities under the contract, services, and other items of expenditure
which are applicable to all trades. These preliminary or general bills and
items are frequently very vaguely itemised or priced, often with large glo-
bal sums in lump sum form, in contrast to the construction bills, which are
sub-divided into work processes for individual pricing in extreme and, as
the years pass, increasingly unrealistic detail. 76 •
Some bills, particularly in engineering contracts are, however, subdiv-
ided with reference to different sections of the works rather than separate
trades. Engineering contracts also have similarly vaguely worded and
often heavily priced general or preliminary bills and items. The construc-
tion sections of engineering bills have in general fewer items, since the
processes involved, while more massive, are generally less com~lex, and
since the rates are frequently of a "composite" character-as, for instance,
a single lineal-yard rate for excavating, supplying laying an? jointi~g
pipes, including backfilling and restoration of the surface-particularly 1n
international contracts where the English standard methods are not used.
. A bill of quantities is usually divided into columns. As prepared by ~e 2·224
quantity surveyor, the left-hand columns indicate the quantities and umts
of measurement which it is anticipated by the quantity surveyor will have
to be carried out. Wherever possible these are calculated from or "taken
off" the drawings, and maybe expected to lie relatively accurate, but some
items, such as quantities for removing soft or unsuitable soil, for importing
suitable fill material, or for excavation in rock, can, in the light of the infor-
mation available at the tender stage, only be estimates and provisional in
character. Then follows a column in which is given a "shorthand" descrip-
tion of the item of work to which the quantities apply. The quantity sur-
veyor then leaves two blank columns, in the first of which the contractor
inserts his price or rate for each unit of measurement and in the second of
which the contractor grosses up the total amount to be charged for the
quantities contemplated. However, the exact nature of the work in the
bills cannot usually be fully understood without reference to the specifi-
cation, which describes the work processes and qualities of material
l required in much greater detail compared to the "shorthand" ~escriptio!1
I in the bills. Uniquely in the RIBA forms, however, the specification 1s
required to be included in the bills of quantities themselves, usually in the
I
.
10 See for this C.C.P.P., paras. 8-05 to 8-06, 23-20 to 23-23, 24-20 to 24-21, Chap. 26, paras.
27-17, 27-20 to 27-22, 29-12 to 29-14 and 31-13 to 31-21.
Il
 370 ARCHITECTS, ENGINEERS AND SURVEYORS [CHAP. 2
form of lengthy preambles to the bills as a whole and also to the individual
bills, as well as in the verbal descriptions of items or groups of items. 77
The amounts to be charged alongside all the various items are then col-
lected into a summary for each bill, these summaries in tum being col-
lected into a grand &ummary for the whole of the work.
2·225 In theory, bills of quantities should, depending on the terms of the con-
tract, serve a number of functions:
(i) they indicate with some precision to tendering contractors the
amount and nature of the work they will have to carry out;
(ii) they indicate to persons examining the tender on behalf of the
owner a more detailed make-up of the overall contract sum for
tender comparison purposes;
(iii) in measured, as opposed to lump sum, contracts they are a precise
measure of the quantity of work undertaken for the contract
price, which will be adjusted once the work is complete and the
actual quantities known, whether or not any variations have been
ordered;
(iv) they form the contractual basis of valuing variations in the work
(as opposed to the discrepancies between billed and actual quan-
tities, arising from errors or inaccurate estimates of the quanti-
ties, which it is the purpose of a measured contract, but not a lump
sum contract, to correct);
(v) in the RIBA standard forms of measured contract, they also con-
tain the specification of the work.
2·226 Quantities were originally attractive to builders because they reduce
the burden and expense of tendering and because, in practice, builders are
often asked to tender for far more work than they can expect to get, and
sometimes because they are afforded too little time to tender. These initial
advantages are today overshadowed by the opportunities they offer, in
conjunction with the standard methods, for securing pricing advantages,
because over- or under-estimates ( or failures to comply with the standard
methods) which can be detected in the bills at the tender stage, and vari-
ations of the work which are already known to be probable at that time,
can be anticipated by the appropriate weighting of the tender prices so as
to present the owner with an apparently attractive overall price which in
reality will need to be adjusted upwards on re-measurement, while
undetected errors will in any event be adjusted. This has been described in
an exceptionally well-informed comment by the Full Court of Victoria
as:
"the notorious practice of those who tender for building and engineering
contracts of making what has been described as an unbalanced bid, that is to
say, of pricing the bill in a way which, without affecting the amount of the
n For a more detailed description of English bills, see post, paras. 3·019-3·02l, . and see
C.C.P.P., paras. 8-05 to 8--06 and Chap. 26. For preliminary bills and items;,see also
C.C.P.P., paras. 8--12, 23-21, 24-20, 24-21(c), 26-05, 26--08 and 27-21.
SECT. 7] DUTIES AND LIABILITIES OF QUANTITY SURVEYORS 371
tender, is calculated to enure to their financial advantage. A tenderer may
put down low rates for items where he believes that the 'as built' quantities
are likely to be less than the billed quantities, and higher rates for items
where he believ\;!s the 'as built' quantities will exceed the quantities in the bill;
he may also increase his rates for early work and reduce his rates for later
work in order to give him a substantial cashflow at an early stage. The prac-
tice is also known as 'loading' the rates. It is referred to in many of the
textbooks ... " 78
Reference has already been made to the efforts of the trade associations 2-227
in the building industry to secure universal adoption of measured con-
tracts with bills for all work of more than a certain value. 79
The employment of quantity surveyors is attractive to architects
because they greatly reduce the administrative work of the architect both
at the tender stage and during the currency of the contract.
The serious deficiencies in the English system from an owner's point of
view lie in the lack of precision as to the costs which may or may not be
included in the preliminary bills or items, coupled with the lack of any
contractual requirement for a detailed make-up of prices from the suc-
cessful tenderer. These factors remove any real precision from re-
measurement or the valuation of variations and permit exaggerated
claims on measurement, for the accurate assessment of which the owner's
advisers, despite their protestations to the contrary, will lack any reliable
contemporary information. so
A detailed account of the varying degrees of possible re-measurement,
and of the unique and elaborate systems of re-measurement which have
evolved under the English standard forms of contract is given post, Chap-
ter 8, Sections 1(2)(a) and (b). See also post, Chapter 3, Sections 1(2)(b)
and 1(3)(b).
(2) Preparation of Bills and Other Duties
In theory, the quantity surveyor should receive complete drawings and a 2-228
specification from the architect before he can start to prepare bills. Once
he has done so, he takes off the quantities of work from the drawings and
prepares the bills, leaving the rate and total columns blank for the ten-
dering contractors. Under the standard RIBA/JCT form there is no speci-
fication named as such, and an important aspect of the work with this
contract is the drafting of the preambles to the various bills and of the
individual items in the bills, which must embody the architect's
specification.
The primary and justifiable reason for incorporating Standard Methods
is to ensure uniformity in the actual technical methods of measuring quan-
78
Sist Constructionsv. State Electricity Commission of Victoria [1982] V.R. 597, at p. 606,per
Brooking J., citing five textbooks and Patterson, "Builder's Measure of Recovery for
Breach of Contract" (1931) 31 Columbia Law Review 1286, at p. 1303. For Sist's case, see
post, Chap. 8, Section 1(2)(a).
~ See supra, para. 2·071.
110 See supra, paras. 2· 162-2· 164 for other suggested drafting improvements.
 372 ARCHITECTS, ENGINEERS AND SURVEYORS [CHAP. 2
tities-----there are, for example, several quite different methods of
measuring a cubic yard of excavation. Amore dubious second reason is to
introduce uniformity into the practice of describing work in bills and to
suggest what processes should, and what processes should not, be treated
as included in items. of work already billed, since every item of work, how-
ever detailed, is in the last resort a composite item. This is effected by
recommending in the standard method that .certain processes should be
separately described in the bills for pricing purposes, and that others
should not be (in which event they will be regarded as included in some
larger composite item, or the other rates or prices generally). However,
these "separate description" rules in the Standard Methods, coupled with
excessive subdivision of work items, expose owners to highly legalistic
"omitted item" claims; well-drafted bills will provide, to the precise con-
trary, that undescribed items of necessary work are to be treated as
included in the prices for the described work.81 Failure to make this clear,
or to comply meticulously with the Standard Methods if unwisely incor-
porated, may expose the owner to claims for additional payment, on the
ground that some necessary ancillary process or the cost of some contin-
gency was not included in the work priced in the bills.82
Z.229 In order to prepare bills successfully, therefore, the surveyor must be a
master of the standard methods of measurement (which may possibly
serve to explain their progressive tendency to over-complication), and
familiar in every respect with the scheme of the contract of which the bills
are to form part, as well as possessing a thorough knowledge 82a of building
or engineering design and of traditional, as well as the latest construction
methods, so that he can understand and interpret in detail the drawings
and specification furnished by the architect, and calculate correctly
therefrom the measurements and items of work involved. The work is
therefore detailed and demanding, and calls for a considerable degree of
professional skill. Nevertheless it is difficult to escape the conclusion that
the pursuit of greater and greater precision in this art has become an end in
itself, with the commercial interest of the client, as well as the realities of
contractors' real-life pricing methods, long forgotten.
When the priced bills of quantities are received together with the ten-
ders, the quantity surveyor will have the duty of checking over the priced
bills to see whether there are any arithmetical or other errors. If there
were a substantial error (for example, in addition), it might mean that the
amount payable on a measurement basis would be substantially different
(in either direction) from the amount tendered,83 depending on the
exact wording of the contractual provisions relating to re-measurement
or adjustment of the contract sum to take account of differences between
the actual and billed quantities. The policy followed in some standard
81
Cf the Singapore SIA contract, Article 5 and Clause 13, C.C.P.P., p. 570.
82
See supra, Section 6(2)(h), paras. 2·161~2·164 and post, Chap. 7, Section 1(2)(c).
si. At least as great as that of the A/E, it is submitted. ,·
al See ante, Chap. 1, para. 1·117, where the application of the rules of rectification to this
situation is considered; and post, Chap. 7, Section 1(2)(b).
SECT. 7] DUTIES AND LIABILITIES OF QUANTITY SURVEYORS 373
forms was to refuse correction of arithmetical or other errors.84 Some
more sophisticated contracts permit correction, provided that the con-
tract price for the original contract work is not affected, which would be
unfair to unsuccessful tenderers.84a
As the work proceeds the quantity surveyor usually has the duty of
measuring up and calculating the value of the work carried out and advis-
ing the A!E so that he may issue interim certificates in favour of the con-
tractor. He also has the duty of valuing, for the purposes of addition to or
deduction from the contract sum, the omissions or additions in the work
due to variations. The quantity surveyor may also be expected to calculate
any fluctuations in the contract price arising from alterations in material
prices or labour rates under the terms of any relevant fluctuations clause.
Further, under the post-1963 RIBA standard forms the ascertainment of
various claims by the contractor for loss and expense under the provisions
of the contract can be delegated to him by the architect.85
There is a dearth of authority upon the standard of skill or care owed by 2·230
a quantity surveyor to the owner. Since, however, his task involves very
large numbers of arithmetical calculations, it seems that an occasional slip
or error may be insufficient to sustain an allegation of professional negli-
gence against him.
ILLUSTRATION
A school board employed a quantity surveyor for measuring up buildings
of a value of £12,000, which had been completed. They brought an action
against the quantity surveyor for (inter alia) negligence in making two clerical
:~ errors in the calculations, whereby the board had overpaid two sums of £118
and £15. Held, that as the quantity surveyor had employed a competent
skilled clerk who had carried out hundreds of intricate calculations correctly,
the quantity surveyor was not liable for these two errors: London School
Board v. Northcroft (1889). 86
However, given his professional status and skills, a quantity surveyor
must, it is submitted, employ them for his client's benefit, should he have
an opportunity to do so, even though some other adviser, such as the AJE,
may bear the prime responsibility. So if he notices defective work while
visiting for purposes of making his valuations, for example, he should
bring what he has seen to the architect's attention in case the latter has
missed it. Bearing in mind the high degree of skill professed by quantity
surveyors in the detail of construction methods, there would seem to be
84
See Clause 13 of the 1963 JCT/RIB A forms, not apparently repeated in the 1980 forms.
84
See the Singapore SIA fonn, Clauses 12(4)(g) and 13(d), C.C.P.P., pp. 568, 570.
"
85
See, e.g. Clauses 11(6) and 24(1). See also Clemence v. Clarke, post Chap. 6, Section 5(5).
86
Hudson, Building Contracts (4th ed.), Vol. 2, p. 147. (Perhaps a less sympathetic view
would be taken today when vicarious responsibility and the provision of services by pro-
fessional advisers are more familiar concepts.)
 374 ARCHI'IECTS, ENGINEERS AND SURVEYORS [CHAP. 2 SECT. 8] FRAUD AND BRIBERY 375

no reason why they should not also be joined as defendants by an owner SECTION 8. FRAUD AND BRIBERY
where, for example, the defects were so glaring that they should have been
seen by him in the course of valuation inspections as well as by the AIE. 87
2-231 It has already been suggested supra that there are in fact considerable (1) Fraud
dangers for owners in the use of measured (or "with quantities"~ con-
In general, there is no contractual relationship between the architect or 2·232
tracts, particularly if words of incorporation are used such as thos~ rn the
engineer, as such, and the contractor. Consequently the NE owes no con-
current RIBA/JCT and ICE forms. 88 The first arises from claims for
tractual duty to the contractor in relation to economic loss caused by the
increased preliminaries or higher construction item prices wher~ t~e
preparation of plans or quantities, or the measuring up of the work, any
quantities differ to any extent. That difficulty, based on express wording 111
more than in relation to his duties of design and superintendence of the
the two forms permitting such increases, is increased by the vagueness of
work.893 (Under the old practice as to taking out bills of quantities, an
description and unknown allocations of cost by the contractor in the often
architect who did so and was paid by the builder by virtue of a provision in
very substantial items in the preliminaries bills, which itself ~~feats the
the building contract requiring the builder to do so, was held liable in prin-
fundamental purpose of bills of quantities, namely the prov1S1on of an
ciple to the builder for misleading errors in the quantities,90 but the under-
accurate method of valuing work whether on re-measurement or as a
lying contractual basis of this situation no longer obtains.
result of variations. Secondly, there is the danger of the "omitted time"
Liability for fraud ( that is, for deliberately or recklessly false represen-
claim resulting from failure to comply exactly with the literally hundreds
tations or conduct91 ) is, however, a liability in tort, and an architect or
of recommendations in the standard methods for separate pricing of par-
engineer guilty of fraud in the discharge of his duties will be liable, apart
ticular items. A quantity surveyor who has exposed his client to such
from contract, to either party to the building contract if they have thereby
claims by failing to prepare bills which exactly so comply should of course
suffered damage. Furthermore, any immunity of an A!E as a certifier
be ipso facto liable in negligence to his client. The reason why th~re are
which may have survived Sutcliffe v. Thackrah<J2 can only apply if he is
few if any reports of such claims is undoubtedly that, on the th~oretical but
honest, and fraud or dishonest collusion by him when certifying will ren-
unreal basis that contractors do in practice price for a contract m the extra-
der him liable in tort to either party.93 Liability in fraud depends upon
ordinarily detailed way assumed by the standard methods, and which is
representation by word or conduct to the plaintiff, however, so that dis-
fundamental to their entire philosophy, the failure to provide for one of
honest conduct by the architect not involving a false representation to the
the recommended separate items will mean that the tendered contract
aggrieved party and intended to be acted on by him will not give a cause of
price would in theory have been higher had the omitted item been
action. So a fraudulent representation by an architect to a building owner
included, with the result that the client has theoretically suffered no dam-
that the work was not yet practically complete was held not to give a cause
age by reason of the omission. For example, it is very doubtful whether
of action to the contractor» although today there would usually be liability
contractors as a practical matter price form-work separately from con-
in such a case under the Hedley Byrne principle. It is no defence to a claim
crete when estimating, let alone in the extraordinary detail with which
for fraud that the architect may have been acting as agent:
form work has now become progressively subdivided for pricing purposes
in the Standard Methods. Similarly, it is quite unrealistic to suppose that "All persons directly concerned in the commission of a fra~d are to be
contractors will in practice price separately for different types of gr~und- treated as principals. No party can be permitted to excuse himself on the
water in excavations as provided in the Standard Methods. It remains _to ground that he acted as agent or as the servant of another; and the reason is
be seen what the courts will make of this particular defence by a quantity plain-for this contract of agency or service cannot impose any obligation on
the agent or servant to commit or assist in the committing of fraud. "95
surveyor in a case where a contractor has successfully brought an "omitt~d
item" claim against the owner and the owner has attempted to claim In so far as the architect may be acting within the scope of his agency for
damages. 89 the owner (that is, in all aspects of the building contract, save his quasi-
judicial duties) the owner will, on general principles, be liable for the

See now, however, the recent Canadian tort cases to the contrary, ante, para. 1·306A.
"9.,

w Bolt v. Thomas (1859) Hudson, Building Contracts (4th ed.), Vol. 2, p. 3,post, para.
91
See ante, Chap. 1, paras. 1·162-1·164.
92
117
See, e.g. Sutcliffe v. Chippendale & Edmondson (1971) 18 BLR 149, illustrated in part As to which see supra, paras. 2.218 et seq.
93
supra, paras. 2·218-2·220. . .. See also post, Chap. 6, Section 5(3).
94
88
As to which latter see C.C.P.P., para. 23-22, 24(d)(n), 26-11 to 26-12, 29-lj,)0-15 to Larkins v. Chelmer Holdings Pry. [1965] Qd. R. 68, Australia.
9
30-19, and 30-21, and see post, Chap. 7, Section 1(2)(c). -· s Per Lord Westbury in Cullen v. Thompson's Trnstees (1862) 4 Macq. (H.L.Sc.) 424, at pp.
119
Ibid. 432-433.
 376 ARCHITECTS, ENGINEERS AND SURVEYORS
fraud of his agent. 96 Thus, an owner has been held liable for the fraudulent
misrepresentation of his architect in inviting tenders. 97
(2) Bribes and Secret Commissions
2·233 This subject, in so far as the.purpose of the bribe is to procure acceptance
of a tender, is dealt with later. 98 The general principle is well stated by
James L.J. in Panama & South Pacific Telegraph Co. v. India Rubber Co.99:
[CHAP.2
SECT. 8] FRAUD AND BRIBERY 377
sued T. for the £225. Held, that he could recover this as money had and
received to his use: Morison v. Thompson (1874). 3
(3) The V. Co. contracted to pay a commission to H. for superintending
repairs to be executed by them on ships belonging to the S.E.R. Co. H. was in
a position of trust in relation to the S.E.R. Co. The jury found as a fact that,
though the contract was calculated to bias H. 's mind, it had not in fact done so.
Held, that H. could not maintain an action for the commission as, even though
H. had not been induced to act corruptly, the consideration for the contract
was corrupt: Harrington v. Victoria Graving Dock Co. (1878). 4

"Any surreptitious dealing between one principal and the agent of the other
principal is a fraud on such other principal cognisable by the court ... The
defrauded principal, if he come in time, is entitled at his option to have the
contract rescinded or, if he elects not to have it rescinded, to have such other
adequate relief as the court may think right to give him."
Whenever a secret commission or bribe is given to an agent, whether
directly in connection with the particular transaction or in such relation to
it as to affect it, the consideration is corrupt and the transaction invali-
dated so far as the principal is concerned. The presumption that the bribe
influenced the agent's action is irrefutable, and the actual consequences
will not be inquired into. 1 All such sums are treated as money had and
received to the use of the principal, for which the agent is accountable.
ILLUSTRATIONS
2·234 (1) An architect, employed by a building owner to superintend a house
being built by a contractor, made an arrangement with the contractor that he,
the contractor, should pay him £20. The building owner, when he knew it,
dismissed the architect, and the architect sued him for his fees. Held, con-
firming the judgment of the court below, that an architect cannot at the same
time be employed in the interests both of the building owner and the builder
and receive pay from both, and as it was proved that the architect had cov-
enanted with the builder to receive pay from him, that it was a violation of the
contract sufficient to discharge the building owner from liability to pay the
architect anything: Tahrland v. Rodier (1866). 2
(2) M. authorised T. as his broker to negotiate for the purchase of a ship on
the basis of an offer of £9,000. T. was to buy the ship as cheaply as she could be
got. The vendor employed as his broker one S. and promised S. any excess
over £8,500 which he might be able to obtain. S. arranged with T., withoutM. 's
knowledge, thatT. should share the excess. T. bought the ship on M.'s behalf
for £9,250, and received £225 as his share of such excess. M., discovering this,
96
Lloyd v. Grace, Smith & Co. [1912] A.C. 716; Uxbridge Permanent Benefit Building Society
v. Pickard [1939] 2 K.B. 248; Morris v. C. W. Martin & Sons Ltd. [1966] 1 Q.B. 716.
•
1
Pearson v. Dublin Corporation [1907] 1 A.C. 351, illustrated post, Chap. 3, para. 3·077.
98
See post, Chap. 3, para. 3·079.
99
(1875) L.R. 10 Ch. 515, at p. 526. . ,
I
Shipway v. Broadwood [1899} 1 Q.B. 369;Hovenden & Sonsv. Millhoff(l900)'gj L.T. 41.
z 16 LC.Rep. 473.
But a profit is not a secret profit in this sense if the owner knows or ought 2-235
to know that a profit will be received, even though he may not be aware of
its actual extent.
ILLUSTRATIONS
(1) A contractor for railway works employed, through the medium of an
agent, a sub-contractor, who allowed the agent a commission upon the con-
tract. The contractor filed a bill against the sub-contractor and agent, alleging
collusion with regard to the commission. The claim was dismissed with costs
as against the sub-contractor, but without costs against the agent, the court
considering that the plaintiff could not have been ignorant of the practice of
allowing commission at the time that he approved the sub-contract: Holden v.
Webber (1860).'
(2) Factory owners employed a surveyor to prepare a specification of war
damage repairs and supervise the work. After preparing the specification but
before work started, the surveyor became a director of the company doing the
work, and so informed the owners, who nevertheless allowed him to continue
in the work of supervision. Held, by the Court of Appeal, although the sur-
veyor had committed a fundamental breach entitling the employers to dis-
miss him instantly, they had waived the breach, and must accordingly pay for
his fees: Thornton Hall v. Wembley Electrical Appliances (1947). 6
The courts will decline to accept evidence of any custom or usage on the 2-236
part of agents to receive commission from persons other than their
employers. Thus Lord Russell of Killowen said in Bu/field v. Foumier1: "If
[the pocketing of discounts and commissions was a common practice] it
was the more reason for juries to say that it was a bad and dishonest prac-
tice, and one which they must stamp out." The above cases are not all
closely connected with building contracts, but the principles are clear. An
architect, engineer or surveyor should have no financial dealings of any
kind with a contractor without the knowledge of his employer. Any prac-
tice whereby the architect's fees, or the fees for measuring up or acting as a
3
L.R. 9 Q.B. 480.
4
3 Q.B.D. 549.
s 29 Beav.117. See also London School Board v. Northcraft, illustrated infra,Subsection (9),
para. 2·285.
6
[1947] 2 All E.R. 630. See also Re Elliott, post, Chap. 6, para. Section 5(2).
1
{1894) 11 T.L.R. 62.
 378 ARCHITECTS, ENGINEERS AND SURVEYORS
surveyor, are included in or appended to the builder's account, should be
rigorously avoided, unless the owner's attention is expressly drawn to the
fact, since otherwise the architect has a personal interest in securing pay-
ment to the builders which may conflict with his duty to the owner to check
the builder's account and resist any unjustified claim.
Receipt by the architect, engineer or surveyor of any secret commission
whether from the contractor or from suppliers of materials or sub-con-
tractors would warrant instant dismissal, recovery of the commission as
money had and received, and release of the employer from any liability to
pay him for his services.
SECTION 9. REMUNERATION OF ARCHITECTS, ENGINEERS AND
QUANTITY SURVEYORS
(1) For Completed Services
(a) By special contract
Z.237 If there is an express contract between the owner and the architect,
engineer or quantity surveyor containing specific terms as to payment,
those terms, unless varied, will naturally regulate the professional man's
right to payments. Any such contract may be made orally or in writing. A
professional man already engaged on agreed terms should always be care-
ful, if events occur which he considers justify him in increasing is fees, to
obtain the agreement of his client. The courts will be very slow in such a
case to treat any existing agreement as no longer applying and permit the
recovery of the additional fees on a reasonable fee or price basis, unless
the evidence of the new agreement is clear.8
If percentage scales of fees, or still wider-ranging conditions of engage-
ment, are to be the basis of payment, a clear record should be made of the
fact either in a form of agreement or in an exchange of correspondence.
Specific agreements as to remuneration (and the scales themselves) fre-
quently relate remuneration to a percentage on the cost of the works, and
it is advisable in such cases to provide clearly as to what is or is not included
in the expres~ion "cost". Extrinsic evidence will be admitted if the
expression is affibiguous.
ILLUSTRATION
An engineer, in addition to certain percentages for designi?g and supervis-
ing the work, was entitled to "a further 11.h per cent. on the estimate of £35,000
s See the decision of the Court of Appeal in Gilbert & Partners v. Knight [1968) 2 All E.R.
248, illustrated ante, Chap. 1, paras.1 ·063-1 ·064. See, however, for a contrary C~f!, Kelly &
Partners v. Northshore Development (1963) 5 W.L.R. 379, Ct. of App., Jamaica~-post, para.
2·284
Seer. 9] REMUNERATION OF ARCHITECTS, ETC. 379
in the event of my being able to reduce the total cost of the works below
£30,000". The cost of the work itself was below £30,000, but with the fees of
the engineer plus the cost of the land came to over £43,000. Held, extrinsic
evidence should be permitted to show that "the estimate of £35,000" was an
estimate of cost including fees and cost of land, and that, the "total cost of the
works" being clearly co-extensive, the engineer was not entitled to the 11.h per
cent.: Bank of New Zealand v. Simpson (1900). 9
It is the mark of many professional institutions, other than lawyers and 2·238
doctors ( and this applies particularly in the United Kingdom to architects,
engineers, quantity suveyors and indeed most other surveyors and land
and estate agents) that they publish and press their members to use
approved conditions of engagement providing for payment under author-
ised scales of percentages of cost, in addition to the other terms of their
contracts. As pointed out, 10 it is of the nature of the professional services
undertaken by A/Es on a construction project that they fall into a series of
progressive stages, with the owner not usually irreversibly committed to
the project until entry into the construction contract itself. The various
institutions' terms of engagement reflect this by providing for the A/Es
remuneration to occur in stages, as a series of cumulative proportions of a
total fee payable should the project go through to completion, that fee
being itself expressed as a percentage of total final cost. Termination at
any of the various stages is expressly permitted, and the proportionate fee
payable at that time is treated as the AfEs full entitlement in that event,
but it would be a mistake to regard this as a valuable concession, since the
proportion of the fee payable in the earlier stages is likely to be weighted
{
t so as to produce a strong financing element for the professional, and so to
that extent a disincentive against discontinuing the project, with termin-
ation at an intermediate stage likely to be more profitable to the pro-
fessional than carrying the project through to completion.
The current (revised 1989) RIBA "architect's appointment" document
is likely to be an exemplar of the pitfalls for prospective clients concealed
in the draftsmanship of professional institutions in the Commonwealth
generally in a number of areas of particular concern to the client, as
follows:
(i) The size of the total percentage fee itself
The graphs of scales are divided into five classes, with houses and flats 2-239
for individual clients for some reason in the most expensive class (together
with research and development buildings, laboratories and teaching hos-
pitals, for example). At a construction cost of £100,000, the recommended
fee for this class is just under 9 per cent. for new construction, dropping to
8~ per cent. at £200,000. Even at £500,000 it is over 7~ per cent., and still
, [1900] A.C. 182.
10
See supra, Section 3(4), paras. 2·049-2·050.
 380 ARCHITECTS, ENGINEERS AND SURVEYORS [CHAP. 2
over 7 per cent. at £1,000,000. These percentages require to be sup-
plemented by further professional percentages if quantity surveyors,
structural engineers or heating or electrical consultants are employed, or
if their services are provided by the architect. Considerably higher scales
are provided for works of conversion. The RIBA states expressly in the
document that it considers these scales are fair and reasonable, but this
statement should not, it is suggested, be taken at face value by a court
concerned to decide a reasonable level of remuneration, and experience
suggests that few commercial owners agree to pay the full recommended
scales, whatever may be the position with less informed members of the
general public.
(ii) The degree of "front-loading" of the earlier instalments
Z.240 This appears to be formidable, with very large sums potentially due if
the project is discontinued in the earlier stages when comparatively little
real work may have been done. Thus at the "scheme design" stage, at a
time when no detailed design or contract documentation has been pre-
pared, no less than 35 per cent. of the total fee is payable, whereas the fee
for preparing contract documents and going out to tender, together with
the provision of post-contract drawings, supervision, administration and
completion, is only25 per cent. of the total fee. 11 As a result, the majority
of modem cases reaching the reports result from claims made for the
earlier stages of discontinued projects.
(iii) Total cost on which the percentage fee is calculated
Z.241 This is defined to include work designed by consultants, such as struc-
tural engineers, heating, mechanical or electrical consultants or special-
ists, even though, as will be seen, the area of the architect's duties in
respect of this work appears to be very substantially reduced. Very
importantly, too, cost is final cost, not contract price, and is to be upgraded
at all intermediate stages as final cost becomes progressively known. Thus
the more that contractual claims are permitted or established against the
owner (as, for example, under a fluctuations clause, or an "omitted item"
or other measurement claim, or an additional expense or other compensa-
tory claim), the higher will be the architect's fees. (This points strongly to
owners insisting on a fixed fee related to the original contract price or
based on any estimate of cost given by the architect at that stage, which
indeed is expressly mentioned as a possibility in the conditions them-
selves, and goes far to explain the "price plus claims" structure of the stan-
dard forms themselves.) 12
(iv) Consultants
:Z.242 Their employment will be advised by the architect (Clause 1.4), and,
even if their services are provided by the architect (quantity surveying
u 1989 revision, Clause 4.Z3A.
12 See Part 4, (1989 revision) Heading and Schedule.
: ._
:;_;,,
REMUNERATION OF ARCHITECTS, ETC. 381
services, structural engineering services, mechanical and electrical ser-
vices, etc.) are recommended to be paid at the various professional insti-
tutions' scales of charges. Where employed by the client ( as stated, on the
advice or nomination of the architect) they, and not the architect, are
responsible for the "competence and general inspection" (the latter the
new expression for supervision) of "the work entrusted to them" (Clause
3.6).
(v) Specialist sub-contractors or suppliers responsible for design
These, too, will be the subject of advice or nomination by the architect. 2·243
Even so, "the client will hold the sub-contractor or supplier and not the
architect responsible for the competence and proper execution of the work
entrusted to that sub-contractor or supplier" ( Clause 3.8). There is also an
exclusion of a notional design fee from construction cost in these cases,
which seems inadequate recognition of the greatly reduced responsibil-
ities and services which the above wording implies.
(vi) Supervision generally
Apart from the above two apparent exclusions of liability for due care in 2-244
supervising other consultants' work or specialist design sub-contractors'
work, supervision by the architect is defined in new and significant word-
ing-it is now described as: "Administer the terms of the building contract
., during operations on site. Visit the site as appropriate to inspect generally
the progress and quality of the work." 13 This is followed by the following
provision. "The client will employ a contractor under a separate agree-
ment to undertake construction or other works. The client will hold the
contractor and not the architect responsible for the contractor's operational
methods and for the proper execution of the works. " 14 The emphasised
words appear to be a substitution for an earlier and perhaps more explicit
attempt at exclusion of liability for general supervision in the previous
RIBA (1972) conditions of engagement: "The Architect shall not be
responsible ... for any failure by the Contractor to carry out and complete
the work in accordance with the terms of the building contract between
the client and the contractor." No authority appears to exist as to the
meaning of these provisions.
It is submitted that courts should be slow to permit incorporation of
these RIBA terms into a contract of employment between owner and
architect in the absence of the most explicit wording, since they are in
parts too obviously controversial to attract the principles of universality
and reasonableness relating to custom or trade practices15 or of impli-
cation of price or other standards or terms based on reasonableness.
It is sometimes assumed that if an architect proceeds with work for the 2·245
building owner without mentioning the question of remuneration he will
13 Clauses 1.21, 1.22.
14 Clause 3.9. Compare Clause 3.8 for designs specialist sub-contractors.
15 As to which see Chap. 1, Section 7, paras. 1·200et seq.
 382 ARCHITECTS, ENGINEERS AND SURVEYORS [CHAP.2
be entitled to, and, in case of dispute, the courts will award him, remuner-
ation based upon a scale of professional charges. This is a mistaken view, it
is submitted. The courts have frequently and for very good reason,
expressed antipathy towards professional scales of every kind,16 and have
reiterated by their decisions that if the building owner is not made aware
of the scale of fees which the architect seeks to apply, and does not agree to
pay those fees, then the courts are entitled to inquire whether such fees are
in all the circumstances reasonable for the particular services which have
been performed. 17 Indeed they have indicated that the principle of assess-
ing remuneration as a percentage of the cost of the works is not one which
the courts will approve unless there is clear agreement between the parties
that such assessment shall be made. 18 It seems possible, however, that the
hostility of the courts to scale fees may be gradually diminishing, 19 and it
cannot be claimed that the law on this subject is entirely clear. Thus in one
case, where the owner was an experienced property developer, Lawton
L.J. apparently considered that reasonable remuneration on the basis of
the RIBA scales might have been implied.20 This seems very doubtful, it is
submitted, particularly since the current RIBA document now recognises
the possibility of a fixed fee. While it certainly recommends the scales as
being reasonable, they themselves differ considerably according to differ-
ent types of project, and it would not be difficult to call expert evidence
and give many practical examples, it is submitted, to the effect that the
RIBA's recommended scales, together with the uncertainties as to con-
sultants' fees, are at the very top level of the market, and that more often
than not considerably lower percentages are agreed and accepted in
practice.
2·246 By way of reconciliation, it is suggested that specific services, as, for
example, a design service for a particular purpose, are not suitable for
assessment by percentage scales at all, but rather on the basis of the hours
required, the status of the professional concerned, and the size and
importance of the project; by contrast the general relationship of care and
the multiple services rendered over a long period involved in a start-to-
finish A/E's professional responsibility for a construction project (rightly
described in general terms as being "to act as the client's adviser and
additionally to administer the building contract" in the RIBA document)
can perhaps best be valued by receiving evidence as to what would be a
reasonable lump sum for the project, that sum being based itself, no doubt,
on prevailing levels of fees for that overall service and derived from or
expressed as a reasonable percentage of total cost charged in the market
16 See the quotations infra, para. (e).
17 Debenhnm v. King's College, Cambridge (1884) 1 T.L.R.170; Wilkie v. Scottish Aviation
Ltd., 1956 S.C. 198.
18
See infra, paras. 2·256-2·258.
19 See, e.g. Graham & Baldwin v. Taylor Son & Davis (1965) 109 S.J. 793, infra, para. 2·259,
the passage quoted from Wilkiev. Scottish Aviation Ltd., 1956 S.C.198, infra, para. 2·259,
and the decision of the Court of Appeal of Jamaica in Kelly & Partners v.,Northshore
Development Ltd. (1963) 5 W.I.R. 379, infra, Subsection (9), para. 2·284. -~·-·
20 Kayev. Firmin & Partners v. Bronesky (1973) 4 BLR 1, C.A.
REMUNERATION OF ARCHITECI'S, ETC. 383
by other professionals. For intermediate uncompleted services, the pro-
portions put forward in most institutional scales seem much too heavily
weighted in favour of the earlier services, and evidence will be needed
addressed primarily to the particular services performed and hours
worked in the earlier stages, at least until such time as the construction
contract has been entered into and the supervision stage has commenced.
(b) Implication of reasonable remuneration
Even if there is no express reference by the parties to the question of 2-247
remuneration, the normal inference, except in certain special cases of
work done on approval,21 will be that an architect or engineer, like other
professional men, does not intend and cannot be expected to give hisser-
vices, fer nothing, and the owner will be held, by the fact of requesting his
services, to have bound himself to pay a reasonable reward for the services
to be rendered.22
In certain circwnstances, however, the courts can hold that services ren-
dered with only the possibility or hope of remuneration in view give no
right of action. The test to be applied, namely whether a reasonable man in
the position of the owner would have believed that the person doing the
work intended to do it at his own expense, has already been referred to in
the context of building work itself. 23 The commonest occasions when the
test may need to be applied will usually, in the case of architects, be at the
earliest or sketch-plan or outline planning consent stage of his activities,
where, as has been explained, very little work indeed can produce startling
claims on an "abandoned work" basis. The latter of the two old cases illus-
trated below probably illustrates the more modern view in such situations,
but even today services can be rendered on an ex gratia basis and all the
circumstances need to be carefully examined.24
ILLUSTRATIONS
(1) W. was engaged in going backwards and forwards selling lottery tickets 2-248
on behalf of a committee, who passed a resolution that "any service to be
rendered by W. shall be taken into consideration, and such remuneration be
made as shall be deemed right". W. brought an action for reasonable
remuneration, which he agreed should have been left to the jury. Held, that
the resolution imported that the committee were to judge whether any or
what recompense was right, that the plaintiff had thrown himself on their
21
See infra, Subsections (c) and (d).
22
Manson v. Baillie (1855) 2 Macq. 80; Moffatt v. Laurie (1855) 15 C.B. 583 at para. 593;
Landlessv. Will-on (1880) 8 R. (Ct. ofSess.) 289; Exp. Birkenshaw, re Allison [1904] 2K.B.
327.
n Applied in City ofMoncton v. Stephen illustrated ante, Chap. 1, para. 1-063 and formulated
in both Anson and Pollock on Contracts.
24
See the cases ante, Chap. 1, paras. 1·263-1·264 and see infra, para. (c).
 384 ARCHITECTS, ENGINEERS AND SURVEYORS [CHAP. 2
mercy in the matter, and that the plaintiff was rightly non-suited: Taylor v.
Brewer (1813). 25
(2) B. made a parol contract with a public board to perform certain work
and labour for whatever "recompense the board might allow as right and
proper". Held, that an action lay to recov~r a rea~onable recompens~, al-
though the board tendered what they considered nght and proper: Bird v.
McGaheg (1849).26
(c) Work done on approval and probationary drawings
2·249 Where work is done on approval, or is in the nature of a proposal,
sketch, or design submitted for approval ( or "probationary drawings", as
they were called in Moffattv. Dickson, infra) or with the intention of inter-
esting the client in a project which he may be only tentatively considering,
the architect may have no claim unless the design is actually approved or
used. Such designs are in the nature of offers, or tenders, leading up to a
possible contract, but for which there is no obligation to accept to pay.27 It
is not unusual "for architects to send in plans for public buildings taking
the chance of being paid for their labour, or not, as they may be adopted or
rejected": per Maule J. in Moffatt v. Laurie.28 Probably this practice is at
the present day less common than formerly.
ILLUSTRATIONS
(1) M., an architect, agreed to examine the site of a proposed .asylum a_n~
2-250
prepare "probationary drawings" for the approval of the committee of v1s1-
tors, and he also agreed to prepare all other drawings, etc., required to be
submitted to the Commissioners in Lunacy pursuant to the statute, and sub-
sequently to prepare the whole of the working drawings, estimates and speci-
fication for the asylum, for which the committee agreed to pay him £437 lOs.
M. prepared three sets of plans for approval, all of which wer~, rejecte.d, and
finally the committee refused to proceed further. Held,.that probatl?n?ry
drawings" meant drawings to be approved by the committee for subrmss1on
to the Commissioners and that as none had been approved, M. was not
entitled to recover any remuneration: Moffatt v. Dickson (1.853). 29 • £3,000. While the intention to build was said to be firm, there were indications
[Note: Had the Commissioners proceeded with the proJect and denved
benefit from the work there might well be liability in quasi-contract. 30 See, for
instance, the analogo~s cases of work done by contractors in the prepa~atio~
of tenders for building work in Lacy (William) v. Davis (1957). 31 and Smclair
v. Logan (1961)n]
i:;1 Maule & S. 290. See also Roberts v. Smith (1859) 4 H. & N. 315, and other "honour" cases
referred to ante, Chap. 1, Section 2(9), paras. 1·081-1·082.
262C.&K. 707.
rr For the rare cases where remuneration can be obtained by tendering contractors, see ante,
Chap. 1, Section 11, paras. 1·263-1 ·264 and see post, Chap. 3, paras. 3·075-3·076.
2s (1855) 15 C.B. 583, at p. 587.
<9 13 C.B. 543.
io See ante, Chap. 1, Section 11, paras. 1·263-1·264. ,· _.,
,1 [1957] 1 W.L.R. 932,ante, Chap. 1, paras.1 ·263-1 ·264 and post, Chap. 3, paras::3·075-3·076.
32 1961 S.L.T. (Sh. Ct.),post, Chap. 3, paras. 3·075-3·076.
Se=. 9] REMUNERATION OF ARCHITECTS, ETC. 385
(2) A., an architect, and B., a building owner, agreed that A. should lay out
lands for building and make surveys. A. was to make no charge for this, but, in
the event of the land being disposed of for building purposes, was to be
appointed architect for B. A. made the surveys. B. died, and his executors put
it out of their power to dispose of the land for building purposes. Held, that
there was no implied contract not to dispose of the land otherwise than for
building purposes: Moffatt v. Laurie (1855). 33-34
(d) Competition drawings
Where plans or designs are submitted in competition, the same difficult- Z.251
ies are likely to arise as in the case of probationary drawings and work
done by contractors when preparing tenders. In the absence of express
provision, the test of contractual liability is whether, objectively regarded,
the circumstances at the time, or which in the event occurred, were such as
to raise a presumption that the work was intended to be paid for. Obvi-
ously the express terms of any invitation or purported acceptance will pre-
vail if they are sufficiently clear. However, apart altogether from contract,
there may be liability in quasi-contract if the owner actually makes use of
the drawings and it would be unconscionable to allow him to do so without
payment. 35
ILLUSTRATIONS
(1) Letters were addressed on behalf of the congregation of a church to the
plaintiff and three other architects, inviting them to submit plans for a build-
ing not to exceed $32,000. If the plans were rejected, the competitor was to
receive only $50. All were rejected except the plaintiffs, though his was found
not to be in accordance with the conditions. The plaintiff sued upon a quan-
tum meruit and obtained judgment for 1 per cent. of the limited price: Hop-
kins v. Thompson (1867). 36
(2) An invitation to take part in a design competition for a proposed office 2-252
building provided that there should beno prize, but the winning firm would be
appointed for the contract, in which event it was to be paid in accordance with
the RIBA scales. If not appointed within three months, it was to be paid
that the building might take place on another site, and that the winning design
might not necessarily be used. The winning architects were appointed at once,
and a formal agreement incorporating the RIBA conditions of engagement
was entered into, but the project was later abandoned when only minor ser-
vices valued at £500 had been carried out. The architects claimed the appro-
priate percentages for Stages C (outline proposals) and D (scheme design),
relying on the work already done for the competition design. Held, by the
Court of Appeal, the architects could not pray in aid their competition work,
and they were entitled to nothing more than the £500: Jepson & Partners v.
Severn Trent Water Authority (1982). 37
:n.J415 C.B. 583.
35
See ante, Chap. 1, Section 11.
36 3 L.C.J. 36, Canada.
37 20BLR58.
 386 ARCHITECTS, ENGINEERS AND SURVEYORS [CHAP. 2
[Note: This is a difficult case, and would have been mu~h easie: to under-
stand if the judgments had made clear whether the later 1nstruct1ons to the
architects contemplated use of the competition design for the project, or
whether a different design would be needed. The Court apparently con-
sidered that the scale percentages were themselves expressly directed to.wo~k
done after appointment, and that the promise to pay scale remuneratio~ 1n
the competition agreement itself also related to work done after the appoint-
ment. It is not clear what the Court would have said should be paid if the
project had gone on to completion using the competition design. Would the
full percentage have been payable and applied retrospectively to the compe-
tition design work, or would a deduction for that work have needed to have
been made?}
Z.253 The RIBA itself promulgates fairly detailed model rules for architec-
tural designs, giving credit for competition payments against the RIBA
fees should the competitor subsequently be appointed as architect for the
project. 38
However, apart altogether from contract, there may be liability in qua-
si-contract if an owner actually makes use of the drawings, where it would
be unconscionable to allow him to do so without payment,39 though in
quasi-contract (as opposed to implied contract) the quantum of the claim
will strictly be governed by value to the owner rather than reasonable
remuneration for the services themselves, which may not necessarily be
the same.
If the plans and estimates are used at all, even if not for the building, the
owner must pay for them, lJ?less some express condition excluding liabil-
ity is inserted in the contract.
ILLUSTRATION
2-254 A building owner was sued for the cost of preparing plans. The defence was
that they were merely on approbation, and that payment was o~ly ~o be made
if they were used. It was true that they had not been used for buildmg, but the
building owner used the plans for the purpose of showing intending pur-
chasers of the land how the land could be developed. Held, that the building
owner must pay the architect: Landless v. Wilson (1880) 40
In the above case Lord Shand said:
"I think it right to say that if I had been of opinion that the case was one of a
competition of plans between the two architects, and the defe~dant h~d
afterwards thought fit not to build at all, I should have had greater difficulty m
holding that he would have been entitled to say to the competitors, 'You shall
be paid nothing for the plans and labour you have bestowed ... upon
is See 20 BLR 53, at p. 56 for some of the rules. _.
39 See ante, Chap. 1, Section 11. ,,_.
40 8 R. (Ct. of Sess.) 289. Cf also the discussions post, Chap. 3, paras. 3·075-3-076.
SECT. 9] REMUNERATION OF ARCHITECTS, ETC. 387
me.' My impression is that each of them would have been entitled to receive a
quantum meruit."
Today these remarks need, however, to be considered in the light of
modern judicial recognition of the distinction between restitution of ben-
efit in quasi-contract and implied contract to pay a reasonable price.41
(e) Amount of reasonable remuneration
In the case of Brewer v. Chamberlain42 Birkett J. indicated the consider- 2-255
ations to be applied in determining the reasonable remuneration to be
paid to an architect for services which included the preparation of design
and sketch drawings for a building project. Although he was considering
the amount to be paid to the architect as reasonable remuneration for
partial services under Clause 2(e) of the then RIBA scale of professional
charges, his observations were equally applicable to services rendered by
an architect or engineer without any express agreement as to· the amount
of remuneration. There, the architect claimed to have his remuneration
based upon a percentage of the estimated cost of works which had been
abandoned, while the building owner claimed that the fees should be
determined on a time basis of seven guineas a day. Birkett J. rejected both
of these contentions on the ground that neither basis of calculation was
appropriate in the circumstances. He rejected the building owner's con-
tention, for the reason that it was impossible to measure on a time basis the
value of services of architectural inspiration which solve a problem of how
to deal with a particular situation. On the other hand, he rejected the basis
of calculating the remuneration on a percentage basis of estimated cost
because, as he said, he had to take into consideration other factors
including:
(a) the difficulties to be encountered and the merits of overcoming
them;
(b) the experience and standing of the particular architect employed;
(c) the nature of the work done and what it entailed in drawings, inter-
views and correspondence.
When an architect is suing for reasonable remuneration, evidence can 2-256
be adduced of the nature and extent of his skill to show what the value of
his services is. 43 Where reasonable remuneration is owed, it is clear that
the services of a famous or specially skilled man would be valued more
highly than those of a less qualified person, and that the owner will nor-
.mally be presumed to have had in view the special qualifications of the
famous man if he knowingly employed him. It is clearly not relevant in
such cases to prove that the owner could have got another man at a
cheaper rate.
•
1
See ante, Chap. 1, Section 11.
42
Unreported, May 13, 1949.
O
Birdv. McGaheg (1849) 2 C. & K. 707, N.P., s~e supra.
 388 ARCHITECTS, ENGINEERS AND SURVEYORS [CHAP. 2
ILLUSTRATION
An agent was employed under a special contract to superintend the con-
struction of a dry dock, but died before the work was quite finished, His
executors sued for the value of his services. Per Balcom J.: "It would be pal-
pably unjust to disregard the stipulated value of the testator's services; for it is
evident that he was employed in consequence of his integrity and capacity for
the services required; and to allow the defendant now to reduce the value of
such service, by proof of the sum for which he could have employed another
person to perform the same services, in whom he might or might not have had
confidence, would enable him, according to the first decision of the referee, to
gain more than $20,000 by the testator's death": Clark v. Gilbert (1863). 44
2·257 On the other hand, other things being equal, percentage scales do to
some extent at last deal with this factor, since clearly the larger the project
the greater its profitability and the more likely that firms with good repu-
tations will be engaged for it. However, the courts have not been entirely
consistent in resisting attempts to equate professional scales of charges
with reasonable remuneration. 45 So in Upsdellv. Stewart4 6 Lord Kenyon,
in a case where a surveyor employed to settle the builder's accounts
sought to charge a percentage on total cost, said: "As to the custom
offered to be proved, the course of robbery on Bagshot Heath might as
well be proved in a court of justice." And in Burrv. Ridout41 Lord Cole-
ridge said of the scale that a commisson upon expenditure incurred was
open to the gravest possible objection, and that the scale was an unjusti-
fiable attempt by the Institute to increase professional emolument, and
did not bind the employer unless he agreed to be bound by it. He gave a
similar ruling in Farthing v. Tomkins4 8 Further criticism of the attempted
used of scales by quantity surveyors as a basis of reasonable remuneration
for giving evidence was made by Lord Coleridge C.J. in Drew v. Josolyne,49
where he said that he "never would sanction the supposed rule that sur-
veyors in such cases were to be paid for their evidence, not with reference
to the work done, but by a percentage on the sum in dispute" .50
ILLUSTRATIONS
2,258 (1) The plaintiff, an architect, sued for 4 per cent. as the customary charge
for drawing plans and speciication, and superintending the completion of a
"26 N.Y. 279.
45
SeeAtt.-Gen. v. Drapers Co. (1869) L.R. 9 Eq. 69; Brocklebank v. Lancashire & Yorkshire
Ry. (1887) 3 T.L.R. 575; Buckland & Garrard v. Pawson & Co. (1890) 6 T.L.R. 421.
46
(1794) Peake N.P. 255, infra, para. 2·268.
41 (1893) The Times, February 22.
4~ (1893) 9 T.L.R. 566,supra. See also Debenham v. King's College, Cambridge (1884) 1 Cab.
& El. 438.
• (1888) 4 T.L.R. 717. For a modern Scottish case on this, see Wilkiev. Scottish Aviation Lrd.,
9
1956 s.c. 198. ·,.:.
su See also per Younger J. in Faraday v. Tamworth Union (1916) 86 L.J.Ch. 436, at p. 439.
SE=. 9] R.EMUNERATION OF ARCHI'IECI'S, ETC. 389
building. The Court (Lower Canada) said: "I know of no right in architects, or
in any other body of men, be they medical men, lawyers or others, to make
tariffs for themselves. Mere proof that a charge of the sum in question is usual
is wholly insufficient. It is, moreover, an unjust rule to establish, even in
favour of the architects themselves, for it might happen that 4 per cent. was an
utterly inadequate remuneration in certain cases": Fottner v. Joseph (1859).si
(2) A. prepared plans for an hotel at B.'s request, under instructions that
the cost was not to exceed£8,000. The cost of the building planned would have
been £12,000. The contractor required security, which B. was not prepared to
give, and finally the project was abandoned. Held, that A. could not recover
the Institute scale of 3 per cent. for the plans, but only his fair charges for the
work actually done in the plans, drawings and specifications: Farthing v. Tom-
k;ns (1893)."
It has been suggested, supra, that, where the percentage can fairly be
seen to reflect a large amount of miscellaneous administrative and other
work over a long period of time which would be difficult to itemise (as, for
instance, in the "start to finish" design, supervision and administration of a
construction project), a scale percentage may not be an unreasonable
approach, whereas it is clearly irrational and will usually produce an exag-
gerated claim to apply a scale to a relatively clearly defined and easily
itemised service (such as a report or a drawing or series of drawings)
where estimates of the time, personnel and disbursements involved can
easily be made.
It is submitted that the following extract from the headnote of a Scottish 2-259
case is a useful and correct statement of principle:
"in the absence of express agreement regarding his remuneration, the pur-
suer was entitled to remuneration at the customary rate if he could prove the
evidence of a custom which was reasonable, certain and notorious; that if no
such custom were established it would be for the court to fix a reasonable
remuneration; that accordingly if the schedule were shown to be the basis in
practice on which the profession operated, the court, while entitled to take it
into account, would not be bound rigidly to apply it unless satisfied that the
resulting fee was reasonable in the circumstances. "53
ILLUSTRATION
Developers had had an application for planning pennission refused. An
architect by his sole efforts, based on personal inspiration, resolved the differ-
ences between his clients (who were the developers' surveyors) and the plan-
ning authority, and put forward a scheme which obtained approval. The
estimated cost of the project was £460,000 and the successful application
earned fees for the surveyors totalling£30,000. The land had also appreciated
st 3 L.CJ. 233; S.C. 5 L.C.J. 226.
2
~ 9 T.L.R. 566. (A. would seem to have been negligent, however, see ante, paras. 2· 156 et seq.
and his claim might have been resisted on that ground.) _
53
See Wilkie v. Scottish A viarion Ltd. 1956 S.C. 198, Scotland.
 390 ARCHITECTS, ENGINEERS AND SURVEYORS [CHAP.2
in value. The architect claimed £4,600, based on the provision for quantum
meruit"notexceedingonesixth of [6 percent.] of the cost of the works" in the
RIBA scales. Held, by Brown J., following Brewer v. Chamberlain 54 that the
scale, whether or not incorporated, was some evidence of what was reason-
able; the factors to be taken into account were: that the architect had achieved
the result wanted; the surveyor's fees of £30,000 but not the increase in the
value of the land; the high qualifications and experience of the architect; ~he
considerable architectural merit of the scheme; the size and value of the budd-
ing work relative to the percentage basis; and since inspiration based on
experience was the decisive factor, the time taken was less ~portant than
otherwise would be the case. Toe problem for the Court was difficult, and the
maximum of £4,600 was only a yardstick. £2,100 would be awarded: Graham
& Baldwin v. Taylor, Son & Davis (1965). 55
(2) For Uncompleted Services
2-260 When a contract of employment between a b\lilding owner and an A/E has
been partly performed, and there is a refusal or failure of the building
owner to complete the project,56 amounting to a repudiation on his part,
the A/E can on general principles sue for all sums due at the time of the
breach and for the profits on the abandoned work lost by reason of the
breach or, under the principle in Ladder v. Slowey, 51 may treat the con-
tract as at an end and sue upon a quantum meruit in quasi-contract on the
different monetary basis of restoration of value received. 58
The contract may, however, and often does, expressly permit the owner
to abandon the project and terminate the architect's services. 59 If so, the
contract will usually set out the basis of the architect's remuneration for
partial services or abandoned work, but in some earlier conditions of
engagement abandonment between stages was not expressly provided
for.
ILLUSTRATION
2-261 In June 1933, the defendant council resolve_d to appoint the plaintiff arch~-
tect in connection with its scheme for the erection of a town hall, and to pay his
fees in accordance with the RIBA scale, which was to be inclusive of all inci-
dental fees and services. This was accepted by the plaintiff. A fee for partial
services was provided for by clause 5: "If the project or part of it be aban-
doned, or if the services of the architect cease or are dispensed with before a
contract is entered into or order given, the charges in respect of the works
abandoned or for which the architect was employed (as the case may be) are
as follows: (a) for taking client's instructions, preparing sketch design and
54 Unreported K.B.D., May 13, 1949, per Birkett J.
5s 109 S.J. 793. See also Kelly v. Norrhshore Development, infra, para. 2·284.
56 See the discussion ante, Section 3(4), paras. 2·049 et seq.
51 [1904] A.C. 442 see post, Chap. 4, paras. 4·230-4·231, and Chap. 12, Section 3(2)(b), 12·083.
s~ See also ante, Chap. 1, Section 11, paras. 1·270---1·272. ·,:.
59 See the discussion ante, Section 3(4).
SECT. 9] REMUNERATION OF ARCHITECTS, ETC. 391
making approximate estimate of cost by cubic measurement or otherwise,
one-fourth of the percentage on the estimated cost of such works; (b) for
taldng client's instructions, preparing sketch design, making approximate
estimate of cost by cubic measurement or otherwise, and preparing drawings
and particulars sufficient to enable quantities to be prepared or a tender
obtained two-thirds of the percentage of the estimated cost of such works." In
September 1935, the council decided to abandon the scheme and to terminate
the plaintiff's agreement. At that time he had on their express instructions
done all the work set out in clause 5(a) and a substantial part of the additional
work set out in clause 5(b). In an action against the council the plaintiff con-
tended that, having employed him on the subject-matter of clause 5(b), they
could not exercise their power of abandoning the project or terminating his
employment at the end Of the work contemplated in clause S(a), and accord-
ingly were obliged to permit him to complete his work and earn his fee under
clause 5(b) or pay damages for breach of contract in preventing him from so
doing. Held, that the defendants, having instructed the plaintiff to proceed
with the work in clause 5(b), had lost their right of terminating his employ-
ment at the end of the work in claue S(a), and were therefore under an obli-
gation to allow him to earn the fee for the work in clause 5(b), and, having
broken their contract, they were liable to pay him not only for the work actu-
ally done in respect of the latter but also damages: Thomas v. Hammersmith
Borough Council (1938). 60
In the absence of an express term, a simple appointment of an A/E for 2·262
the general conduct of a construction project is not subject to any implied
term permitting termination on reasonable notice or at an intermediate
stage, and the owner will be obliged to do all things within his control
necessary to permit the project to proceed, or be liable in damages, usually
involving loss of profit on the remaining work.
ILLUSTRATION
Chartered surveyors commenced performing initial services on a particular
site for developers, whose principal director was a solicitor. In 1976 the solici-
tor agreed by letter to an all-in 20 per cent. fee, to include for quantity
surveyors' and structural engineers' fees. It was understood that, if the
developers.finally decided not to proceed with the development, only services
already performed would be charged for. Later the backers who were provid-
ing finance for the development insisted upon some better-known firm of
architects to be found for the project. The developers protested, but were
ultimately forced to agree and gave notice terminating the surveyors' engage-
ment. Held, by Hutchinson J., following Thomas v. Hammersmith Borough
Council, that there was no implied term permitting reasonable notice ofter-
mination, and since the development had been carried out there was no
defence to a claim for breach of contract, and the plaintiffs were entitled to
damages; including loss of profit on the remaining work: Edwin Hill & Part-
ners v. Leakcliffe Properties (1984).61
60
82 S.J. 583. See also Stubbs v. Holywell Ry.,post, Chap. 4, para. 4·026.
61 29BLR43.
 392 ARCHITECTS, ENGINEERS AND SURVEYORS [CHAP. 2
Z.263 It has already been pointed out, supra, that a substantial financing
element may often be present in the percentages for the earlier services
recommended by many institutional scales of fees, so that express terms
apparently permitting the contract to be terminated without additional
remuneration, beyond that already due in accordance with the scales, can
justifiably be viewed with some scepticism. A further danger for owners to
be found in the more recent versions of the two English professional insti-
tutions conditions of engagement is that they describe dividing lines
between the earlier services qualifying for the first percentage payment
and the later services qualifying for the next percentage payments which
are not easily recognisable in practical terms, with the result that claims
for the second or third percentages can be plausibly advanced with little
real justification. Thus the borderlines between "outline proposals",
"scheme design" and "detail design" in Stages C, D and E of the RIBA
scales respectively do not always conform to any easily discernible steps in
the real life development of drawings, as they seem to suggest. In the case
of the ACE conditions, which govern most consulting engineers' appoint-
ments, no less than 70 per cent. of the total fee is earned before work starts,
in stages of 20 per cent., 30 per cent. and JO per cent., with descriptions of
the latter two stages which are complicated and, given the great variety of
civil engineering projects, do not always apply. Since the increases in per-
centages can be very substantial in absolute terms, there is again a danger
of excessive remuneration becoming payable by owners who have not
finally committed themselves to a project and may wish to regain the right
to terminate without· disproportionate loss.
Again in the case of the ACE conditions, in addition to any b~s~c "front
loading" factor which might be present, the pre-1981 edition rec-
ommended that there should be agreement between the parties on a "dis-
ruption charge" to be imposed in addition to the scale r.emune~ation due
at the time of termination. However, in 1981 an automatic one-sIXth of the
expected fee on the outstanding work was substituted ( Clause 17.1\C) ): so
that there is now in effect a "liquidated damages" clause for tenmnation
by the client which almost certainly involves a very substantial degree of
profit, in addition to that in the scale percentages.
Z.264 The draftsmanship of the ACE provisions in regard to payment for·
incomplete services is poorly thought out and has attracted the judicial
comment:
"I do not suggest that this clause is a masterpiece o~ claritr and_ draftsman-
ship, for it plainly is not. This is not unusual when one 1S deahngwith standard
fonns of contract or indeed almost any printed contract whatever. Th~y ~re
apt to be somewhat like Topsy, and they just grow without anybody th1nk1ng
much about what is happening during the course of growth." 62
Thus, as what was probably an acciden.t of the draftsmanship ?f these
particular conditions, the first percentage instalment, on the wording, had
62 Mander Raikes & Marshall (a firm) v. Severn-Trent Water Board Authority (i9BO) 16 BLR
34, at p. 43,per Parker J.
SECT. 9] REMUNERATION OF ARCHITECTS, ETC. 393
to be calculated on total cost as estimated at the time the instalment was
earned, but, for purposes of payment for partial services only, it could not
be retrospectively upgraded in the light of later estimates of total cost
upon which later instalments were to be calculated (in contrast with the
position had the contract continued to completion).63 Again, the wording
of Clause 17 of the same ACE conditions has been interpreted as entitling
the engineer to a fair proportion of the total profit element for the contract
as a whole, arrived at by comparing the services performed up to the time
of termination against the services yet to be performed had the contract
been completed and not, as contended for by the engineers, profit on the
remaining work in additon to full payment of the instalments due for the
work aleady done. Given doubtful wording, Legatt J. refused to interpret
the contract (as had been done by an experienced official referee sitting as
arbitrator) so as to give the engineer the same profit on an uncompleted
contract as he would have obtained had it been completed. 64
In the context of damages, it need hardly be added that, even where the
AJE is entitled to damages for a partially completed project, the profit
recoverable as damages on the uncompleted work will not, on general
principles, be the A/E's gross fee for that work, but his net profit on that
fee after giving credit for the cost to him of providing the remaining ser-
vices to earn that fee. It may also be of interest to note that in the National
Coal Board case Judge Fay, sitting as an arbitrator, accepted evidence that
the operating profit of consulting engineers on major mining projects was
of the order of 30 per cent. of their gross fees.
(3) By Whom Remuneration Payable
An A/E can only look to the person with whom he contracts for payment 2·265
of his services, unless he can prove an agreement with himself by some
other person to meet his fees, usually in the form of a contract of indem-
nity or guarantee, or can frame an action in quasi-contract for money had
and received as where, under the old practice, which appears to have died
out about 1950, an architect's or surveyor's fees were sometimes paid to
the builder under the terms of the building contract for onward trans-
mission by him.
ILLUSTRATION
A building owner employed L., an architect, to superintend certain build-
ing works, and the contract was silent as to who was to pay L. 's commission. ln
an action by L. against the builder for this commission, held, that he could not
succeed unless the builder had first received the commission from the build-
63 Ibid.
64
National Coal Boardv. Leonard & Partners (1985) 31 BLR 117.
 [CHAP.2 SECT. 9] REMUNERATION OF ARCHITECTS, ETC. 395
394 ARCHITECTS, ENGINEERS AND SURVEYORS

ing owner in addition to what was due to him upon the contract: Locke v. negotiation and formal recording of an agreed figure by a Valuation Court
Morter (1885). 65 was not supporting litigation for the purpose of the rules of maintenance and
secondly, because a District Valuation Court was not in any event a court of
law for the purpose of the rules of maintenance or champerty, but merely part
of the administrative process of rating: Jeremy Pickering (trading as City
(4) Services Outside Building Contracts Agents) v. Sogex Services (U.K.) Ltd. (1982). 68
2·266 Other services, besides the preparation of plans for building and engineer-
ing contracts and the supervision of the work, are performed by engineers,
However, there has been a rapid growth in the United Kingdom in
architects and surveyors, such as making valuations, surveys and measure-
recent years of a "claims industry" in the construction field, with persons
ments, attending in court and before arbitrators to give evidence, etc. in
of varying or no formal qualifications offering their services as arbitrators,
this class of work also the courts have refused to recognise any other basis
expert witnesses, advisers on the preparation of claims, and even as rep-
of remuneration than that of reasonable remuneration, unless previous
resentatives or advocates of the parties to construction disputes at hear-
agreement has been reached.66
ings before arbitrators (as to which there are no restrictions in England).
In the case of fees for giving evidence, architects, engineers and sur-
There are an increasing number of such persons charging a percentage on
veyors will, in the absence of express agreement, be in principle entitled to
the sums recovered for these services. Such agreements will be in real dan-
payment on an hourly basis, which is likely to be the basis of most express
ger of being held to be unlawful and unenforceable, whatever the outcome
agreements, though obviously in the case of any professional man whose
of the current government pressure in 1989 for contingency fees in the
services are in demand and who is required to make himself available in
legal profession itself. There is also a separate question whether, as
advance for an indeterminate period, possibly outside the country, a mini-
between parties in dispute, fees for these types of service are recoverable
mum fee or commitment together with disbursements will no doubt often
from an unsuccessful party as damages for breach of contract or as costs.6&.
be required and agreed. 66a However, unless an agreement is champertous
(that is, to provide services free or otherwise lend support to litigation in
return for a share of its proceeds), or alternatively unenforceable as an
(5) Charges for Settling Builders' Accounts
assignment of a bare right to sue,67 express agreements for such renumer-
ation will usually be enforced.
An architect or surveyor is sometimes specially employed to look over 2·268
and settle the amount of a builder's or sub-contractor's account. In such
ILLUSTRATION cases, in the absence of special agreement or proof of custom, be will not
be entitled to charge a percentage on the amount, but only a reasonable
payment for the services he has rendered. 69 There was certainly strong
2·267 A firm of valuers and surveyors offered to investigate an office building
judicial resistance to percentage fees for these services in a very old case.
owner's rating assessments with a view to securing a reduction. They pro-
posed as a fee the amount saved during one stipulated calendar year, with no
fee charged if they were unsuccessful. Alternatively they proposed a fee of 2
per cent. on rateable value, payable whatever the outcome. The former pro- ILLUSTRATION
posal was to apply if the matter did not have to go to court, and was accepted.
Negotiations with the valuation officer were not successful, and an appeal was
listed for the Valuation Court, but the appeal was compromised by the sur- A surveyor claimed £34, being 5 per cent. on all money charged by and
veyors before the hearing and the rates reduced by some £19,000 per annum, allowed to the different tradesmen in a building work. He had done nothing
which was duly claimed. The defendants contended for the scale fee, and also m~re_than measure the work and settle the bills, not being at all employed in
that the agreement was champertous and unenforceable. Held, by Kilner- building the house. The defendant offered 214 per cent. The plaintiff proposed
Brown J, that there had been no "going to court" so as to nullify the accepted to tender evidence of a custom, and that five per cent. was reasonable. Held,
proposal, and the agreement was not champertous because the that the plaintiff was entitled to a reasonable compensation for his labour
which must go to the jury, but he must not estimate that by the money laid out
65 2 T.L.R. 121. For an example of surveyor's fees, see Paynev. Wheeldon (1954) 104 L.J. 844, by the defendant in finishing his building. Per Lord Kenyon, "As to the cus-
County Court.
66 SeeAtt.-Gen. v. Drapers Co. (1869) L.R. 9 Eq. 69; Debenham v. King's College, Cambridge

(1884) 1 T.L.R. 170; Brocklebank v. L. & Y. Ry. (1887) 3 T.L.R. 575; Drew v. Josolyne 61!2QBLR66.
(1888) 4 T.L.R. 717; Faraday v. Tamworth Union (1916) 86 L.J.Ch. 439; Wilkiev. Scottish
6s. Manabeev. Brett [1970] 1 W.L.R. 1607, and see the discussion in the BLR commentary to
Aviation Ltd., 1956 S.C. 198, Scotland. ~ Longley v. S. W. Regional H.A. (1983) 25 BLR 56.
"6e See the Norjarl case,post, para. 18·156.
111 ~or a modern case on quantity surveyor's remuneration for adjustment of variations dur-
67 See post, Chap. 14, Section 4(1). mg the course of the work, see Kelly's case, infra, Subsection (9), paras. 2·283-2-284.
 396 ARCHITECTS, ENGINEERS AND SURVEYORS [CHAP. 2
tom offered to be proved, the course of robbery on Bagshot Heath might as
well be proved in a court of justice": Upsdell v. Stewart (1794). 70
There is evidence in many reports of early surveyors in the nineteenth
century charging by percentages for measuring up, but no doubt this was
often by express agreement. Certainly today there would be no impli-
cation of this, it is submitted, since builder's accounts can be of very
varying degrees of complication and there would be no likelihood
of agreement on the appropriate percentage.71
(6) When the Right to Payment Arises
Z.269 On general principles, when an architect contracts to perform an entire
work, as, for instance, to prepare drawings and superintend the whole
work for a certain sum, whether fixed on the basis of a commission on the
outlay or otherwise, his charges are not recoverable until the whole work
is complete, unless provision is made for payment by instalments. In the
view of the long-term nature of architects' work, it would seem reasonable
to imply a term for reasonable payments on account ( as inde~d in the case
of many small jobbing contracts), but there is as yet little authority in the
general law of contract on this topic. 72 The RIBA scale of charges, as al-
ready pointed out, makes provision for payment by instalments.
(7) Retention of Plans and Documents
2·270 When an engineer, architect or surveyor is employed to perform a specific
work, such as to prepare plans or make a survey, he is entitled to be paid
for his plans or survey as soon as he has done the work and given his
employer a reasonable opportunity of inspecting and ascertaining its cor-
rectness, and he has a lien upon and may retain the plans until he is so paid.
An architect or surveyor, by demanding more than a reasonable price
and refusing to deliver his plans except upon payment of the excessive
price, does not preclude himself from subsequently suing for and recover-
ing a reasonable price. He may maintain an action and retain his lien not-
withstanding.73 But upon payment of the architect's charges he must
deliver up his plans, unless it has been stipulated that they are not to
become the property of the employer. Architects frequently take advan-
tage of this in contracts which have run into trouble, where the owner and
his advisers may need to see the documentation and correspondence
before deciding against whom they should pursue a claim. A valuable
70 Peake N.P. 255. Not perhaps surprisingly, the plaintiff agreed to a non-suit.
71 See Subsection (9), infra. See also supra, para. 2·255.
12 For the absence of any implication of payment of a contractor by instalments or on
account, and a possible exception, see post, Chap. 4, paras. 4·032-4·034. -,:.
73 Hughes v. Lenny (1839) 5 M. & W. 183.
SECT. 9] REMUNERATION OF A_RCHITECTS, ETC. 397
remedy in this situation is that afforded by Order 50, rule 8 of the Rules of
the Supreme Court, by virtue of which, on payment of the fees demanded
into court to abide the result of the litigation, the architect's lien is dis-
charged and he is bound to surrender the documents. Apart from plans or
drawings actually made by the architect, the principle is the same in the
case of all maps, plans and other documents relating to the contract col-
lected by him in the course of his employment.74
ILLUSTRATIONS
(1) The defendants employed the plaintiff (a surveyor) to survey a parish Z.271
and then to put down the results of his survey, first in the books provided for
him by the defendants, and afterwards on paper to be provided by them for
him in the shape of a map or plan. He made a plan, and wrote, saying that he
would deliver it on payment of his charges. The defendants inspected the
plan. The defendants refused to pay, and the plaintiff retained the plan, and
sued for and recovered his charges: Hughes v. Lenny (1839). 75
(2) B. employed D. as a land agent, and paid him by commission. In the
course of D. 's employment he made memoranda relating to the estate, maps,
plans and calculations, etc. D. was discharged from his employment. Held,
that D. must give up all documents relating to the estate made or collected by
him in the course of his employment: Beresford (Lady) v. Drier (1852). 76
(8) Ownership and Copyright of Plans and Documents
(a) Ownership
There is no custom or any general or binding usage to the effect that the Z.272
plans themselves, as opposed to the copyright in the plans, belong.to the
architect and not to his employer.77 No doubt the reason is that the client,
by paying for the design service, is entitled to ownership of the basic prod-
uct of that service, in the absence of express provision to the contrary.
While the position of plans presents little difficulty, it may not be easy to
decide the ownership of the very large number of miscellaneous docu-
ments and correspondence which normally come into existence during the
course of the A/E's administration of a construction contract. It is sug-
gested that the test is whether a document comes into existence or is
obtained by the architect as a part of the discharge of his function as agent
of the owner for which he is paid. If so it will be his client's property.
Thus it is submitted that letters written to the contractor in relation to
the contract, correspondence with quantity surveyors or clerks of works
74
See also Subsection (8), infra.
l5M. & W.183.
7
76
22 LJ.Ch. 407.
71 Gibbon v. Pease [1905] 1 K.B. 810; Ebdy v. McGowan (1870), Hudson, Building Contracts
(4th ed.), Vol. 2, p. 9; Moffatv. Scott (1863) 8 LC.J. 310, Canada.
 398 ARCHITECTS, ENGINEERS AND SURVEYORS [CHAP. 2
appointed under the contract, local and planning authorities, consultants
of all kinds, and all other correspondence arising in the administration of
the contract satisfy the test and are the property of the client.78 On the
other hand, personal memoranda or communications between members
of his own staff or firm, and calculations and private notes used by them,
will remain his property.79 In cases where a site supervisory organisation is
maintained, it is submitted that correspondence passing between the site
and the architect's or engineer's office, such as between engineer and resi-
dent engineer, or between architect and architect's assistant on site, will
be the property of the owner even if the correspondents are in fact
employees of the same firm, provided the subject-matter of the correspon-
dence relates to the administration of the contract or might be needed at a
later date for its proper administration.
It is suggested that a convenient test might be to ask whether a docu-
ment is such that it ought to be handed over to a successor NE in order to
enable him to continue the administration of the contract successfully. If
so, it would be the property of the owner, it is submitted.
(b) Copyright
2·273 A/Es have been well served by the legislation in Commonwealth coun-
tries, based in almost all cases on the wording of the English Copyright
Act of 1911, itself semantically although not in substance, greatly altered
by the English Act of 1956, and later by the English Act of 1988. Today
that protection applies principally in two areas, namely:
(i) Copyright of the buildings themselves
:Z.274 This special type of copyright was effectively created by the 1911 Act,
which applied to what were described as "architectural works of art", and
was confirmed as a new separate copyright in the leading case in England
of Meikle v. Maufe. 80 Under the 1956 Act the description is "works of
architecture, being either buildings or models for buildings (including any
structure). " 81 Under the 1988 Act this has been expanded to "building or
fixed structures or any part of a building or fixed structure". 82 It has been
suggested in Australia that the 1956 Act wording made it somewhat easier
to establish copyright.83 In the Acts, what is protected is the copying of a
building as such, either by the subsequent use of drawings or by another
building, but for this type of copyright all the Acts require the element of
artistic quality. Thus under the Act of 1911 the protection was expressly
7s See Beresford's Case, supra.
79 See A.L. Smith J .'sjudgment in London School Boardv. Northcraft (1889) Hudson, Build-
ing Contracts (4th ed.), Vol. 2, p. 147; illustrated infra, para. 2·285.
80
[1941] 3 All E.R. 144.
81 1956 Act, Section 3(1).
82
Section 4(2). , si Section 4(1)(a) and (2).
ro Ownit Homes Pty. Ltd. v. Mancuso, unreported, Federal Court of Australia, Queensland
Registry, April 29, 1988: see (1988) 7 A.C.L.R. 358.
SECT. 9] REMUNERATION OF ARCHITECTS, ETC. 399
limited to "its artistic character and design and not to processes of con-
struction" (section 35(1)). Under the Acts of 1956 and 1988 there is a clear
negative inference from the wording that artistic quality of the building
remains essential to this special type of copyright, since it is expressly pro-
vided in both Acts that it is to be disregarded in the different case of copy-
right in plans and drawings. This particular copyright does not attach to
the use of plans or documents, it should be noted, but to the building
itself-thus, even if all original plans and drawings have been lost, and no
others used, copying by simply building a sufficiently close resemblance of
it would infringe the copyright if originality and artistic quality are
proved.84 This copyright is the property of the architect and not, as was
unsuccessfully submitted in Meikle v. Maufe, that of the builder (see now
section 9(1) of the 1988 Act). This is one important respect, incidentally, in
which United States law differs from United Kingdom law, there being no
copyright of buildings there, as opposed to plans and drawings. This could
provoke difficult problems of international law where a building in the
United States copies a building in the United Kingdom, or vice versa, for
example.
(ii) Copyright of the plans and drawings of a building
Under the 1911 Act this was rather awkwardly divided between the pro- 2-275
tection of "literary works" (which expressly included "plans") and ''artis-
tic work" (which expressly included "drawings"). Thus a plan and
elevation of a shop front submitted with an estimate was held to be a "lit-
erary work" .85 Under the 1956 Act, "artistic work" was defined as includ-
ing sketches, plans and elevations (section 48(1)), and the Act now
expressly confirmed that this latter form of copyright would attach "irres-
pective of artistic quality" (section 3(1)), confirming what had been the
understanding as to both "literary works'? (plans) and "artistic work"
(drawings) under the 1911 Act. This policy has been followed by the 1988
Act, which expressly applies to any "drawing, diagram ... or plan" .86 Thus,
subject to the basic and important questions of originality and copying,
this second copyright is easier to establish, since it is "originality" (which
does not mean novelty, but the exercise of independent skill and labour)
and not artistic quality which is protected. It will apply to the structural
steel plans and drawings for a building, providing there is the necessary
degree of originality,justas much as to an architect's plans.87 So, too, to a
floor within a building. 88 These two cases are confirmed and reinforced by
the words "fixed structure and a part of a building or fixed structure" now
to be found in clause 4(2) of the 1988 Act.
84 Meikle v. Maufe [1941} 3 All E.R. 144, where it was unsuccessfully argued that a simple
building without use of documents could not infringe a copyright.
85 See Chabot v. Davies [1936] 3 All E.R. 221.
,, Neptusky v. Dominion Bridge [1969] 68 W.W.R. 529, Canada.
88
Lend Lease Homes Pty. Ltd. v. Warrigal [1970] 3 N.S.W.R. 265.
 'i
400 ARCHITECTS, ENGINEERS AND SURVEYORS [CHAP. 2
An important practical qualification was imposed by section 17 of the
1956 Act, which provided that no injunction should issue to prevent the
completion of a building the construction of which had been begun-
though precisely what stage of development of the project might attract
this protection was not clear.89 However, this restriction was removed by
section 96(2) of the 1988 Act. Even so, in many cases the only practical
question may be the amount of the damages for infringement (since on
general principles injunctions will be bard to obtain in such cases), and
normally these will not be very substantial. In this context, the amount of
fees which an A/E might have expected to earn if himself employed on the
infringing work will be irrelevant. A reasonable amount to be charged for
a licence might be a sound basis from which to begin the assessment, but
other factors can then be taken into consideration.90
A/Es have tended in the past to treat their ownership of copyright as a
potentially powerful weapon in the event of disagreement with their cli-
ents, either to secure further employment on the project or to prevent
interference with their design. This can easily be exaggerated, and the
damages for infringement, if established, are likely to be relatively small.
ILLUSTRATIONS
Z.276 (1) An architect was commissioned by a public body to design an ornamen-
tal fountain for the foreshore. His design contained three elements, namely
the fountain itself, a special ornamental feature, and a surrounding area. The
clients decided to use only the fountain part of the design. Held, by Bloch J.,
there was no principle of copyright law whereby, in the absence of express
agreement, a person who by paying his fees had obtained a licence to use the
copyright was bound to use the whole if he did not wish to do so: Barnett v.
Capetown Foreshore (1960). 91
{Note: This case now needs to be read subject to the (very limited) "moral
rights" against "derogatory treatment" in section 80 of the 1988 Act: see
infra.]
(2) An engineer produced detailed drawings of an unusual design of struc-
tural steel work for a football stadium and ice arena for a fee of $45,000. He
had differences with the architect and withdrew, and another engineer was
appointed, under whom the sub-contractor produced shop drawings which
essentially reproduced the original drawings, with some omissions and modi-
fications to reduce costs to a final figure of $1,800,000. Held, by the British
Columbia Court of Appeal, that the drawings were "in the nature of architec-
tural drawings or plans" and subject to copyright, but the sub-contractor had
undoubtedly had a licence to use them in their original form. However, there
was no licence to alter them, and $1,000 damages woud be awarded: Neptusky
v. Dominion Bridge Company Ltd. (1969)n.
89 See.per Oliver J. in Hunterv. Fitzroy Robins (1977) 10 BLR 84; [1978] F.S.R. 167.
w For a discussion of the considerations, see Meikle v. Maufe [1941] 3 All E.R. 144, at pp.
9
153-156,per Uthwatt J.
94
91 [1960) 4 S.A. 439, South Africa.
92 68 W.W.R. 529, Canada.
95
SECT. 9] REMUNERATION OF ARCHITECTS, ETC. 401
.[Note: Thi.s c~se see!11s to ~ave been a somewhat pyrrhic victory financially,
with the pnnctpal discussion concerned with the eligibility of steel, as
opposed to_ a.rchitectural, drawi:1gs for copyright. Nevertheless, the latter part
of the dec1s101:1 seems wrong 1n principle and was mentioned and clearly
doubted by Ohver J., who appeared to prefer Barnett's case, in a later case in
England,93 and the point does not seem to have been thought·worth taking in
the Court of Appeal inBlairv. Osborne & Tompkins, infra where alterations
had admittedly been made.] '
Moreover, the courts have been both realistic and generous in their 2-277
readiness to imply licences to use plans and drawings arising as an incident
of the contract of employment of the NE.
ILLUSTRATIONS
(1) Ar~hitects were com~issioned under the RAIA conditions of engage-
ment, which co~ld. be terminated on reasonable notice, to prepare plans of
ho_us:s for subm~ss1on to a local a.11thority so as to obtain a design approval in
pnnc1ple. The clients then. advertised the property for sale by auction, stating
that approved plans were .available for purchasers. The purchasers
approached the architects to prepare working drawings, but agreement could
not ?e reached on terms, and other architects were called in. The original
architect sued them an~ thf:purchas~~ for copyright infringement. Held, by
Jacobs J., there was an implied perm1ss1on or consent given to the vendors to
use the plans for the construction of the building, and to assign their right to
the purchasers: Beck v. Montana Constructions Pty. Ltd. (1963).94
~2). An ar.chitect prepared plans in order to obtain consent for a proposed
building. His employment was then terminated on reasonable notice under
the RIBA conditions of engagement. His plans were then used by the client's
surveyors to prepare detailed plans with some alterations for by-law
approval. Held, by the Court of Appeal, aplying Beck v. Montana Construc-
tion Ltd., that in return for his fee there was an implied licence for the owner
or subsequent purchasers from him, to use the plans for the project, eve~
though other persons were engaged for this purpose: Blair v. Osborne &
Tomkins (1971).95
(3) ~I~nni.ng perm~ssion bad been refused for a factory, and an architect 2·278
spec1~hs1ng 1n such difficult cases was engaged to prepare new plans, which
containe~ an unusual and attractive feature, as a result of which permission
was obtruned. Later the owner employed another architect to build who
adopted the plaintiff's special feature, but not the whole design. The original
architect had charged a nominal "fee of £100 (the RIBA scale at 1kth would
have been. £900), mar~ing it "nominal" in his account, and expressly stating
that copyright was retained and no use should be made of his plans without his
con~ent. Held, by the ~ourt of Appeal, that the Beck and Blair cases involved
full instalment fees being charged. On the facts no licence would be implied
for the use of the plans in the later building, though clearly there was a licence
J Hunter v. Fitzroy Robinson (1977) 10 BLR 84; [1978] F.S.R. 167.
80N.S.W. W.N.1578.
[1971] 1 All E.R. 468.
 T
I
402 ARCHITECTS, ENGINEERS AND SURVEYORS [CHAP.2
for planning purposes. Per Salmon and Megaw L.JJ ., an architect may agree
considerably less than his full fee for a planning permission in a doubtful case,
since he knows there is a chance that the project and expense may be abortive.
It would be unreasonable, if the project went ahead successfully, to imply a
licence for use in construction without further charge. Following
Chabotv. Davies, damages would be equal to the fee that the plaintiff would
have had to pay for a licence, and a sum of £500 would be fair: Stovin-Brad-
!i
ford v. Volpoint Properties Ltd. (1971). 96
(4) Developers in New South Wales commissioned an architect to provide
plans for buildings, but they subsequently went into liquidation and were
unable to pay his fees. The liquidators transferred the property to new own-
ers, whom the architect sued for breach of copyright. Held, by Wooten J., an
implied licence was given once for all when the architect accepted his com-
mission, and was not dependent upon subsequent payments. There was no
implied term that, once a licence had been granted and acted upon, it might be
revoked for subsequent non-payment: Ng v. Clyde Securities (1976). 97
2·279 (5) An architect was retained to prepare plans for rebuilding a well-known
hotel, and did much detailed work, including obtaining planning and Fine Art
Commission permissions, and a new wing of the hotel was built in accordance
with his design. There followed a fire before the remaining work could be
done, and he prepared a modified scheme. At a time when he was still owed
£46,000 in fees his clients got into financial difficulties, and the hotel was sold
to new owners by their receiver. The architect then learned that the new own-
ers had appointed other architects and were proposing to use his plans for the
proposed erection of another building on the site and, failing agreement, he
eventually brought proceedings for an interlocutory injunction pending trial
of his claim for infringement of copyright. There were noticeable differences
between the proposed work and the original plans, with the elevations and
internal layout markedly different. The new architects admitted to having
seen and to some extent copied from the plaintiff's plan. Held, by Oliver J.,
that the plaintiff might succeed in showing actual copying of his plans, but
whether the copying was of such a degree as to be substantial appeared quest-
ionable. But in any event there was a very strongly arguable case that there
was an implied licence to the original owner to use the plans in any way he
thought right, including if necessary the engagement of another architect to
modify them, and the injunction would be refused: Hunter v. Fitzroy Rob-
inson (1977). 98
2-280 Moreover, it is clear that in the particular case of an architect's plans a
special difficulty faces copyright claims, because there are so many com-
mon features to all plans for relatively simple building on straightforward
sites:
"It is clear I think that the degree of protection of an architectural plan must
of its nature be very limited, and it seems to me that one of the reasons for the
severe limitation in the degree of protection under the law of copyright is that
in an architectural plan, more than any other forms of literary or artistic pro-
duction, there is a greater element which may be·described as common to all
plans, and that the particular portion of the plan which may be regarded as
i 4
% [1971] Ch. 1007.
• (1976] 1 N.S.W.L.R. 443.
1
"~ 10 BLR 84.
SECT. 9] REMUNERATION OF ARCHITECTS, ETC. 403
belonging to the owner of the copyright, the particular features of it and of
the expression, must consequently be more limited. " 99
This may be a difficult question of degree, but it would seem that for a
successful claim for infringement there must not only be an element of
actual copying of substantial parts of a design, but there must also be a
sufficiently close and immediately perceptible resemblance of the later to
the earlier work. 1 It has been said that this degree of resemblance is in the
last degree for the court and not expert witnesses to establish. 2 Thus in a
case where a visitor to a developer's display home obtained copies of plans
which he instructed his own draughtsman to use when designing a house
for him, it was held that despite undoubted copying a number of differ-
ences in the house as finally built were sufficient to defeat the developer's
claim for breach of copyright. 3
The foregoing discussion has been exclusively concerned with the rights 2·281
of A/Es as authors of their designs. In turnkey contracts, the copyright will
clearly, in the absence of express provision, remain in the turnkey con-
tractor if he ( or an employee) is the "author" of the design. In cases where
the turnkey contractor himself employs independent design pro-
fessionals, as often happens, no doubt the result will be a licence from the
designer to the turnkey contractor for the use of the copyright, and the
contractor, as exclusive licencee from the owner of the copyright, will be
able to sue in his own name for its infringement. 4 It has been held in Malay-
sia that in such a case a turnkey contractor who had been dismissed was
entitled to an injunction preventing the use by the owner, for the purpose
of completing the project, of drawings and designs prepared by three firms
of consultants engaged previously by the turnkey contractor. It is not
entirely clear whether the matter was dealt with on the basis of the right of
ownership of the documents in question or of copyright, but on either view
the decision seems doubtful. 5
The 1988 Act has introduced a few "moral right" provisions which can 2-282
confer additional rights on A/Es in the construction field. These are, first, a
right to identification of the author of the copyright in certain circum-
stances, and, secondly, a right of objection to "derogatory treatment".
By section 77(4) of the 1988 Act, there is a right to identification of the
author, provided it is asserted as required by section 78, if a model of a
99
Beckv. Montana Constructions (1963) 80 N.S.W. W.N. 1578, at p. 1580,per Jacobs J.
1
See Ancher Mort lock v. Hooker Homes Pty. Ltd. [1971] 2 N.S.W.L.R. 278, commented on
by the Federal Court of Australia (Queensland Registry) in Ownit Homes Pty. Ltd. v.
Mancuso, unreported, April 29, 1988 and see (1988) 7 A.C.L.R. 3, at p. 58, where the only
innovative feature of a house-type was a distinctive roof in four planes described as a
"brokenZ".
2
See the Beck and the Ancher cases, supra.
J Ownit Homesv. Mancuso,supra, per Kelly J., affirmed by the Full Federal Court (1989) 8
A.C.L.R. 14.
Jonathan Cape Ltd. v. Consolidated Press Ltd. [1954] 1 W.L.R.1313, and see theAncher
Mortlockcase, [1971] 2 N.S.W.L.R. 278, at pp. 292-293 and see now section 101 of the 1988
Act replacing section 19 of the 1956 Act.
5
High Mark (M)S.d.n. B.h.d. v.PatcoMafaysiaS.d.n. B.h.d. (1984)28BLR 133,perYatimJ.
 404 ARCHITEcrs, ENGINEERS AND SURVEYORS [CHAP. 2
building is exhibited in public or a visual image of it broadcast or filmed in
public or, in the case of a building or of a model, copies of a graphic work
or photograph showing it are issued to the public. In the case of a building
(or a prototype of a number of buildings), the author also has a right of
physical identification on the building or prototype itself (section 77(5)).
Apart from assignments or other instruments dealing in copyright, the
right can be asserted by a simple instrument in writing signed by the
author himself, and is enforceable against any person to whose notice the
assertion is brought (section 78(2)(b) and (4)(b)).
In addition, section 80 of the 1988 Act confers a right on authors to
object to "derogatory treatment" (that is, distortion or mutilation of their
copyright work) in certain circumstances. In the case of models of build-
ings this gives a right of action against persons issuing distorted graphic or
photographic representations of the model to the public (section 80(4)
(c) ), but in the case of buildings themselves,. the right is the very limited
one of having any identification of the author on the building removed.
(9) Remuneration of Quantity Surveyors
2-283 In practice, whether or not there has been express agreement, quantity
surveyors have in the past almost invariably submitted their accounts for
preparing bills of quantities by reference to a percentage calculated on the
contract price.6 In Gwytherv. Gaze7 Quain J., after a conflict of evidence,
assessed the remuneration at l1h per cent., but this was a jury case, and
each side was putting forward a percentage. It is submitted that, on the
principles previously discussed8 evidence might in theory be received to
show a reasonable percentage for true quantity surveyor's work in prepar-
ing bills, but it should be remembered that, since the date of the above
case, the practice of inserting PC or provisional lump sums in bills of quan-
tities has greatly increased both in frequency and extent, and that this
inevitably has the effect of greatly reducing the work of the quantity sur-
veyor, in preparing Bills.9
It is suggested that where, for example, 60 per cent. of the contract price
is billed in this way (which nowadays is by no means uncommon), a build-
ing owner would be justified in demanding a considerable reduction in the
scale percentages, and that an architect with authority to employ a quan-
tity surveyor on his behalf should be slow to agree to remuneration based
on the full percentages on total cost for these services, although, as pre-
viously pointed out, the RIBA 1982 appointment document recommends
that quantity surveyors' and structural engineers' services should be paid
for in accordance with their respective institutions' recommended scales. 10
6 Compare the attempt to set up a custom in regard to fees for settling the builder's account,
supra, Subsection (5).
'(1875), Hudson, Building Contracts (4th ed.), Vol. 2, p. 34.
~ See ante, Section 9(1)(e). para. 2·255.
9 For a discussion of these items see post, Chap. 3, paras. 3·020--3·021, and Chap,.:13, Section
m w
10
1982 appointment document, Clause 2.45.
SECT. 9] REMUNERATION OF ARCHITECTS, ETC. 405
However, modem courts tend to use scales at least as a yardstick when
assessing reasonable remuneration. 11
ILLUSTRATION
Quantity surveyors' agreed remuneration for adjustment of variations dur- 2-284
ing the course of the work was to be 21h per cent. on the value of measured
additions and 11h per cent. on measured omissions (excluding omissions not
involving the exercise of professional skill). The contract sum was £46,000 and
the final cost £68,000, but so many variations had been ordered that the quan-
tity surveyors were, as a practical necessity, obliged to re-measure the whole
work. The owner contended, and the trial judge awarded, that they should be
paid 21h per cent. on the excess of £22,000. The quantity surveyors contended
that they should be paid 21h per cent. on the whole £68,000, the contract sum
being treated as an omission involving no professional skill; alternatively they
claimed quantum meruit. Held, by the Court of Appeal of Jamaica, that, since
the contract did not contemplate such a large number of variations, the pro-
vision could not be applied in this different situation; the surveyors were
entitled to reasonable remuneration and the trial judge was wrong in only
giving a percentage on the excess, since this ignored the fact that the actual
variations greatly exceeded the net excess, and would mean, for example, that
the surveyors would obtain nothing if after a great many variations the final
result was the same as the contract sum. A reasonable basis would be to apply
the provision for preparation of bills of quantities, namely 21h per cent. on the
first £20,000 and 2 per cent. on the balance: Kelly (C. T.R.) & Partners v.
Northshore Development Co. Ltd. (1963) 12
The quantity surveyor used to charge for lithographing his quantities, 2-285
employing and paying his own lithographer, in which case he might appar-
ently retain any cash discount obtained by him, but could not accept any-
thing in the nature of a commission from such lithographer, nor retain any
'i' trade discount. 13
'i 1
The charges for lithography were sometimes, however, included in the
contract as part of the builder's tender under the old practice. 14
ILLUSTRATION
The L. school board employed N., as a quantity surveyor and measurer, on
buildings of the value of £12,000, which were completed and measured up.
The board brought an action in detinue against N. for the return of certain
11 Compare the cases on architect's remuneration, supra, Subsection (1).
12 5 W.I.R. 379, West Indies. Contrast Gilbert & Partners v. Knight (1968) 112 SJ. 155, illus-
trated ante, Chap. 1, para. 1·064.
13 London School Boardv. Northcroft(1889), Hudson,Building Contracts (4th ed.), Vol. 2, p.
147; Hippisley v. Knee Brothers [1905] 1 K.B. 1.
14 See, in addition to the case illustrated, Campbell v. Blyton (1893), Hudson, Building Con-
tracts (4th ed.), Vol. 2, p. 234.
 406 ARCHITECTS, ENGINEERS AND SURVEYORS [CHAP. 2
papers of calculations and memoranda and in money had and received in
respect of £74 charged by N. for lithography. Held, (1) that the measuring up
having been done, the board had no right to the memoranda; (2) as to a sum of
15 per cent. paid by the lithographers to N., that though, N. being the board's
agent, the payment of any commission to N. was illegal and improper, yet, as it
was agreed that N. should employ his own lithographer, he might retain this,
which was really discount for cash: London School Board v. Northcraft
(1889)."
These cases were decided at a time when the quantity surveyor's role in
the building industry was very different, however, as indicated below.
SECTION 10. LIABILITY TO PAY FOR QUANTITY SURVEYOR'S FEES
(1) Liability to Pay for Preparing Bills
2·286 At first sight this problem would not appear to present any difficulty, and
the normal assumption would be that it is the building owner who employs
the quantity surveyor. Historically, however, quantity surveyors were first
employed jointly by builders tendering for lump sum contracts, before the
emergence of measured contracts for building work, 15a to take out quan-
tities, on the basis that payment would be made by the builder ultimately
selected to carry out the work.
Probably because it was more convenient for the architect to discuss his
design with the quantity surveyor at an earlier stage, it later became the
practice for the architect himself to engage the quantity surveyor to pre-
pare the bills, on the basis that payment for this service would be made by
the successful tenderer, and to insert a provision into the building contract
to that effect. Consisteiltly with this, it was not unusual to find a provision
in the contract with the builder for payment to him of these fees, usually
under a provisional sum, and the RIBA forms of contract had, until 1963,
an optional clause for this method of payment via the builder. It is clear
from Moon v. Witney Union 16 that this practice was established as early as
1837. It is important to appreciate that at this time bills did not form part of
the contract, 17 but were merely the application of the correct first-stage
technique for estimating a lump swn price for the work, serving as a guide
for this purpose for all tenderers. Because only one person took off the
quantities, this part of the cost of tendering was reduced to nothing in the
case of the unsuccessful tenders. At this time, therefore, the work was
primarily for the benefit of the builders, and only secondarily of the owner .
is Hudson, Building Contracts (4th ed.), Vol. 2, p. 147.
is. For the history of this see post, Chap. 8, paras. 8·016 et seq.
t6 (1837) 3 Bing. N.C. 814.
17
See post, Chap. 8, Section 1(2)(b).
SECT. 10} LIABILITY FOR QUANTITY SURVEYOR'S FEES 407
(who might expect to receive tenders somewhat lower than would be the
case if builders had to recover on successful tenders the surveyor's charges
incurred by them on their other unsuccessful tenders). It is therefore not
surprising that in the older cases the courts took the view that, by reason of
the provision in the building contract for payment of the surveyor by the
builder, a contractual relationship between builder and quantity surveyor
came into being, with the architect acting as agent for the builder, and the
surveyor could accordingly sue the builder for his fees in contract. 18 So too
in cases where the architect himself prepared the bills, and the term for
payment was to be found in the building contract, a contractual relation-
ship with the builder was accepted by the courts. 19
These arrangements produced obvious difficulties if insolvency of the 2-287
builder or the owner followed, or where for any reason the project did not
go forward after the bills had been prepared, so that some form of con-
ditional contract had to be imputed to the original engagement,20 The
cases showing this history were illustrated and fully analysed in the tenth
edition,21 and should be consulted should a construction contract emerge
for consideration at the present day in which the AJE or quantity sur-
veyor's remuneration is included in the contractor's price as an item or
provisional sum.
There is no doubt, however, that today a quantity surveyor in private
practice will be variously employed either directly by the owner, or pri-
vately by the architect, for the preparation of bills of quantities; and poss-
ible privately by or as an employee of the builder to arrive at a lump sum
tender price, for example, or to check for pricing purposes bills of quan-
tities for a measured contract already prepared on behalf of the owner. In
more substantial English measured construction contracts he will almost
invariably be employed by the owner if quantities are to be prepared. It
would be extraordinary, on the other hand, if an owner ever permitted a
quantity surveyor to be engaged by or on behalf of a contractor for prep-
aration of bills if a measured contract was to be used, because of the obvi-
ous conflict of interest between builder and owner in such a situation, and
the opportunity for increases in the contract price which would follow
from understating the prospective quantities. This is the reason why turn-
key contracts are invariably lump sum in character, and why, if any part of
a turnkey contract is to be on a measured basis ( as sometimes will be the
case in a civil engineering part of the project, such as the foundations),
those quantities will normally be prepared by quantity surveyors acting on
behalf of the owner with access to the owner's engineering or other
advisers, since otherwise they would be unable to discharge properly their
basic contractual responsibility to their client to avoid understatement of
the likely quantities.
1
B North v. Bassett [1892] 1 Q.B. 333.
19
Boltv. Thomas (1859), Hudson, Building Contracts (4th ed.), Vol. 2, p. 3.
20
Moon v. Whitney Union (1837) 3 Bing. N.C. 814; Youngv. Smith (1880), Hudson,Building
Contracts (4th ed.), Vol. 2, p. 70.
21
See pp. 194-197, tenth edition.
 408 ARCHITECTS, ENGINEERS AND SURVEYORS [CHAP. 2

(2) Liability for Measuring Up

2·288 If the old practice no longer obtains as to preparing bills, it must obviously
be the more true of the quantity surveyor's duties involved in valuing the CHAPTER3
builder's work for interim certificates, or in measuring and valuing the
work on completion. Despite the decision in Birdseye v. Dover Harbour
Commissioners in 1881, the cases of Beattie v. Gilroy, Plimsaulv. Kilmo- TENDERS AND ESTIMATES
rey (Lord) and Locke v. Morter show that any customary practice to this
effect did not persist for long. 22
PARA,
Section l. Types of Tender Documents
(1) Documentation Generally .............. . 3·001
(a) Invitation to tender ........................................................... . 3·003
(b) Tender ......................... . 3·006
(c) Acceptance of tender ............ . 3·007
(d) Later formal agreement. ... . 3·008
(e) Incorporation of terms or documents 3·009
(2) Principal Categories of Priced Contracts .................................... . 3·011
(a) "Fixed price" or "lump sum" contracts ........ . 3·012
(b) Measured or bill of quantities contracts . 3·014
(c) "Schedule" contracts ......................................................... . 3·015
(d) Mixed contracts ........ .. 3·016
(3) Where Extent of Work is Known at Time of Contract
(a) Drawings ....... . 3·018
(b) Bills of quantities ................................................................ 3·019
(c) Specifications ...................................................................... . 3·022
(d) Schedules of rates or prices .............................................. . 3·024
(4) Non-traditional Contracts
(a) "Turnkey" or "design-and-build" contracts ................... . 3·026
(b) "Management" contracts .................................................. . 3·033
(5) Where Extent of Work Uncertain ............................................... . 3·041
(a) Contracts employing schedules of prices ....................... . 3·043
(b) Contracts on a cost-plus basis ................ . 3·045
Section 2. Incorporation of Documents .......................................................... . 3·048
Section 3. Acceptance of Tender
(1) Legal Effect of Tender .................................................................. . 3·053
(2) Whether Acceptance Creates Contract ..................................... .. 3·054
(a) Acceptance of tender subject to condition
(i) Conditions as to a formal contract............;............ . 3·055
(ii) Conditions as to third party approval or per-
mission ....................................................................... . 3·060
(iii) Other conditions....................................................... . 3·062
(b) Parties not ad idem ............................................................. 3·066
(c) Acceptance within reasonable time ................................ . 3·068
(d) Commencement of work .................................................. . 3·069
(e) Letters of intent .................................................................. 3·071
(3) Withdrawal of Tender ................................................................... . 3·072
(4) Tender for Such Work as Employer may Order ....................... . 3·073
Section 4. Liability Apart from Contract
(1) Cost of Tendering 3·075
(2) Misrepresentation ............... . 3·077
(3) Bribery and Secret Commissions ...................................... . 3.079
Section 5. Collusive Tendering 3·080
Section 6. Other Statutory Requirements ..................................................... .. 3·082

22
See the cases referred to supra, paras. 2·072-2·073, and illustrated in the tenth
117-119.
eJi~ion ' pp.
409 I
'
 410 TENDERS AND ESTIMATES [O~P.3
SECTION 1. 'TYPES OF TENDER DOCUMENTS
(1) Documentation Generally
3·001 Many construction contracts, and particularly smaller ones such as those
for repair, decoration, alteration or refurbishment of buildings, may be
entered into by owners without any professional adviser, and may be very
informally concluded with a selected contractor, with little more than
drawings and a brief specification to describe the work, together with an
exchange of letters limited to basic matters such as price and times of com-
mencement and, possibly, completion. Even in larger contracts, the price
itself may sometimes be cost-based, and so not firm, or the subject of an
approximate estimate of cost only.' Cost-based ("cost-plus") contracts
carry self-evident commercial risks for owners,2 but apart from this, since
construction contract law (apart from questions of breach of contract) is
almost entirely concerned with the ascertainment of price and its adjust-
ment, and with analysing precisely what obligations and contingencies are
included in the price, cost-based contracts will be of only incidental inter-
est in many parts of this book, though there are some relatively sophisti-
cated modern variants, such as "target-cost" contracts, which are strongly
advocated by contracting and "project management" interests, particu-
larly in France and the United States. Other contractor-ad.vocated vari-
ants are the United States "fast-track" and similar United Kingdom
"approximate bills" arrangements which may give an illusion of detailed
pricing under cover of apparently sophisticated and complicated contract
documentation, but which may often in reality be little more than an
unenforceable "agreement to agree" on price, with the same ultimate risk
and disadvantages for owners as a simpler form of cost-based contract, but
with the serious additional disadvantage that the owner will be "over the
barrel" and committed to a partly constructed project before the real
negotiations about finalised prices begin.3
3·002 Reverting to the more traditional priced contracts which still govern the
majority of more important construction projects in most countries, the
contract documentation is normally sequential, and takes the form of an
initial approach by the owner or his A/E to the contractor describing,
often with very substantial documentation, all aspects of the required
work for the contractor to price (that is, in legal terms an "invitation
to tender"), followed in turn by a tender or offer and finally the acceptance
of the owner, which for both practical and evidentiary reasons will almost
1 there will be a priced document to assist in the valuation of variations,
For a possible duty of care of the contractor to warn of increasing cost in such a situation,
see ante, Chap. 1, Section 12(2) and the case of Abrams v.Ancliffe [1978] 2 N.Z.L.R. 420
there referred to.
2
See post, Chap. 8, para. 8·050, and see C.C.P.P., paras. 23-13 to 23-14 and 24-19, and see
also infra paras. 3·045-3·046.
J See also infra, paras. 3·041-3·042.
SECT. 1] TYPES OF T,P-1'9ER DOCUMENTS 411
invariably be in writing. This is often followed, particularly in main con-
tracts, by bringing together all the relevant documents into one contract
documentation for signature or execution by the parties.
In supply or work sub-contracts, and some smaller main or p~e con-
tracts these various stages may be less formally structured at meetings or
in co~espondence, and it may be a matte~ of construction an? inter-
pretation (and often a difficult one upon which the cou1:1s may differ)_ of
the course of negotiations a:p.d the relevant documentation to determine
when the parties are finally ad idem and a binding contra~t has come into
existence.4 It is now proposed to discuss the documentation where more
formal procedures are followed, as in the case of competitive tendering for
a main or prime contract.
(a) Invitation to tender
This will usually be sent to two or more contractors if competitive ten- 3·003
ders are desired. If sent to one contractor only, any subsequent contract
entered into is usually described as a "negotiated" contract to distinguish
it from contracts resulting from competitive bids. In the great majority of
cases where·the work has been or is to be designed by the owner's AIE
("traditional" contracts in this book, as opposed to "turnkey" or ''design-
and-build" or some kinds of what are now becoming described as "man-
agement" ~ontracts5 ), the original invitation documentation, someti~es
called "the conditions of tender", will contain all the documentation
necessary for a concluded contract with the exception of those terms to be
proposed by the contractor, of which the most important will obviously be
prices; but also other matters which may be left for tenderers to_ complete,
such as the prices for variations, prices r~quired for the operation of fluc-
tuation clauses (such as basic price lists), or even in some cases the con-
tractor's proposals for the length of the contract period or for the amount
of liquidated damages for delay, although these latter are more often pre-
scribed by the owner and not left to the contractor.
These documents will Ilormally include drawings in sufficient detail for
pricing purposes; a specification covering not. only th~ final. perma~ent
work required but often, in the interests of its quality, quite detailed
requirements as to the contractor's working methods, as, f~r .example,
external temperatures or curing times for concrete before stnking form-
work, use of compressed air in tunnels, minimum passes of rollers. to
achieve compaction, and so on; and finally conditions of contract, which
will seek to regulate the entire contractual position of the parties either in
extenso or by reference to ·some standard form: In most major projects
often called in England a "schedule of rates" if the contract is not to be a
4 See the discussion and cases ante, Chap. 1, Section 2(5), and see infra, Section 3.
s See infra, paras. 3·033 et seq.
 412 TENDERS AND ESTIMATES [CHAP.3
measured one (that is, in the case of a lump sum or fixed price contract).
However this particular usage is not universal, and the same expression
is often used outside England for the documents containing the prices to
be used for measurement where a measured contract is intended. In
measured contracts in the United Kingdom these pricing documents are
usually, however, described as "bills of quantities", and to add to the con-
fusion the bills of quantities in the RIBA/JCT contract documentation in
England themselves include the specification which is, somewhat
unusually, not a separate document or so described in those forms. 6
The final contract documentation will also be required to stipulate the
starting and finishing dates for work and the necessary details to eriable
liquidated damages clauses and fluctuations (variation of price) clauses to
operate. Given the complexity of the documentation, mistakes and dis-
crepancies can easily occur, and also questions of priority as between
documents which are in conflict. 7
3·004 The compelling commercial objective underlying all invitations to ten-
der, above all in cases of competitive tendering, is to secure an offer by
way of reply from the tendering contractors which leaves nothing for fur-
ther agreement, so that it will acCOrdingly be capable of immediate accept-
ance creating a legally binding contract. Otherwise, with the disbandment
of the original tenderers, the owner's position in any subsequent negotia-
tion, if that is thought desirable for any reason, will be substantially weak-
ened. This is well understood by all concerned in the field of competitive
tendering. In practice this is usually achieved by requiring that, in express
or implied consideration of the contractor being admitted to the tendering
list and permitted to tender, all tenders must be irrevocable until some
later stage stipulated by the contract for acceptance. In the United States,
and perhaps to a lesser degree in Canada, of recent years attempts to with-
draw from their tenders by contractors at a very late stage so as to secure a
higher price appear to have reached the state of a fine art, usually taking
the form of alleging a mistake in his pricing by the successful tenderer.
Their arguments have been assisted by the fact that many invitations to
tender, for well-understood practical reasons, add a requirement that the
successful tenderer should upon being notified subsequently enter into a
later formal contract with the owner, usually under seal or its equivalent. 8
This requirement is not in fact inconsistent with there being an earlier
binding contract already in existence, since a formal contract may confer
important limitation advantages on owners and for that reason may be
required by the standing orders of public authorities. A later formal con-
tract of this kind will also afford a useful opportunity for last-minute
agreed modifications or corrections of terms previously agreed to be made
6
For bills of quantities see ante, Chap. 2, Section 7(1),post, paras. 7·015 et seq., paras. B·Ol6et
seq., and see also Chap. 2, Sections 2(5) and 4(4). See also C.C.P.P., Chap. 26, Chaps. 23
and 24 passim and paras. 29-12 to 29-14 and 30-13 to 30-21.
7
For the principles to be applied, see ante, Cha:p. 1, paras. 1·225 and 1·229-1·230... ,
s See ante, Chap. 1, Section 2(3), paras. 1·023 et seq. and the Ron Engineering tll.se there
referred to.
SEcr. l] 'TYPES OF TENDER DOCUMENTS 413
prior to work commencing, or for bonding or other arrangements to be
completed, which can be very convenient to both sides. Well-drafted invi-
tations to tender will accordingly make clear that the conclusion of this
later formal agreement is not to prejudice the substantive preceding
agreement constituted by the owner's notification of his acceptance of the
contractor's tender.
It is also usual for the invitation to tender to reserve the right to reject 3·005
tenders which are qualified or subject to conditions of any kind. Unless
expressed as an alternative to a separate unqualified tender, there would
then be no tender capable of acceptance on the owner's original terms, so
defeating the owner's principal objective in inviting tenders. Moreover, a
qualified tender is obviously unjust to other tenderers unless they, too, are
given an opportunity to reconsider their own tenders in the light of the
proposed qualification, although even here the owner will run the risk that
in the ensuing delay the momentum for a binding contract may be lost
altogether and new tenders may have to be called for. On the other hand,
in recessionary times when the owner's bargaining position is strong and
the likelihood of losing tenderers correspondingly reduced, it is becoming
increasingly common, particularly in international projects, for qualified
tenders to be accepted and considered, notwithstanding express prohib-
itions on qualified tenders; and in some international projects it is even
becoming usual for tenderers to be expressly invited to submit qualifi-
cations and alternative prices, so that the prescribed date for tenders in
these cases becomes little more than a starting date for a further series of
parallel negotiations in the nature of an auction. If this is the intention,
great care in drafting will be needed to avoid losing the bid of the orig-
inally most attractive tenderer.
(b) Tender
As stated, in all but exceptional cases these are almost always required 3·006
by the preceding invitation to be in a form capable of immediate binding
acceptance. It will be a sign of strong bargaining power on the tenderer's
part if, in defiance of the requirements of the invitation, he puts forward a
qualified tender differing from that of his competitors.
In the case of lump sum contracts the tenderer may or may not be
required to price the schedule of rates required for valuation of variations
at the time of his tender, since some invitations to tender or contract con-
ditions recognise its more limited r6le by leaving it for subsequent agree-
ment, in which event the existence of a binding contract will usually not
depend upon the finalisation of the document in question. In the case of
measured contracts, on the other hand, the tenderer will have had to price
the individual rates or prices in the bills, grossing them up into the "grand
summary" so as to produce his final global tendered price, and in most
measured contracts these prices will have the additional function of pro-
viding the basis for valuation of variations under the variation valuation
clause.
 414 TENDERS AND ESTIMATES [CHAP. 3
(c) Acceptance of tender
3·007 This should be the final document creating the contract, and it is usually
contemplated by the invitation to tender that it will be comparatively
short-its objective should be to identify with precision the tender offer
together with its related documentation, which is now accepted on the
part of the owner. Any qualification or introduction of a new term on the
owner's part will in law constitute a counter-offer,9 unless it has been pre-
viously agreed, in which event that agreement should be recorded and
identified in the acceptance document.
(d) Later formal agreement
3,008 This, too, can be a comparatively short document. Under United King-
dom and many Commonwealth jurisdictions, a formal contract under seal
will double the period of limitation to 12 years-an extremely valuable
protection for owners against the subsequent discovery of defective work.
( e) fucorporation of terms or documents
3·009 It is of fundamental importance in order to avoid confusion in interpret-
ation ( or indeed the possibility of a party avoiding the contract altogether)
that all documents which are to be contractual should be identified with
precision. Ideally this can be done if one of the undoubted contract docu-
ments lists and identifies the entire contract documentation, although in
law a document or term will be equally effectively given contractual force
by any clear reference to it evincing that intention to be found in any one
of the admitted contract documents, even though not itself physically
incorporated into the bundle of contract documents signed and executed
by the parties. However, problems can also arise because of the extent or
degree to which it is intended that a particular document should have con-
tractual force, since the intention may be to incorporate it for a limited
purpose only, and not that the document in question should be adopted in
extenso. 10
To avoid such complications, well-drafted invitations to tender should
contain in some part of their own documentation what may be described
as a "master list" of the documents which it is proposed shall form the
contract and against which the contractor is being invited to tender. The
final formal agreement previously referred to gives the last opportunity to
complete this master list comprehensively, if this has not already been
done, and to include in it any additional points or qualifications which the
parties may have exchanged or agreed since the original tender was
received. Any such final additional points of agreement are often most
conveniently recorded by a letter or other document, itself then expressly
made part of the contract documentation finally signed by the parties.
• See ante, Chap. 1, Section 2(3).
10
See Section 2, infra.
'TYPES OF TENDER DOCUMENTS 415
It is a never-ending source of confusion in the interpretation of even 3·010
major construction contracts that this essential task of identifying and
including all relevant documents is so often not meticulously carried out,
with the result that documents containing vitally important terms are for-
gotten or omitted from the final bundle, or conversely physically included
in the executed bundle on the assumption that they are contract docu-
ments without there being any point in the signed contract documentation
where they are referred to or listed or identified as having contractual
force. Thus it is not uncommon, for example, for some or all of the original
invitation to tender documentation to escape formal incorporation in an
ultimate contract documentation consisting of the technical and other
documents formally incorporated by the tender and the subsequent
acceptance documents only.
From an owner's point of view, identification of all the contract docu-
ments must be made either expressly, or by reference to an earlier con-
tract document, either in the tender itself (since to add any further
document by reference or otherwise in the form of acceptance would con-
stitute a counter-offer entitling the tenderer to withdraw). The "master
list" can be a very short document, usually only on a single page.II In an
important project, the need for meticulous identification by initialling or
otherwise cannot be over-emphasised-for example, without such identi-
fication it may subsequently prove impossible to decide which particular
revision of a drawing was the definitive contract version.
Some of the cases on incorporation are considered in Section 2, infra.
(2) Principal Categories of Priced Contracts
Schemes for pricing construction contracts can differ considerably. The 3-011
following are the commoner broad categories of contractual arrangement
where the owner uses his own professional adviser to design the work. 12
(a) "Fixed price" or "Jump sum" contracts
These are contracts where a fixed price or prices are quoted for carrying 3·012
out and completing the work described in the drawings and specification.
When analysing this more exactly, it will be appreciated that even in
sophisticated contracts the specifications and drawings cannot be
expected to descend to the minutest details of construction. Moreover,
even a relatively detailed description of particular work will, to the know-
ledge of all concerned, involve carrying out perhaps quite substantial
ancillary work if the described work is to be performed. Thus fair-faced
concrete which has been so described and priced will inevitably require
formwork as an indispensable part of the process of producing the finished
11
For an example, see the Singapore SIA contract, Article 6, C.C.P.P., p. 550.
12
For "Design-and-build" or "Turnkey contracts", and for "Management contracts", see
infra, Subsections (4)(a) and (b), paras. 3·026'-3·028 and 3·033-3·036.
 416 TENDERS AND ESTIMATES [CHAP. 3
concrete, whether or not the formwork is itself separately described or
priced. Additionally, there will be the possibility of contingent expendi-
ture which may become necessary in order to produce the described work,
as, for example, if the weather is poor, pumping out of excavations in
order to produce the foundations described in the documents, or the
reinstatement or repair of work if it is damaged by storm or vandals during
construction. Specifications and drawings, therefore, need only give a suf-
ficiently clear description of the desired "permanent work" in sufficient
detail to enable it to Be priced but, under what has been judicially called
"the inclusive price principle",13 all indispensably or contingently necess-
ary expenditure required in order to complete the described work will be
included in both the contractor's price and in his completion obligations,
in the absence of express provision to the contrary.
3·013 Contracts of this kind, where in the absence of variations re-
measurement of work and re-calculation of price is not intended, are the
classical fixed price or "lump sum" contracts, and in the RIBA/JCTforms
are somewhat ineptly described as contracts "where quantities do not
form part". More substantial contracts of this kind will usually contain
additional documents with itemised prices, often called "schedules of
rates" or "schedules of prices" in the United Kingdom, but in these con-
tracts they will have no pricing significance other than for valuing such
variations as the owner may decide to call for under a power contained in a
variation clause, or for valuation purposes if interim periodical payment,
rather than fixed instalment payment, is called for. Sometimes these pric-
ing documents may even contain estimated quantities of the whole work
as well as the itemised prices, and in some cases may actually be called "bills
of quantities", with the prices grossed up to produce a total contract sum,
and so indistinguishable from the pricing documents used in United King-
dom contracts where the quite different pricing intention is to re-measure
the entire work and re-calculate the contract price in the light of the final
"as built" quantities, whether or not variations have been ordered. In
lump sum contracts, however, such a document, even if so entitled, will
simply be a guide to assist tendering contractors in arriving at their lump
sum tenders, with its pricing significance limited to the valuation of vari-
ations, should these be ordered, or for interim payment valuations. 14
It will be seen that in lump sum or fixed price contracts the drawings and
specification are not only the "master" documents in assessing the price
and completion obligations of the contractor, but they will amount effec-
tively, as a matter of interpretation, to a minimum statement of the
required work, with possibly substantial additional undescribed work also
required under the inclusive price principle. The less formal and sophisti-
cated a contract, the shorter will be the descriptions and the greater the
1
~ Probably first used in the Court of Appeal in A.E. Farr Ltd. v. Ministry of Transport
reported in the House of Lords in (1965) 5 BLR 94.
04
See ?lso ante, Chap. 2, Section 2(5), paras. 2·031-2·033, Section 4(4), paras. ?:069-2·070,
Secuon 6(2)(h), para. 2· 161, and Section 7(1), para. 2·223, for the advantages for·owners of
these contracts.
SEcr. l] TuPES OF TENDER DOCUMENTS 417
required element of undescribed but necessary work. Whether sophisti-
cated or not, it is always a question of interpretation whether undescribed
work is covered by the contractor's pricing and completion obligations
under the inclusive price principle, or represents, on the other hand, a
variation or change from the original contract intention. Thus an informal
contract to supply and fit a door, for example, may or may not, on its true
construction, include an obligation to supply for the agreed price hinges, a
door handle and other "furniture". In an.unsophisticated contract it may
well do so, but in a sophisticated contract with a separate ironmongery bill,
for example, it may not.
(b) Measured or bill of quantities contracts
These will be contracts which, apart from a specification and drawings, 3·014
will also include documents which, however entitled, not only contain
items or units of work for pricing by the contractor, but also estimated
quantities of all the items of work required so as to produce, when grossed
up (often in conjunction with so-called "preliminary" or "general" items),
a total price for the work as a whole. These documents are in the United
Kingdom almost invariably called "bills of quantities", although in some
old-fashioned contracts in the United Kingdom, and in many contracts in
the Commonwealth, they can be described as "schedules of rates" or
"schedules of prices" .15 The relevant incorpo_rating provisions of contracts
of this kind make it clear that the contractor's quoted tender prices (but
not his completion obligations) are only for the stipulated quantities, and
that, whether or not variations are subsequently ordered, the ultimate
Ij contract price is to be re-calculated in the light of the final "as built" quan-
tities of work carried out. 16
The reason why differences in final "as built" quantities can occur in the
absence of variations are, first, that some quantities of work may be
I
inherently unpredictable, as, for example, the quantities of unsuitable
material to be removed from excavations and replaced with imported suit-
able, or else because errors may have been made in "taking off' the orig-
inal quantities from the drawings when the quantities document was
prepared, or detailed taking off had not yet been carried out. These docu-
ments have often been described in the past as contracts "for measure and
value" or even as "schedule contracts", but are generally in this book
described as "measured contracts" or as "contracts using bills". In the
United Kingdom RIBA/JCT terminology, they are described as contracts
"of vyhich quantities form part". It should be noted that there is no differ-
eiice in principle between measured contracts of this kind and lump sum
contracts when deciding whether work is either indispensably or contin-
1
~ See, e.g. the Australian case of Arcos Industries Pty. Ltd. v. Electricity Commission of New
' South Wales [1973] 2 N.S.W.L.R. 186, illustrated post, Ch&p. 7, Section 1(2)(b), para. 7·016.
1
• See bills defined ante, Chap. 2, Section 7(1), para. 2-223;for the distinction between bill and
lump sum contracts, see also ante, Chap. 2, Section 4(4), paras. 2·069-2·070 and Section
2(5), paras. 2·031-2·033.
 418 TENDERS AND ESTIMATES [CHAP. 3
gently necessary, and so not a variation but included either in the contract~
or's global lump sum or individual itemised prices. 16a The only contingent
risk transferred from the contractor to the owner by a measured contract
will be that of an increase in the final "as built" quantities of the priced and
described items in the bills (balanced, of course, by a reduction of price
should the quantities decrease). The required work remains precisely the
same.
Based on arguments de~ived from the express and complicated (if not
devious) wording of the RIB A/JCT incorporation provisions (and now of
comparable provisions in the ICE civil engineering forms) unsuspecting
owners using those forms may find themselves exposed, however, to an
ingenious type of "omitted item" claim, almost invariably devoid of merit,
based upon alleged failure of the bills to conform to a relevant Standard
Method of Measurement. Such claims are at direct variance with the
inclusive price principle which, in the absence of express wording, the
courts would otherwise apply. 17 It is a remarkable fact that many owners'
professional advisers, particularly quantity surveyors, can be found pre-
pared to justify or support the draftsmanship which permits these claims.
A somewhat fuller account of bills of quantities and of their possible
disadvantages has been given ante, Chapter 2, Section 7(1). The varying
degrees of possible re-measurement, and the unique and elaborate sys-
tems of re-measurement which have evolved under English standard
forms and their associated standard methods of measurement, are dis-
cussed in detail post, Chapter 7, Section 1(2) and Chapter 8, Section 1(2).
(c) "Schedule" contracts
3·015 Occasionally, although more often in engineering contracts or in some
public building contracts, the precise work to be done may not be known
at the time of contracting, so that sufficiently detailed drawings are not
available for pricing purposes and quantities cannot be estimated. In such
cases, contracts are sometimes used incorporating schedules or lists of
rates and prices for all the various foreseeable construction processes on
the proposed project. It follows, of course, that there will be no estimated
quantities and no grossed-up contract sum. Such a contract may not even
have a completion obligation, and be of a day-to-day or jobbing character.
On the other hand, such contracts may also commit the contractor to com-
pletion of the entire project by reason of an express or implied completion
obligation to be inferred from the contract documents as a whole, so that
the contractor's ceasing work before completion would be a breach of
contract. In the latter category there is little difference in principle
between these contracts and a measured contract using grossed-up bills, of
which these contracts are' only a somewhat less sophisticated form. How-
ever, as a matter of necessity and not law, full re-measurement of the final
16
• See post, paras. 4·008-4·009. _.
n See ante, Chap. 2, Section 6(2)(h), para. 2· 161 and see post, Chap. 7, Section 1(2)(C), and see
further C.C.P.P., paras.23-22, 24(d)(ii), 26-11 to 26-12, 29-14, 30-15 to 30-19 and 30-21.
SECT. l] TYPES OF TENDER DocUMENTS 419
completed work will have to be carried out in these contracts, whereas, in
measured contracts using bills with drawings and a specification, full re-
measurement is not usually carried out in practice except in areas of
known or asserted or likely differences in the final "as built" quantities.
These more elementary forms of measured contract are described in this
book as "schedule contracts" ,17a but should not be confused with those
(lump sum) contracts where schedules of rates are used for the sole pur-
pose of valuing variations ordered on behalf of the owner.
(d) Mixed contracts
It should be emphasised that these are not necessarily hard and fast 3·016
categories of contract, and that the particular nomenclature chosen by the
parties to describe the contract, as opposed to the substance of the con-
tract intention with regard to pricing to be derived from its detailed pro-
visions, should not be treated as all-important. Moreover, construction
contracts are to be found containing mixed characteristics. Thus many
lump sum or fixed price contracts may have particular elements of work
where the quantities are recognised as being unpredictable and where
owners see an advantage in permitting an adjustment of the price of that
particular item in either direction. So the use of provisional sums or pro-
visional quantities, both of which will require an adjustment in the light of
final "as built" quantities, are quite common in many lump sum contracts,
although standard forms usually opt for one or the other. Here again, how-
ever, the Malaysian PWD contract, for example, provides that every item
marked as "provisional" in the bills of quantities shall be subject to re-
measurement, but that all items not so marked shall be lump sum. In all
cases it is necessary to consider the exact wording of the contract in regard
to incorporation of the bills or schedule, re-measurement, valuation of
variations, and provisional sums or items, before coming to a final con-
clusion as to what is intended. Thus in one case, a contractor tendered a
total price, representing the grossed-up total of quantities, rates and prices
in a schedule which was required to be priced by all the tendering contract-
ors. The schedule contained one item, without any estimated quantities
and no grossing-up, for importing topsoil. The contract was held to be a
lump sum contract but with the single item re-measurable. 18 On the other
hand, a contract describing itself as "a schedule of rates contract" but with
references to measurement was held to be a normal measured contract in
the full sense. 19 Again, where the special conditions of a contract provided
that "this is a lump sum contract and the general conditions shall be
amended or altered by these special conditions", and the general con-
ditions contained traditional re-measurement wording that the quantities
were estimated only and not taken to be the actual correct quantities, it
17•Discussed further infra, paras. 3·043-3·044.
18See Commissioner for Main Roadsv. Reed & Stuart Pty. Ltd. (1974) 48 A.L.J.R. 641; (1974)
12 BLR 55, High Ct., Australia, illustrated post, p'ara. 7·017.
19 Arcos Industries Pty. Ltd. v. Electricity Commission of New South Wales [1973] 2
N.S.W.L.R. 186, illustrated post, para. 7·016.
 420 TENDERS AND ESTIMATES
was rightly held that the bills of quantities were to be used for full re-
measurement and not merely to value variations.20
3·017 Some further discussion of the terminology used to discuss these vari-
ous contractual arrangements may help to avoid confusion. "Fixed price"
and "lump sum", used in the present fixed price or measured price context,
are synonymous. In other contexts, however, "fixed price" is often used to
indicate contracts (whether measured or not) where the price is not
adjustable for some other reason, as, for example, under a "rise and fall",
"variation of price" or "fluctuations" clause (as inflation adjustment
clauses are variously called). Equally, "lump sum" has been used by law-
yers in the strictly legal and narrower context of the contractor's com-
pletion obligation and the rules of entire and substantial performance.21
Both measured and fixed price or lump sum contracts will usually all be
"lump sum" in this special legal sense. However, in this book, unless the
contrary is stated, "lump sum" will usually be used in its pricing sense, by
reason of the expression's almost universal use in the industry for that
purpose. "Variation" (or its United States "change" equivalent) will usu-
ally connote changes in the contract work ( as opposed to changes in the
contract terms) and, to avoid confusion, "fluctuations" or "rise and fall"
will be used rather than "variation of price" for price inflation adjustment
clauses of that kind.
(3) Whei;e Extent of Work is Known at Time of Contract
(a) Drawings
3,018 The drawings used for the purpose of tender (from which any bills of
quantities which may exist will have been prepared) must, as a minimum
requirement in the more usual types of contract referred to above, be in
sufficient detail to represent a true and complete description for pricing
purposes of the works to be undertaken by the contractor, when read in
conjunction with any specification which may exist. The contract drawings
in the United Kingdom are commonly insufficient in number or detail to
enable the work to be carried out, and the standard forms of contract in
both industries find it necessary to confer power on the architect or engin-
eer to issue further drawings and details (usually referred to as "working
drawings") after the contract has been placed and during the period of
construction. 22 Whether such everyday instructions involve an alteration
of the original design and hence of the contract price under a variation
clause23 may be a difficult question of fact, but for some reason is only
rarely a cause of dispute. Whether they arrive in time to avoid delay and
20
N.Z. Structures Investments Ltd. v. McKenzie [1983) N.Z.L.R. 298, C.A.
21
See post, Chap. 4, Section 1, para. 4·008.
22
See the fuller discussion ante, Chap. 2, Section 1, para. 2·004.
23
See Chap. 7, Section 1.
[CHAP. 3 'TYPES OF TENDER DOCUMENTS 421
disturbance of the contractor's programme is, however, one of the com-
monest causes of building and engineering financial disputes. 24
In addition to the drawings and working drawings which are to be pro-
vided by the owner's A/E in traditional contracts, there may be a class of
drawings (sometimes called "shop" or "installation" drawings) which it
may be the responsibility of the contractor (or very often of a specialist
sub-contractor) to supply to·the A/E, or to a specialist consultant, in re-
sponse to drawings or information previously received from him. Struc-
tural steel is one of the areas where this practice is usual, but there are
others, such as reinforcement steel, where the responsibility for issuing
steel drawings on the one hand and bending schedules on the other may be
variously split between the owner's advisers and the contractor. Similar
arrangements may be made in regard to electric wiring and wiring dia-
grams. These are all usually cases where basic or outline design drawings
are to come from the A/E or a consultant, but the contractor or sub-con-
tractor then assumes a reciprocal obligation to prepare detailed or fabri-
cation or shop or installation drawings and submit them for approval prior
to starting work. In such a situation a main contractor, for example, will be
unable to make complaint against the owner in respect of a sub-contract-
or's delay in complying with responsibilities of this kind, where these have
been expressly required in the main or sub-contract. 25
The reasons for such reciprocal arrangements and obligations may be
various-for example, it may be convenient to leave a degree of some
latitude to a specialist within the guidelines laid down by the A/E or con-
sultant; on the other hand, the obligation may be imposed in order to
avoid errors in manufacturing which would be too costly to remedy if
detected later, or to enable the A/E to co-ordinate the proposed con-
tractor- or sub-contractor-designed work with his own architectural or
engineering working drawings for other trades.
(b) Bills of quantities
In most modem contracts, documents so described will, by virtue of 3·019
governing provisions in the contracts, be found to constitute the exact
measure of the work undertaken by the builder for the contract price.
though not of his obligation to complete. These will be classical measured
contracts, and the price will be adjusted to take account of any difference
between the original estimated quantities from which the tendered con-
tract sum has been calculated and the final "as built" quantities. 26 Apart
from this function, they usually serve, under the terms of even a lump sum
contract, as the basis for valuation of variations, and in addition provide,
at the building owner's expense, a guide to contractors when tendering
and a common basis for the comparison and analysis by his A/E of
24
See ante, Chap. 2, paras. 2·130 et seq.;post, Chap. 4, paras. 4·174 et seq.
i5 See, for an example, H. Fairweather & Co. Ltd. v. London Borough of Wandsworth (1987)
39 BLR 112,per Judge Fox-Andrews Q.C.
26
See supra, para. 3·014.

420 TENDERS AND ESTIMATES
was rightly held that the bills of quantities were to be used for full re-
measurement and not merely to value variations.20
3·017 Some further discussion of the terminology used to discuss these vari-
ous contractual arrangements may help to avoid confusion. "Fixed price"
and "lump sum", used in the present fixed price or measured price context,
are synonymous. In other contexts, however, "fixed price" is often used to
indicate contracts (whether measured or not) where the price is not
adjustable for some other reason, as, for example, under a "rise and fall",
"variation of price" or "fluctuations" clause (as inflation adjustment
clauses are variously called). Equally, "lump sum" has been used by law-
yers in the strictly legal and narrower context of the contractor's com-
pletion obligation and the rules of entire and substantial performance.21
Both measured and fixed price or lump sum contracts will usually all be
"lump sum" in this special legal sense. However, in this book, unless the
contrary is stated, "lump sum" will usually be used in its pricing sense, by
reason of the expression's almost universal use in the industry for that
purpose. "Variation" (or its United States "change" equivalent) will usu-
ally connote changes in the contract work (as opposed to changes in the
contract terms) and, to avoid confusion, "fluctuations" or "rise and fall"
will be used rather than "variation of price" for price inflation adjustment
clauses of that kind.
(3) Where Extent of Work is Known at Time of Contract
(a) Drawings
3°018 The drawings used for the purpose of tender (from which any bills of
quantities which may exist will have been prepared) must, as a minimum
requirement in the more usual types of contract referred to above, be in
sufficient detail to represent a true and complete description for pricing
purposes of the works to be undertaken by the contractor, when read in
conjunction with any specification which may exist. The contract drawings
in the United Kingdom are commonly insufficient in number or detail to
enable the work to be carried out, and the standard forms of contract in
both industries find it necessary to confer power on the architect or engin-
eer to issue further drawings and details ( usually referred to as "working
drawings") after the contract has been placed and during the period of
construction. 22 Whether such everyday instructions involve an alteration
of the original design and hence of the contract price under a variation
clause23 may be a difficult question of fact, but for some reason is only
rarely a cause of dispute. Whethe~ they arrive in time to avoid delay and
20
N.Z. Structures Investments Ltd. v. McKenzie [1983] N.Z.L.R. 298, C.A.
21
See post, Chap. 4, Section 1, para. 4·008.
22 See the fuller discussion ante, Chap. 2, Section 1, para. 2·004.
23
See Chap. 7, Section 1.
r
[CHAP. 3 I SECT. l] TYPES OF TENDER DOCUMENTS 421
IJ disturbance of the contractor's programme is, however, one of the com-
monest causes of building and engineering financial disputes.2 4
l In addition to the drawings and working drawings which are to be pro-
vided by the owner's A/E in traditional contracts, there may be a class of
drawings (sometimes called "shop" or "installation" drawings) which it
may be the responsibility of the contractor (or very often of a specialist
sub-contractor) to supply to the NE, or to a specialist consultant, in re-
sponse to drawings or information previously received from him. Struc-
tural steel is one of the areas where this practice is usual, but there are
others, such as reinforcement steel, where the responsibility for issuing
steel drawings on the one hand and bending schedules on the other may be
variously split between the owner's advisers and the contractor. Similar
arrangements may be made in regard to electric wiring and wiring dia-
grams. These are all usually cases where basic or outline design drawings
are to come from the NE or a consultant, but the contractor or sub-con-
tractor then assumes a reciprocal obligation to prepare detailed or fabri-
cation or shop or installation drawings and submit them for approval prior
to starting work. In such a situation a main contractor, for example, will be
unable to make complaint against the owner in respect of a sub-contract-
or's delay in complying with responsibilities of this kind, where these have
been expressly required in the main or sub-contract.25
The reasons for such reciprocal arrangements and obligations may be
various-for example, it may be convenient to leave a degree of some
latitude to a specialist within the guidelines laid down by the NE or con-
sultant; on the other hand, the obligation may be imposed in order to
avoid errors in manufacturing which would be too costly to remedy if
detected later, or to enable the NE to co-ordinate the proposed con-
tractor- or sub-contractor-designed work with his own architectural or
engineering working drawings for other trades.
(b) Bills of quantities
In most modern contracts, documents so described will, by virtue of 3·019
governing provlsions in the contracts, be found to constitute the exact
measure of the work undertaken by the builder for the contract price.
though not of his obligation to complete. These will be classical measured
contracts, and the price will be adjusted to take account of any difference
between the original estimated quantities from which the tendered con-
tract sum has been calculated and the final "as built" quantities. 26 Apart
from this function, they usually serve, under the terms of even a lump sum
contract, as the basis for valuation of variations, and in addition provide,
at the building owner's expense, a guide to contractors when tendering
and a common basis for the comparison and analysis by his A/E of
24
See ante, Chap. 2, paras. 2·130 et seq.;post, Chap. 4, paras. 4·174 et seq.
25
See, for an example, H. Fairweather & Co. Ltd. v. London Borough of Wandsworth (1987)
39 BLR 112,per Judge Fox-Andrews Q.C.
~ See supra, para. 3·014.
 422 TENDERS AND ESTIMATES [CHAP. 3
competing tenders, and, once priced, an estimate of the total cost of the
work. The bills are prepared with the object of giving a full description of
every item of permanent work entailed in the contemplated project, and
the quantities of each item to be deduced from or measured off the
drawings.
Bills prepared in accordance with the RIBA/JCT standard forms of
measured contract will, uniquely, need to contain the full specification
descriptions of both work and materials, since under those forms any
document actually entitled a specification is denied legal force. If pre-
pared in accordance with the current standard methods of measurement
in the United Kingdom, bills will also contain lists of many of the general
obligations of the contractor and of the services which he will have to pro-
vide in order to carry out the works, including, for instance, supervision,
watching, provision of water, lighting and power, safety measures, tem-
porary hutting, and so on; and, for some reason which is unclear, a tabu-
lation of the general conditions of contract clause by clause so that
tenderers may have the opportunity of pricing them separately if they
wish. These items are often referred to as "preliminary" items, perhaps
because they usually occur first in "preliminary bills" before items of
actual work in later bills, though a number of items (but not all) do refer to
initial or early expenditure by the contractor needed for the contract as a
whole, and they may originally have been thought of as "preliminary" in
this sense.27 Well-drawn bills usually provide that failure to price any item
merely means that the cost of that item is included or concealed in the
prices to be found elsewhere in the bills, but it is submitted that this will in
any event be implied as a matter of business efficacy. Well-drawn bills
should also provide that the rates and prices in the bills are to include for
every item of work or service or expense contingently or actually necess-
ary for the carrying out of the work described in the bills, whether specifi-
cally mentioned or not. 28 Otherwise there is a risk that provisions in the
contract incorporating a Standard Method of Measurement and dealing
with errors in the bills may have the effect of exposing the owner to claims
based on the omission of items in the bills which the standard method
recommends should be separately stated,29-30 but which it was at all times
obvious would have to be carried out.
In the United Kingdom civil engineering forms, bills of quantities do
not usually incorporate the specification, which is provided in a separate
document, and the items of work set out in the bills frequently refer back
to this document for a description of each item.
3·020 In bills of quantities (in both industries) it is common to find a large
number of items marked "PC" (prime-cost) or "provisional sum", which
have round sum prices inserted against them on behalf of the owner
27
Forpreliminaries, see also C.C.P.P., paras. 8-05, 8-012, 26-05 and 26--08, and ante, Chap. 2,
Section 7(1), para. 2·223, and post, paras. 7·107-7·108.
28
See, e.g. Article 5 and Clause 13(1)(a) of the Singapore SIA contract, C.C.P.P., pp. 550 and
2 30
570. ''"
'1-- See post, Chap. 7, Section 1(2)(c).
SEcr. l] TYPES OF TENDER DOCUMENTS 423
before the bills go out to the contractor for tender. There is no generally
acknowledged meaning of these terms, which must be searched for else-
where in the contract, but they are almost invariably used with the
intention of substituting actual cost for the stipulated sum or price31
("prime-cost" in a pricing context will usually mean all of the contractor's
direct costs, such as labour, plant materials and sub-contractors).32 The
origin of the word "provision" in the expression "provisional sum" is a
corruption of the expression "Provide the sum of£--" in old specifi-
cations, that is, it is a provided sum,33--34 rather than an indication of pro-
visional or contingent work. Reasons for dealing with work in this way
may be that the work in question is provisional in character at the time of
contract, either because it may not be carried out at all, or because an
element of selection by the owner or his architect is involved. In relation to
some specialist sub-contracted work, the work may not have been
designed or possible to price at the date of the contract. In fact, by a curi-
ous confusion of these two quite different considerations, the two terms,
which by themselves appear to have no special significance, are invariably,
although not exclusively, used as part of the contractual machinery relat-
ing to nomination or selection of specialist sub-contractors.35 There is, in
fact, no reason why nominated sub-contractors' work should be pro-
visional in the usual sense of that word, any more than the builder's or his
own sub-contractors' work.
Examples of genuine provisional work arise, for instance, where the 3·021
architect has in mind the possibility of using an alternative method of con-
struction to that shown on the drawings or itemised in the bills, in which
case he may include a provisional swn, rather than ask for an alternative
price, for the alternative work; or of having to increase or change the
quantity of a part of the works (for example, foundations); or of encoun-
tering an unknown quantity, for example, of rock or "soft spots". In these
latter cases he may insert a nominal quantity, marking the item "pro-
visional". These latter,however, are cases of provisional quantities, not of
a provisional sum, and do not attract the nomination machinery in the
contract, and may well be left for pricing by the contractor with a rate or
price. There is, therefore, no necessary connection between such genu-
inely provisional items or quantities and the concept of sub-contracting,
nominated or otherwise. Most contracts make provision for the substi-
tution of the amount of a sub-contractors' accounts (or, in the case of work
done by the main contractor, either a valuation at cost or an accepted
estimate of the work), for the PC or provisional sum. Where no sufficiently
:iiSee per Stephen J. in the High Court of Australia in Tuta Products v. Hutcherson Bros.
(1972) 46 A.L.J.R. 119, quoted post, Chap. 13, Section 3(3), para. 13·093.
32
See C.C.P.P., para. 8-18.
:u-34 SeeperRomerL.J. in Leslie & Co. v. Metropolitan Asylums DIStrict(1903) 1 L.G.R. 862,
at p. 868, and the discussion post, Chap. 13, Section 3(3), para. 13·089.
J> For a further discussion of P-C and Provisional Sums, see post, Chap. 13, Section 3(3).
 424 TENDERS AND ESTIMATES [CHAP.3
express provision exists it may, it is suggested, be possible at the present
day to establish a usage to this general effect. In the case of building con-
tracts the 1963 Standard Method of Measurement (fifth edition) rec-
ommended the use of the term "provisional sum" (in the absence of
express contractual definition) for work or costs not clearly foreseen,
defined or detailed at the time of tender (that is, genuine provisional
work), and the use of the term "prime-cost sum" for work or services to be
carried out by nominated sub-contractors, statutory authorities or public
undertakings, or for materials or goods supplied by a nominated supplier
(that is, in all cases work which definitely will be done, but will be done, or
in the case of materials supplied, by persons other than the contractor and
selected by the owner). 36
These obscurities can create serious problems, and draftsmen should
understand the need for much more precise definitions of the terms, as
also of the frequently found "contingency sum" expression, if serious dis-
putes are to be avoided. In particular, it is clear that, whether or not the
work is provisional, in the sense of contingent, or on the other hand defi-
nitely required work, will call for very different extension of time
decisions or overhead and extended preliminaries payments.37 Again, the
extent to which nominated sub-contracting is intended should be made
clear.
(c) Specifications
3·022 As has been seen, in the traditional situation where work has been pro-
fessionally designed prior to the contract on behalf of the owner, and its
content is known with a comparative degree of certainty, a contractor may
be required to tender on a measured contract basis using bills of quanti-
ties, which, in addition to providing a basis for re-calculation ( or "re-
measurement") of the contract sum, will usually also be used as a basis for
valuation of variations. It is, however, not uncommon in the United King-
dom, and very common in the United States, to let such contracts, not on a
measured basis with bills of quantities, but on a "lump sum" or "fixed
price" basis, where the contract sum is not subject to recalculation unless
there have been variations in the work ordered on behalf of the owner.
While both these expressions can be misleading,38 the "lump sum"
expression is now so widely used in the industry that it will generally be
used in this book to denote contracts where re-measurement is not
intended, whereas "fixed price" may be used from time to time in other
situations, as, for example, in contrast to contracts with rise-and-fall
clauses.
3·023 Whether lump sum or measured, all priced contracts will require at least
some written description or specification to supplement the drawings and
30 Rule A 7. Later rules, however blurred the distinction.
37
See, e.g. the definitions adopted in Clauses21(1)(b )(c) and (d), (4) and (5) of the Singapore
SIA contract, C.C.P.P., pp. 586-589. -,,.
31
See supra, para. 3·017.
SEcr. l] TYPES OF TENDER. DOCUMENTS 425
indicate the full extent and quality of the required work. Thus the draw-
ings and specification, taken in conjunction, together with such
undescribed work as may be either indispensably or contingently necess-
ary to carry out and complete the described work, will constitute the total
of the work required in exchange for the agreed lump sum or measured
prices, as the case may be, in the absence of provision to the contrary.
Specifications may, in the interest of the quality of the ultimate perma-
nent work, not merely describe it and the desired quality of its various
constituent parts, but also condescend to dictate in considerable detail the
contractor's methods of working or temporary works in order to achieve
that end. In the absence of sufficiently detailed express provision, specifi-
cations will need to be supplemented by implied terms of good quality of
both materials and workmanship. 39
(d) Schedules of rates or prices
There are three quite different categories of tender document which J.024
may be called by this name. First, lump sum or fixed price contracts of any
degree of sophistication will need a document to introduce some certainty
into the valuation of such variations as may be ordered. Such a document
usually bears· a superficial resemblance to a bill of quantities, but the
important difference will usually be that while unit items and prices may
be inserted for all likely work processes, specific or estimated quantities,
and therefore grossed-up totals of the prices, are likely to be absent. Also,
there may or may not be preliminary or mobilisation or other general
items of a kind to be found in a preliminaries bill, which may assist in a
more precise valuation of those variations where time or overheads are a
factor. Whatever their title, these documents are used, by virtue of express
provisions in the contract, to value such variations as may be ordered and
constitute, in effect, an offer by the builder to carry out such variations of
the work as the owner may require on the basis that the contract sum will
be adjusted (whether by omission or addition) in accordance with the
prices in the schedule.40 Because variations by way of omission may obvi-
ously involve special financial implications, from the point of view of the
profitability of the work as a whole to the contractor, it is not unusual to
find a saving clause in the contractual provisions for valuation, whereby an
allowance can be made for this factor. In any event, variations, whether by
addition or omission, may well be ordered in circumstances which inevi-
tably cause delay or disturbance, and clauses for valuing this are almost
always present in United Kingdom or Commonwealth (but often not
United States) contracts. 41
Secondly, schedules of rates or prices may be used as the definitive· con- 3,025
tract document in order to value the whole of the work carried out by the
contractor. As such, they represent his tender offer, and a contract in this
>Y See post, Chap. 4, Section 1(2).
40
See post, Chap. 7, Section 3.
41 /bid.
 426 TENDERS AND ESTIMATES [CHAP. 3
form is appropriate where the nature or full extent of the contract work is
so vague or difficult to foresee (perhaps for good reasons) at the time that
it is desired to start work, that a contract using bills or a precise specifi-
cation, or a lump sum contract, is not practicable. 42 This type of contract is
considered below in Subsection (5).
Thirdly, schedules or lists of prices or rates may be found forming part
of the contract documents which exist purely to give effect to what are
often loosely called "variation of price" or "rise-and-fall" clauses, primar-
ily designed to compensate contractors for inflationary or other price
rises, though also benefiting owners if prices fall. These clauses (in particu-
lar to distinguish them from clauses for the valuation of variations and
other compensatory clauses varying the contract price) ai-e described in
this book as "fluctuations" or "rise.and-fall" clauses.43 In the United King-
dom civil engineering forms they are often referred to, however, as "vari·
ation of price" clauses. The prices in the lists or schedules which are
necessary for the operation of these last clauses are not prices of items of
work, but of materials and sometimes of labour or wage rates ( depending
on the terms of the fluctuations clauses), and are the base from which to
calculate increases or decreases in the prices or wages actually paid by the
contractor during the currency of the work. They are frequently called
"basic price lists", particularly in the case of materials, but are today being
increasingly replaced by more sophisticated index·based clauses, which
avoid the abuses to which such basic price lists can easily be open.
( 4) Non-traditional Contracts
(a) "Turnkey" or "design-and-build" contracts
3-026 These contracts have become increasingly common in the last few dec-
ades, before which they were comparatively rarely used for building or
traditional civil engineering projects in the United Kingdom and Com·
monwealth. Their earliest use was for contracts with a high mechanical
content, such as industrial plant and machinery contracts. They appear to
have emerged rather earlier in the construction field in the United States.
In the tenth edition in 1970, they were referred to in the traditional con·
struction context as "package deal" contracts, and under that name were
described by Lord Denning M.R. in 1975 as "a new kind of building con-
tract called a package deal" .44 One type of building construction with
which these early arrangements were asso_ciated, and which emerged rela-
tively early in the United Kingdom, were the "industrialised building" or
"systems building" projects in the 1960s, principally used for high-rise
public housing projects making use of off-site pre-manufactured-con-
1
• See supra, para. 3·015.
43
For these, see post, Chap. 8, Section 1(2)(c). ~- _,
44
See Greaves & Co. (Contractors) Ltd. v.BaynhamMeikle&Partners [1975J 1 W.L:R.1095,
at p. 1098.
SECT. l] TYPES OF TENDER DOCUMENTS 427
crete units patented and designed by major contractors, though fre-
quently traditional and inappropriate standard form documentation was
initially used for them. 45 The more modern United Kingdom description
"design-and-build" is in fact the most useful and least misleading descrip-
tion, but the American oil industry description "turnkey", originally used
for industrial plant projects such as refineries, is that probably most widely
used at the present day, particularly in the international field, though
"design-and-build" is now widely used in the United Kingdom. The
expressions "turnkey" "design-and-build" and "package deal" can now
be said to be synonymous, while the expression "package deal" appears to
be on the wane in the United Kingdom. 46 In the present edition the two
former expressions will usually be employed.
The use of the expression "turnkey" in the contract documentation in 3·027
some of the early cases, such as "Tenders shall be as a turnkey proposi-
tion", "as a first class turnkey job", or "on a turnkey basis" gave rise to
difficulties and some confusion in both the United States and the Com-
monwealth. This was not perhaps surprising, since the expression,
together with its French equivalent "cle-en~main", is seriously misleading,
suggesting that the principal characteristic of such a contract is the hand-
ing over of a project complete and ready for use, whereas this is, of course,
a normal if not universal element of traditional construction contracts.
This confusion is illustrated by some of the earlier United States judicial
attempts to give a correct meaning to the terrn. 47 However, the vital dis-
tinguishing feature of these contracts, namely provision of the design by
the contractor, seems to have become fully understood by the United
States courts by 1975:
"The term 'turnkey construction job' under the applicable case law imposes
on the contractor the responsibility for providing the design of the project
and responsibility for any deficiencies or defects in design, except to the
extent such responsibility is specifically waived or limited by the contract
document". 48
Dictionary defintions in the United States had by 1980 also appreciated
the point: "turnkey ... designating a method of construction whereby the
contractor assumes total responsibility from design through completion
of the project".49 Similarly in Australia, in a difficult case complicated by
questions of incorporation of one document containing the turnkey refer-
ence and another providing for the approval of drawings submitted by the
contractor to an NE designing another part of the work, the High Court
refused to impose a design responsibility on the contractor, although in
45
See, e.g. Basildon District Councilv. 1. E. Lesser (Properties) Ltd. [1985] 1 All E.R. 20.
46
See, however, for a comparatively modern case, Viking Grain Storage Ltd. v. T. H. White
Installations Ltd. [1985] 33 BLR 103 .
., See Robbins v. Myers Trading Post 117 S.E. (2nd) 438 (1960), citing the Webster New
International Dictionary (1960 edition), and see also Restal Drilling Co. v. Commissioner
of Internal Revenue 127 F. (2nd) 355, at p. 357 (1942) for another doubtful case.
48
Per Chilson J. in Mobile Housing Environments v. Barton 432 F. (Supp.) 1343 (1975).
9
• Webster (1980 edition). Contrast the 1960 edition.
 428 TENDERS AND ESTIMATES [CHAP. 3
defence of the High Court's perhaps unrealistic interpretation the arbi-
trator had found as a fact that at the relevant date (in 1964) the words
"turnkey" and "turnkey basis" had no accepted meaning in Australia.so
3·028 In all construction contracts, however, whatever the descriptive termin-
ology, it is now clear that, where an owner can be seen to rely on the con-
tractor for the design, the latter's responsibility in law will be to produce,
in the absence of express provision, a final work which, independent of any
question of fault on his own part, will be suitable for its required purpose.
In case after case at the present day contractors who agree to design as
well as build have sought to argue that their liability for design should be
one· of due or professional care only, on the specious argument that it is
unfair to impose a higher duty than that of a professional designer. The
courts have constantly rejected these arguments, first on an implied term
basis in the case of developer and builder vendors of "houses in the course
of erection", and later when advanced by contractors who have expressly
agreed to design51 : "It was not merely an obligation to use reasonable care.
The contractors were obliged to ensure that the finished work was reason-
ably fit for the purpose. "52
3·029 Some judges have professed to feel some difficulty in requiring a higher
duty from a contractor designer than from a professional adviser, had one
been employed. 53 It is not difficult, however, to see the essential validity
and justification of this very important distinction, since a contractor, like
a manufacturer of goods for sale, is under compelling and perfectly
respectable competitive commercial pressures to "design down" as far as
more short-term market considerations will permit, whereas a pro-
fessional adviser will usually be, if anything, under quite different press-
ures to design conservatively in the long-term interest of his client, and
certainly will have no direct financial interest in under-design. From
an owner's point of view this conflict of interest is undoubtedly the most
serious disadvantage of turnkey contracts. 54
Thus, in these contracts the essential feature is that the owner does not
employ his own professional advisers to produce the design of the
so See Cable (1956) Ltd. v. Hutcherson (1969) 43 A.L.J.R. 321, illustrated infra, Section 2,
para. 3·050 and more fully post, Chap. 4, para. 4·090. There are other reasons for doubting
this decision, including particularly the fact that the contractor's tender included the word
"design". The English courts in later years have been particularly robust in according over-
riding importance to the true source of the design when imposing the suitability term: see
post, Chap. 4, paras. 4·093-4·099 and the cases of Viking Grain Storage v. T. H. White
(1985) 33 BLR 103 and Basildon District Councilv.J. E. Lesser Ltd. [1985] 1 All E.R. 20
there illustrated.
51
Hancockv.B. W. Brazier (Anerley) Ltd. [1966] 1 W.L.R.1317; Greavesv. Baynham Meikle
(1975] 1 W.L.R. 1095;lndependentBroadcastingAuthorityv. EM! (1978) 11 BLR 29, at p.
52,perRoskill L.J.; (1980) 14BLR 1,atp.47,perLord Scannan; VikingGrainStoragev. T.
H. White (1985) 33 BLR 108; Basildon District Councilv.J. E. Lesser Ltd. [1985] 1 All E.R.
20.
52
Per Lord Denning M.R. in the Greaves case, supra, at p. 1098G-1098H. For contractors'
design responsibilities generally, see post, Chap. 4, Section 1(2).
5
J See, e.g. per, Fox and NeillL.JJ. in George Hawkinsv. Chrysler U.K. Ltd. (1986)38 BLR36,
at pp. 51, 55. ',·
54
See C.C.P.P., para. 24----07(i) and (viii) and see also para. 23-08.
SEcr.1] TYPES OF TENDER DOCUMENTS 429
building or project which he requires. Either by negotiation, or by outline
specification to tendering contractors, the owner makes known his
requirements and the contractor then produces the design, in the form of
drawings, a specification and sometimes schedules of rates to cover poss-
ible variations. Bills are not usually used in such contracts, which will
almost invariably be lump sum, since clearly there would be unacceptable
pricing risks for an owner if bills were to be prepared by a contractor for
use in a measured contract. In some traditional building and civil engin-
eering works however, the project may be of a "mixed turnkey" character,
with external works and foundations under the design control of the
owner in the usual way, possibly with bills of quantities, but the super-
structure provided under an "industrialised building" design of the con-
tractor. Turnkey contracts may be virtually unavoidable, however, in
those fields outside normal building and civil engineering where indepen-
dent consultant advice is not readily available in the market to owners,
and the best design and technological expertise is likely to be that of
specialist manufacturers in the field, as in the case of many industrial plant
projects.
In more traditional building or civil engineering situations, the justifica- 3·030
tion for this system advanced by its advocates is that, in theory, it avoids
duplication and the expense of design staff, and enables the contractor,
with his specialised knowledge of his own techniques, to design so as to
produce maximum economy, and therefore a keener price, in a way that
an architect or engineer without knowledge of his techniques would not.
In fact owners usually endeavour to have professional advisers avail-
able to ensure that their own interest in the design is safeguarded, but the
simple fact that in general it takes longer to check and understand the
design of another person than it does to design de novo, means that, unless
the owner is prepared to pay heavily for design-vetting services, which
would defeat the whole purpose of the exercise ( even assuming that full
access to factory techniques and specialised processes is available) the
design protection afforded by his own advisers is bound to be superficial at
best. Employers frequently employ quantity surveyors as well, to impose
some sort of check on the reasonableness of the contractor's prices. It is to
be doubted if, in the absence of truly comparable tendering (which ten-
ders invited on a turnkey basis will not usually provide) any really effec-
tive check on cost can be provided by such advisers.
It has been seen that in those cases where a contractor supplies his own
design (as in the analogous field of houses sold in the course of erection),
there is an implied warranty of suitability for the required purpose, similar
to that under the Sale. of Goods Acts, and that this warranty is absolute,
and independent of fault. Moreover, in the owner's interest, such a .war-
ranty should be effective for longer than the minimum period of limi-
tation. This can be achieved by expressing the warranty as an indemnity or
as being available for a reasonable period having some relationship to the
life of the building-it may be of little interest to an owner paying for a
building required to last for 60 years that a suitability warranty will expire
 430 TENDERS AND ESTIMATES [CHAP.3
at the end of six years. Essential requirements of a design-and.,build con-
tract are:
3·031 (a) a warranty of suitability, absolute and independent of fault, 55
expressed to. be available for a substantial period of time, but
excepting normal replacement and maintenance of parts of the
building which might reasonably be expected to have a limited life;
(b) the bonding of this obligation by a substantial surety;
(c) a right of the contractor to object, after giving notice, to any vari-
ation ordered by the owner which might prejudice his suitability
obligation, but subject to safeguards to prevent frivolous objection;
(d) where "mixed package deal" contracts are involved, a warranty by
the contractor extending to the owner's work as well as the con-
tractor's, subject to safeguards enabling the contractor to object at
the time to the design or suitability of the owner's work;
( e) in industrial building cases, a totally different system of interim
payment (preferably stage payments), since valuation of work and
materials on site as in traditional contracts cannot be applied where
much of the work done is off the site and no reliable method of
checking costings or overheads is available;
(f) a right of the contractor to be permitted to vary the work, if necess-
ary for purposes of suitability and safety, subject to financial and
other safeguards to prevent abuse;
(g) a list of any parts of the work intended to be excluded from the
contractor's suitability obligation, including any work or goods of
nominated suppliers or sub-contractors which it is thought appro-
priate to exclude from it;
(h) a definition of the precise status and rights of the owner's A/E
(if any) engaged in supervising the work, and in regard to the ·
remedying of defects.
3·032 Probably enough has been said to show that there is hardly a provision
of the traditional form of contract which does not require radical rethink-
ing and revision in order to safeguard the interests of both parties and
provide a viable commercial document. In the early days of design-and-
build projects in the United Kingdom, the traditional standard forms were
frequently used in these situations with greater or less, or no, modification,
often with the owner's NE named as the A/E in charge of the project, and
with the preambles to the articles of the standard forms, which refer to the
drawings and specification as having been prepared by or under the direc-
tion of the owner's A/E, unaltered. In such circumstances the factual
matrix of reliance on the contractor for the design should prevail over
inappropriate wording, it is submitted. 56
,, There is no question but that this will be implied by law in the absence of provisions to the
contrary: see post, Chap. 4, Section 1(2).
,. See Basildon District Council v. J. E. Lesser Ltd. [1985] 1 All E.R. 20, illustratedpost, para.
4·097,per Judge Newey Q.C. and see, for a further Australian example of early'inuddled
documentation, the Cable case, supra.
SECT. 1] TYPES OF TENDER DOCUMENTS 431
In 1981 a RIBA/JCT "with contractor's design" standard form of con-
tract was published, containing many of the anomalies of the traditional
RIBA/JCT contracts. 57 A principal disadvantage of this form from
an owner's point of view is the professional negligence basis of the con-
tractor's design liability in place of a full suitability warranty. 58
It should perhaps be added that the history of these contracts in the
United Kingdom has not been a happy one, and against some advantage in
speed of construction no advantage in economy and serious disadvantages
in quality have been the usual experience. The subject of turnkey con-
tracts generally, the considerations affecting the choice of turnkey as
opposed to traditional contracting arrangements, and an analysis of the
advantages and disadvantages of turnkey, are discussed at greater length
in C.C.P.P. 59
(b) "Management" contracts
The initiative in the last two decades for the use of turnkey (or "indus- 3·033
trial building" or "design and build") arrangements for normal building
and civil engineering projects ( as opposed to industrial plant contracts) in
place of traditional NE-designed contracting arrangements came princi-
pally from the (main) contracting side of the two industries, at least in the
United Kingdom and Commonwealth, and does not seem to reflect owner
or consumer pressures or dissatisfaction with the traditional design
arrangements for normal building or civil engineering projects. The prin-
cipal inducements offered by these industry sources to owners were
alleged economy of price and speed of construction.
Whether or not as a result of owner disenchantment with the turnkey
concept and the defects and failures in many buildings so constructed,
producer initiatives have more recently shifted to the advocacy of novel
contracting arrangements, currently being described as "management
contracts". One difficulty in commenting upon them is that at the time of
writing no identifiable standard pattern or structure for these arrange-
ments has emerged and, on the contrary, considerable variations appear
to be involved in the different networks of legal relationships so described
and on offer. Some general characteristics appear to be:
(a) that the main contractors, as the principal advocates of these 3·034
schemes, sometimes in association with quantity surveyors or other
consultants, propose to perform broadly the same co-ordination,
supervision and other management services as traditional main
contractors, but no longer under any pricing risk, since their
remuneration is to be taken in the form of a fee. Sometimes their
role is described as that of "project manager"60;
'7 As to which, see ante, Chap. 2, Section 6(2)U), paras. 2· 167 et seq.
sK See Clause 2.5.1.
50 See paras. 23-05 to 23-11 (for property developers); paras. 24--01 to 24-09 (for industrial
plant projects); and see C.C.P.P., Chap. 25 (for turnkey contracts generally).
~1• See C.C.P.P., paras. 23-07 and 24-14 for an earlier discussion of this new emerging role.
 432
TENDERS AND ESTIMATES
(b) the persons under a pricing risk under these arrangements would
now seem to be "works contractors" (who would previously have
been sub-contractors, whether nominated or domestic), and whom
it is now often proposed should contract separately with the owner
or with the managers on his behalfand in his name. How these latte;
~e to be chosen, by tender or otherwise, will vary. On a major pro-
1ect there would, therefore, be likely to be a large number of such
"dir~ct contracts" under the "control" of the "managers" ( or, in
vary1n~ degrees, by any A/Es or other professionals engaged by the
?wner 1n an ~ften ill-defined relationship to the new "managers").
3,035 (c) 1n some versions the new "managers" (that is, the old main con-
tractors) will engage design professionals within their own overall
f~e remuneration. In others, the owner will contract separately with
his AfEs or other consultants, who will be expected to work in some
sort of association or consultation with the "managers";
(d) the various direct contracts with the. erstwhile sub-contractors may
themselves be variously turnkey or traditional, or lump sum or
measured;
(e) in some American versions, project managers, to overcome the
obvio~s budgetary uncertainty of the entire arrangement, and
reflecting the much more powerful and interested control exercised
by private developer-owners in the United States over the drafting
of their contracts, may give a guarantee to the owner that total cost
will not exceed a stipulated amount. How the manager is in a posi-
tion to do this without entering into complicated warranty or con-
tracting arrangements of his own with the various direct
contractors is often unclear. It seems unlikely, however, that similar
safeguards to owners will be offered by those currently putting for-
ward these arrangements in the United Kingdom. Indeed,
exclusion clauses absolving the managers of responsibility for
~orks contractors' defaults are a particularly common and damag-
ing feature from an owner's point of view. 61
3,036
One Australian writer62: has identified and proposed names for these
project manager arrangements in three principal categories (which can-
not, however, be regarded as exhaustive.) Under this classification, con-
sultant project managers will be in contractual relations only with the
owner. The latter will contract directly with his A/E and any other consult-
ants, _and also with a main contractor as in the traditional arrangement,
and hne management will be carried out by the owner's A/E in the usual
manner with the project manager acting simply as an additional adviser to
the owner, and perhaps a "chaser", in association with the AfEs, of the
61
See, e.g. Clause 3.2.1. of the RIBNJCT 1987 management contract, and see the commen-
tary and Judge Stannard's comments in Chester Grosvenor Hotels Ltd. v. Alfred McAlpine
Management Ltd. (1991) 56 BLR 115, at pp. 118, 123--124.
62
Dr. A. M. Barnett see (1989) 8 A.C.L.R. 137.
Tl
[CHAP. 3
lI
SECT.!] TYPES OF TENDER DOCUMENTS 433
! main and any sub-contractors. This class of "manager" would seem to be
il little more than an additional adviser to the owner. Executive project man-
agers, on the other hand, will be given direct management authority on
behalf of the owner over all the other parties, including any A/Es and
l
t
consultants as· well as any main contractor (presumably this will be
reflected in the express terms of their various contracts with the owner),
but the managers will still themselves remain in contractual relations with
I!
the owner only. It must follow in such cases that the owner will be likely to
find himself with wide contractual responsibilities for co-ordination, and
any failure on the manager's part will involve the liability of the owner as
his principal, whether to any main contractor, or to separate direct con-
tractors, or as between the various consultants, and so for the cost of any
t disturbance arising between all or any of these other parties, unless their
various individual contracts provide to the contrary. Finally, commerical
! project managers will enter into direct contractual relations with any con-
! sultants and with the various contractors, and the owner's only contract
will be with the project manager himself. This last arrangement would
'l'
r seem very close to, if not indistinguishable from the main contractor's role
in a turnkey or design-and-build project, and will at least have the substan-
I tial merit of safeguarding the owner from co-ordination and disturbance
',, claims.
Enough has been said to indicate that little useful comment can cur- 3·037
rently be made on this subject, which essentially involves a network of
inter-related contracts, although the expression "management contract"
is frequently used by its proponents in the industry in the apparent belief
that some effective and coherent single contractual structure has already
been evolved under this description, and can serve as a satisfactory substi-
tute for the traditional main contractor's essential role, at the apex of the
contractual pyramid for a particular project, of accepting financial and
legal responsibility to the owner while at the same time pricing for the
entire underlying network of sub-contracts and suppliers and their ser-
vants and agents. In such a management contract, that could only be the
case if the terms of all the separate contracts with the owner excluded or
indemnified him against disturbance and dislocation claims based on the
acts or omissions of the other contractors. In fact this was historically not
uncommon, through the device of the "no damage" clause, in United
States government contracts, where the use of multiple direct contracting
for a single project was the rule rather than the exception in the earlier
part of this century, and is still to be found at the present day. 63
It is self-evident that, without such contractual safeguards, the owner
effectively becom.es his own main contractor, and so exposed to a whole
series of claims for disturbance or delay based on failures of co-ordination
between the now numerous contractors, as well as any professionals, with
whom he is now required to contract. It should be remembered that, in the
case of the traditional main contractor, what undoubtedly powerfully re-
·,>
63 For "no damage" clauses see post, Chap. 8, Section 2(4)(b).
 434 TENDERS AND ESTIMATES [CHAP. 3
strains internal disturbance claims by domestic sub-contractors against
him is that domestic sub-contractors regard themselves, in the last resort,
as "on the same side of the table" as the main contractor, as opposed to the
owner- paymaster on the other side, who is the source of the funds avail-
able to the contractors generally. In addition, there is the very powerful
factor of the dependence of domestic sub-contractors on the main con-
tractor for future employment on other projects. No such restraints can be
expected to apply where the target of the dislocation claim is the owner
himself (as in the case, for example, of nominated sub-contractors, as a
result of the contractor-influenced nominated sub-contract provisions in
many more recent English standard forms of main contract,64 which are
designed to expose the owner to such claims in unwise and often anomal-
ous defiance of the "chain of liability" principle).
3,038 Most of these management contract arrangements, when examined in
detail, therefore, appear to be little more than thinly disguised collective
cost-plus contracts in their ultimate final effect, but with the serious added
danger for owners of the opportunity they offer for a multiplicity of exag-
gerated inter-acting dislocation claims, which by their nature will be
extremely difficult to analyse and refute. Moreover, these arrangements,
like turnkey contracts although for different reasons, will be incompatible
with competitive tendering and the advantages of pricing discipline and
comparison of cost which competitive tendering alone can provide.
In sum, management contracts as currently put forward only seem
appropriate to an owner prepared to contract on a negotiated basis, with
relatively flexible budgeting requirements, and with more projects in his
gift, should the· contract prove successful, to counterbalance his greatly
increased exposure to complex disturbance and delay claims brought by
numerous potential plaintiffs and frequently, under modern contribution
legislation, involving claims between a multiplicity of parties. In the case
of local government and public authorities in the United Kingdom, their
unwillingness (or perhaps their inability due to standing orders) to take
account of tenderers' previous claims records when considering bids,
removes much of the protection from unjustified or exagerated claims
which a private owner in their position might be expected to enjoy as a
result of their undoubted ability to place further orders for future projects.
The budgetary uncertainty of final cost, and the lack of control over price
which competitive tendering procedures would provide, seems to render
the arrangements currently on offer doubly unattractive.
However, although management contracts can be expected to evolve
further after the time of writing, the unsatisfactory content of the United
Kingdom standard forms so far evolved for design and build contracts,
and the first version of a management contract published by the RIBN
JCT, does not inspire confidence that a satisfactory structure will be found
which could be recommended to public or private owners.
64
Contrast, however, the English GC/Wks/1 government contract, Clauses 31(2) and 38(5).
SECT. I] TYPES OF TENDER DOCUMENTS 435
Summarising the above, important questions in analysing a manage- 3,039
ment contract arrangement are:
(a) To what extent the owner is protected, by indemnity or otherwise
( either in his direct contracts or in the management contract itself)
against contractors' claims based on the default of other con-
tractors or of the manager so that, in return for the owner's con-
cession of a risk-free fee to the manager, he is as secure in this
regard as with a traditional main contractor?
(b) quite apart from this essential factor, to what extent is the owner
being offered a final package with a firm price for the project as a
whole, equivalent to that apparently offered by a well-drafted mea-
sured or lump sum contract?
(c) Will the owner have other separate professional advice, such as
architects, structural engineers or quantity surveyors, and if so what
will their precise relationship be with the manager? In particular,
will the owner be able to look to one A/E-style adviser responsible
to him for co-ordinating the remainder (including the manager)
and for handling claims, or will that be the role of the manager? Or
will the various professional contracts, including the manager's, be
separate, with the possibility of additional 'fees charged due to co-
ordination difficulties or work required between any or all of them?
( d) Will there be measured contracts, and if so who will perform the 3·040
role of quantity surveyor for preparing bills and measuring the "as
built" work, and to whom will he be responsible?
(e) Will the various fees, including the manager's, be fixed (as, for ex-
ample, a percentage of contract prices) or on the other hand based
on final cost, as under nearly all current professional conditions of
engagement? 65
(f) From the policy point of view, to what extent are the proposed con-
tract arrangements, in total, suitable for competitive tender, or do
they contemplate the various direct contracts going out to individ-
ual subsequent tender after conclusion of the management con-
tract? Or are they only really suitable for negotiation?
(g) What responsibilities, in particular in regard to design, supervision
to ensure contract compliance, or co-ordination, is the manager
prepared to undertake in his contract with the owner?
(5) Where Extent of Work Uncertain
It will be apparent from the foregoing that the more usual methods of 3·041
letting contracts on a measured or lump sum basis are only practicable if
the works have been designed in sufficient detail to enable them to be
defined and priced by the builder (subject to the inroads effected upon this
65
See ante, Chap. 2, Section 9.
 r--.\
436 TENDERS AND ESTIMATES
principle by the use of PC or provisional sums or items to indicate work
which is not genuinely provisional, where the intention is that the work in
question will definitely be carried out). But it may happen that an owner
does not know at the time he requires tenders precisely what work he will
wish the contractor to do. He may also wish, for financial or other reasons,
to commence part of the works before a stage of design of the remainder
has been reached which would permit the preparation of drawings or bills
of quantities. To meet such situations, various methods of obtaining ten-
ders have been evolved, the commonest of which entail the carrying out of
work either at unit prices contained in a schedule of prices or rates,6sa or on
a cost plus a fee or percentage profit basis.
The use of these latter contracts, however, clearly involves an admission
that ilo sufficiently precise design of the works exists at the time of con-
tracting, and for this reason professional advisers are sometimes reluctant
to recommend such a contract to their clients; and quite commonly, par-
ticularly in engineering contracts, where even in a well-planned project
the bills of quantities are likely to be relatively short and uncomplicated
documents, they will still use the traditional type of contract and a set of
drawings of varying degrees of precision, and rely on the power to vary the
work contained in the contract. If the drawings and bills appear to be pre-
cise on their face and no specific warning is given, this can be grossly mis-
leading, quite possibly to the owner and certainly to the contractor,
though if the drawings are very general and the bills contain many pro-
visional items and quantities, the contractor may not be misled, but the
owner quite possibly may be. Whatever the actual position, such a con-
tract is likely to be a fertile source of dispute, and substantial claims by the
contractor, whether or not the latter was under any real illusion as to the
character of the project at the time of tendering, are a probable result.
3·042 It is fair to say that the responsibility for this situation can also lie at the
door of owners, particularly property developers, where commercial or
financing pressures requiring early signature of contracts serve to override
the warnings of professional advisers.
In these various situations, quantity surveyors in the- United Kingdom
not infrequently advocate contracting arrangements using what are called
"approximate bills of quantities". Here the intention is that, once the
work and quantities are more precisely known after the contract has been
entered into, and the design finalised with or without the collaboration of
the contractor, definitive bills will then be prepared for re-pricing by the
contractor in substitution for the prices and descriptions in the approxi-
mate bills. However, most of these arrangements (and their American
"fast-track" equivalents) on close examination will be found to be no
more than "agreements to agree", and so unenforceable,66 and from an
owner's point of view will suffer from the serious disadvantage that he will
be irretrievably committed to the project and that other tenderers, if any,
65
• See supra, para. 3·015.
M See ante, Chap. 1, Section 2(6), paras. 1·042 et seq., and see supra, para. 3·001.
[CHAP. 3 TYPES OF TENDER DOCUMENTS 437
will have disbanded, and his negotiating position on price with his chosen
contractor correspondingly weakened. These arrangements will usually
only be found to be practicable where there is a community of interest or
an exceptionally high degree of trust between the owner and selected
contractor.
(a) Contracts employing schedules of prices
Although rarely used at the present day, there have, in the recent past in 3·043
the United Kingdom, been standardised lists or schedules of prices pre-
pared by certain Crown departments which define in detail units of work
and show a price fixed by the authority against each unit. The contractor
may be invited to tender for whatever works he may be ordered to carry
out during a given period at the prices in the particular schedule, plus or
minus a tendered percentage.
Schedules of prices may also be prepared by some owners' professional
advisers designed for the particular project and containing descriptions of
all the various units of work which it is expected may be required to be
undertaken, with or without preliminary or general items. These are usu-
ally, but not invariably, priced by the contractor, and occasionally may
even be used when the full extent of the work is known, but, more usually,
the obligation of the builder is to carry out whatever work he may be
ordered to do at the prices in the schedule, rather than to carry out a fully
designed project at those prices.
As already indicated, these types of contract require to be distinguished 3·044
from lump sum contracts without quantities where schedules of rates will
be used solely for the purpose of valuing variations only.
In these forms of tender it is not essential for any clear or defined project
to be determined upon before the invitation to tender. The documents
may indicate the scope of the works in general terms and perhaps in some
cases the limits of each operation, but their main purpose will be to ident-
ify the schedule in question and to define by general conditions of contract
or otherwise the obligations and liabilities of the tenderer and the terms of
payment. It is essential that the descriptions of work in each item should
be complete and to make clear the ancillary processes or general obli-
gations which are to be covered by the prices in the schedule.
Where the extent of the work is fully known and described in the docu-
ments, however, these contracts will not usually differ in their basic legal
consequences from contracts using bills of quantities, the only difference
being that the quantities will not have been taken off the drawings or
otherwise calculated or estimated, so that as a consequence a grossed-up
contract sum will not have been calculated or shown in the documents. If
this has indeed been done in the documents, the differenc.e from a bill of
quantities measured contract will be one of terminology only. 67
61 See supra, Subsection 2(b ).
 438 TENDERS AND ESTIMATES [CHAP. 3
(b) Contracts on a cost-plus basis
3·045 Cost-based contracts involve reimbursement of the contractor's total
cost plus a stipulated fee or profit, often expressed as a percentage. These
contracts will normally be used only where the extent and nature of the
work is n~t known With ~ufficie.nt precision at the time of contracting to
enable pnces to be obtained, since they have a number of unavoidable
di~ad~antag~s ~hich well-advised owners would not usually accept. The
pnnc1pal obJection to such contracts is the greatly reduced incentive to
economy or speed of construction, since no really effective sanctions to
enforce these can be provided, although no doubt terms will be implied in
almost all such contracts preventing payment for wasteful or uneconomic
use of labour, materials or plant, and for due diligence in carrying out the
work. 67a Other disadvantages from an owner's point of view include the
absence of any useful comparison of tenders in order to select a contract-
or, the budgetary uncertainties, and the need for far more expensive day-
to-day prof~ssional_ administration and supervision of the contract simply
to.check sat1sfactonly t~e expenditure on labour, materials or plant quali-
fying for payment, which would be unnecessary in a priced contract.
I1:deed the accurate ascertainment of a contractor's cpst is an extremely
difficult task for an outside person, however well qualified, so that such
contracts can be easily abused.
To meet the first of these objections, contractors have put forward fixed
(as opposed to percentage) fee or closely allied "target" (United King-
dom) or "upset" (United States) arrangements, whereby the contractor's
profit rem~n~rati~n is ~ither fixed in money terms or, if a percentage,
r~aches a lnrut which will not be increased. There is an inherent logical
difficulty about these types of contract, however, since the ability to agree
on a fixed or target.fee requires a reasonably precise knowledge of the
extent and nature of the proposed work at the time of contracting-not
usually the situation in which, as stated, most owners will opt for a cost-
based contract at all. Nor will such contracts be relatively free from con-
tractors' claims, as might be expected from a straightforward cost-based
contract, since any act or omission for which the owner can be said to be
responsible, such as delay in affording possession or information, will, in
the absence of express provision, entitle the contractor to an increase in
any fixed or otherwise restricted profit remuneration. Again, variations
ordered by the owner (presumably, in the absence of detailed information
as to the original work at the time of contracting, very difficult to identify
or define) will again theoretically justify an increase in any fixed or restric-
ted fee in the absence of provision to the contrary. 68
3·046 No standard form of contract for cost-based contracts existed in the
United Kingdom until the RIBA/JCT Fixed Fee form was published in
61
'See post, paras. 4· 130-4· 131, and then see C.C.P.P., para. 24-19, p. 421. See also the Prince
Albert Pulp case, post, para. 6·057, and paras. 8·072-8·075. ,· _.,
6
~ See the analogous case of Parkinson (Sir Lindsay) & Co. Ltd. v. Commissionei!fof H.M.
Works and Public Buildings [1949] 2 K.B. 632,post, Chap. 7, para. 7·090.
SEcr. l] TYPES OF TENDER DOCUMENTS 439
March 1967,69 which has been closely followed in subsequent editions.
That form appeared to be modelled on the RIBA/JCT priced contracts as
closely as possible, with the latter's compensatory provisions modified so
as to secure increases in the fixed fee, but also with alterations in the
"nature or scope of the works" (whatever that expression might in context
mean) prohibited in the absence of subsequent agreement.70
The drafting of a watertight cost-based contract is in fact far more diffi-
cult and complicated than is often realised if abuse is to be avoided. In
particular, detailed schedules require preparation which identify all items
qualifying as "cost" for payment purposes, and the many categories of
general or preliminary items of cost (for example, taxation, insurance, sal-
aries, supervision, site overheads and off-site fixed overheads) together
with the intended method of valuation or recovery under the contract for
those items. If, as will often be the case, such general or preliminary items
are to be regarded as included in the contractor's profit percentage or fee,
the contract must define those items with the greatest particularity.71 The
contract must also deal specifically, when defining cost, with the various
types of discount obtainable from sub-contractors or suppliers, whether
domestic or nominated, by main or prime contractors, since otherwise
profit may be superimposed on profit. The contract will also need to
provide for depreciation and use of plant, tools, transport and similar
items. 72
In the absence of sufficiently precise drafting, it will be a particularly 3·047
difficult question of interpretation in "cost-plus" contracts to decide
whether and how a contractor's fixed overheads (that is, the fixed off-site
cqsts of the contractor's entire enterprise not directly attributable to an
individual contract's performance, but which must be recovered in his
prices if he is to remain in business) are to be recovered. These will
include, for example, head office and other central expenditure on rent,
rates, salaries, pensiOns and other outgoings.73 Normally, a contractor
pricing a project has no alternative but to estimate the totality of its vari-
ous items of prime-cost, including all site or other expenditure directly
attributable to the work on that contract (sometimes called "site over-
heads"),74 and then add a "profit" percentage or figure, which in reality is a
gross margin combing two elements, one of required net or "pure" profit
on the one hand and the other the required fixed overhead (or "head
office" (United Kingdom) or "Home Office•• (United States) contribution
element, which latter is, in the last analysis, a cost element although
69
See the summary analysis of that contract in Building and Civil Engineering Standard
Forms, pp. 235-240, and the more detailed commentary at pp. 241-285.
70
Ibid. at pp. 245, 244--246.
11
For the various cost and overhead categories, including prime-cost, site and off-site over·
heads and general and preliminary items, see C.C.P.P., Chap. 7, paras. 8-05, 8--11 to 8--13,
8--20 and Chap. 26, para. 26-05, and see post, Chap. 8, Section 2(3).
72
For a discussion on the choice of such contracts, see C.C.P.P., para. 24-19 and see also para.
23-13.
73 See for this post, Chap. 8, Section 2(3)(d), and C.C.P.P., paras. 8--15 to 8-17.
74
See C.C.P.P., paras. 8-18, and 8-11 to 8-12.
 440 TENDERS AND ESTIMATES [CHAP. 3
not attributable to the individual contract.75 The "plus" or profit element
in cost-plus contracts will usually, therefore, require to be of this com-
bined "profit and (fixed) overheads" kind, it is submitted.76 There is a sub-
stantial jurisprudence in United States jurisdictions discussing those
heads of expense to be properly included in "cost" and those in the profit
percentage or fee. 77
As to the quantum of the percentage to be added to cost, the high
element of gearing in construction contracts will mean that any sum
expressed as a percentage on total cost or turnover will represent many
times that percentage on capital employed. On the other hand, the per-
centage will almost always have to include the fixed overhead recovery
element already referred to, which is in reality a cost element. Evidence in
litigation referred to in the tenth edition of Hudson suggested (combined)
percentages of between 3 per cent. and 7 per cent. on turnover (including
nominated sub-contractors' turnover) as being usual on priced contracts
for substantial projects.78 Much will depend upon the extent to which
nominated sub-contracting is present in these contracts, since under tra-
ditional English practice nominated sub-contract work is not only price-
risk free but extraordinarily profitable. Cost-plus contracts, on the other
hand, with little or no pricing risk, will clearly justify much lower percent-
ages. For government contracts generally, (not merely construction con-
tracts) 8 per cent. on capital employed or 4 per cent. on cost has been
suggested as a yardstick by one English writer. 79 Recessionary and interest
rate movements must obviously exercise major and varying influences.
SECTION 2. INCORPORATION OF DOCUMENTS
3·048 Whatever types of contract documents are used, the question may arise
whether a particular document has been successfully incorporated into, or
forms part of, the concluded agreement between the parties. The practical
background to this has already been fully discussed. so As there explained,
unintended failures of incorporation frequently occur in practice in con-
struction contracts, and well-drafted contracts will reduce this risk to a
minimum by expressly listing the documents intended to form part of the
contract in one of the acknowledged contract documents signed and
executed by the parties. 81 In strict law, however, all that in fact is necessary
is a reference to or identification of the document in question in some part
75
See for this, C.C.P.P., paras. 8-15 to 8-17.
76
See the leading U.S. case of Vitex Manufacturing Corporation v. Caribtex Corporation 377
F. (2nd) 795 {1967) U.S. Court of Appeals, 3rd Circuit, discussed in C.C.P.P., para. 8-16.
17
See under Am. Jur. (2nd), Vol. 13, para. 20.
is See post, Chap. 8, Section 2(3)( d)
79
Turpin, Government Contracts, pp. 176-178 and 18g..:192.
80
See supra, paras. 3·003-3·010.
a, See, e.g. the Singapore SIA contract, Article 6, set out in C.C.P.P., p. 550.
441
SECT. 2] INCORPORATION OF DOCUMENTS
of the admitted contract documents, together with a sufficient indication
of the extent to which the document is intended to govern or control the
contractual rights of the parties.
ILLUSTRATIONS
(1) If an order refers to a specification, as if B, engages to do work in con-
formity to drawings and a specification, the offer incorporates the drawings
and specification, and if the specification mentions a time for completion, and
the offer is accepted, completion to time is a part of the contract: Wimhurst v.
Deeley (1845).•
(2) The fluctuations clause (Clause 25A) of a contract in the pre~1963
RIBA standard form provided for adjustment of the contract sum to take
account of differences between the market price current at the date of tender,
and the market price paid by the contractor, of any of the materials or goods
"specified in the list attached to the bills of quantities". The list never was
attached to the bills of quantities, but was simply filed with the contract docu~
ments. Held, by Ashworth J., the failure actually to attach the list to the bills
did not deprive it of its legal force: Royston Urban District Council v. Royston
Builders Ltd. (1961).8.3
On the other hand, merely because the document is referred to for one 3-049
purpose, and may be incorporated to that extent, it does not follow that
the whole of the docwnent will be incorporated. Moreover, the intention
to incorporate must be sufficiently clear and the provisions sought to be
incorporated sufficiently certain. 84
ILLUSTRATIONS
(1) Tender documents provided: "The successful contractor, if any, may be
required to enter into the usual form of agreement published by the RIBA or
other form of agreement required by the War Damage Commission". The
successful tenderer was not in fact required to sign any form of contract, and
sued for fluctuations under Clause 25A of the RIBA form. Held, the tender
could not be construed as incorporating the RIBA form of contract and the
claim must fail: Moore v. Shawcross (1954).85
(2) A letter accompanying the contractors' form of tender stated "Our ten~
der is subject to adequate supplies of material and labour being available as
and when required to carry out the work within the time specified". The
remainder of the letter contained references to the working of the fluctu-
82 2 C.B.253.
83 177 E.G. 589.
114In addition to the cases cited below, see the case of Re Fulham Borough Council and the
National Electric Construction Co. Ltd. (1905) 74 J.P. 55 an interesting example of limited
incorporation (of a fire insurance company's rules into electric work).
85
[1954] J.P.L. 431.
 .---
442 TENDERS AND ESTIMATES [CHAP. 3
ations clause in the contract. The appendix to the form of tender referred to
this letter in relation to the fluctuations clause only. The later formal contract
between the parties referred to "the said tender" but not to the accompanying
letter. Held, that while the parts of the letter relating to the fluctuations clause
might have been incorporated by the reference in the appendix to the form of
tender, as a part of "the said tender", the sentence relating to supplies of
material and labour was not so incorporated: Davis Contractors Ltd. v. Fare-
ham Urban District Council (1956). 86
3·050
(3) A specification, under a sub-heading "Basis of tender", provided that,
"Tenders shall be as a turnkey proposition under which tenderers, irrespec-
tive of any information contained in the specification or tender drawings,
shall take all responsibility for supply, erection and efficient operation of the
project for the period of maintenance". The tender required the contractor to
design the project and submit drawings, etc., to the employer's consulting
mechanical engineer for approval. A formal contract was also contemplated.
Between acceptance of tender and formal agreement drawings were agreed
for (inter alia) the foundations. The agreement was in a form similar to the
RIBA forms, under which the contractor undertook to "execute and com-
plete the work shown upon the drawings and described by or referred to in the
specification". Held by the High Court of Australia, that the owner could not
rely on the words in the specification so as to impose an obligation on the
contractor when the foundations proved unsuitable, since they did not
describe the work and so were not incorporated: Cable (1956) Ltd. v. Hutch-
erson Ltd. (1969). 87
(4) A main contractor's order to nominated sub-contractors required them
"To supply ... labour plant and machinery ... in full accordance with the
appropriate form of Nominated Sub-Contractors RIBA (1965) Edition". The
description was incorrect and there was no such RIBA sub-contract, but there
was a F.A.S.S. "Green Form" sub-contract published by another body for use
with the RIBA conditions. Evidence was received which enabled it to be
identified. Held, by the Court of Appeal, that the words were sufficient to
incorporate an arbitration clause in the (correctly identified) form of sub-
contract: Modern Building Wales; Ltd. v. Limmer & Trinidad Co. Ltd.
(1975)."
(5) A bill of lading provided that"... all conditions and exceptions of which
Charterparty, including the negligence clause, are deemed to be incorporated
in the Bill of Lading". Held, by the Court of Appeal, the incorporation was
limited to conditions under which goods were to be carried and delivered, and
did not extend to a collateral term such as an arbitration clause: Skips AJS
Nordheim v. Syrian Petroleum Co. Ltd. (1984). 89
3·051 Sub-contracts, particularly when informally concluded by quotation
and order, frequently attempt to incorporate the provisions of the main
contract in vague and general language. Unless they are sufficiently
explicit, these effor~s may fail, 90 although misdescriptions of the docu-
86
[1956] A.C. 696 (see,per Lord Radcliffe, at pp. 725-726). See also Smith & Montgomery v.
Johnson (1954) 1 D.L.R. (2d) 342, Canada, illustrated post, para. 4·157.
87
(1969) 123 C.L.R. 143: (1969) A.L.J.R. 321, doubted supra, para. 3·027 and illustrated more
fully post, Chap. 4, para. 4·090.
88
[1975] 1 W.L.R.1281, illustrated more fully post, para. 13·105. See also the similar case of
Brightside Kilpatrick Engineering Services v. Mitchell Construction (1973) Ltd (1975] 2
119
Lloyd's Rep. 493, illustrated post, Chap. 13, para. 13·106. ,· _.,
00
[1984] 1 Q.B. 599. Contrast Kaye v. Broneski (1973) 4 BLR4, see ante, paras. 2·04fc:.2·042.
See post, Chap. 13, Section 4(3) and the cases there set out.
SECT. 2] INCORPORATION OF DOCUMENTS 443
men ts to be incorporated, which are quite common in practice in construc-
tion contracts, will be disregarded if they can be sufficiently identified by
evidence. 91
Another common source of difficulty in arriving at the true intention
will be where a document referred to by reference for a particular purpose
also contains an arbitration clause which it is sought by one of the parties
to invoke.92
In cases where contract documents expressly purport or appear on their
face to be complete, unincorporated documents may in certain circum-
stances amount to or evidence a collateral agreement, which will have
independent legal force between the parties; but it has been seen that the
onus of establishing this is not an easy one, since it is a commonplace event
for each party during the negotiating stage of a contract to put forward
terms for suggested acceptance, but the presumption, once they purport
to sign a set of contract documents, is that all such prior contentions, or
even agreements, have been superseded. 93 It has already been seen94 that a
letter prior to the contract from an owner giving his reasons for a change
he had caused to have made in the wording of the fluctuation clause, and
stating what it meant, was rejected even as evidence of the meaning of the
clause.
It is, of course, perfectly possible for the contract documents expressly
to limit or control the extent to which any documents may have contrac-
tual force, or modify or affect other documents. Where, as in the case of
the RIBA forms,95 they purport to give priority to the printed standard
form over the documents special_ly prepared for or coming into existence
as part of the contract, this can cause grave injustice and anomalies, and
defeat the true common intention of the parties.%
Assuming that a document agreed upon and intended to be incorpor- 3·052
ated in a formal contract is not in fact incorporated, then, if the failure to
do so is due to a common mistake, or a mistake of one party known to the
other, the remedy of rectification may be available. 97 But there must be
either full agreement, or a mistaken belief (known to the other party) that
the documents contain an agreed term, before rectification will be
granted. It is not sufficient to inform a representative of the other party,
who neither assents nor dissents, that a particular term will be required.
91 See the Modern Buildings and Brightside cases, supra.
oi See the cases post, Chap. 18, Section 2(3).
93 See ante, Chap. 1, Section 8.
114 Boot (Henry) &Sons Ltd. v. London County Council[l959] l W.L.R.1069,seeante, Chap.
1, paras.1·115-1·116.
9> Cf Clauses 2 and 10 of the pre-1963 RIBA form of contract, Clause 12 of the post-1963
forms, and Clause 2.2.1 of the 1980 form.
9,\ See ante, Chap. 1, Section 9(2)(d), "Priority of documents".
.,., Rectification is fully discussed ante, Chap. 1, Section 5(3), paras. 1·109 et seq.
 444 TENDERS AND ESTIMATES [CHAP. 3
ILLUSTRATION
Before signing a contract a director of the contractors informed the sur-
vey.or o.f the council t~at, ~otwi!hstanding that certain materials only and
their pnces were conta1n~d 10 a hst attached to the bills of quantities, for the
purposes of th~ fluctuations clause (Clause 25A in the standard pre-1963
RIB~ form), his c<?mpany would in fact require the clause to operate on all
mat~n~ls. whe_ther 10 the hst or not. The surveyor did not repudiate or assent
to th.is 1nt1mation, but the contract documents were signed without alteration.
Dunng the work the contractors claimed the increases, which were paid by
the council on interim certificate. Held, by Ashworth J., that (1) there was no
~greement to vary the contract as signed by the parties; and (2) the payments
1nadvert.ently made by the council would not estop them from subsequently
contending that they were not due under the contract, since there was neither
a representation nor action upon the representation sufficient to found an
estoppel: Royston Urban District Council v. Royston Builders Ltd. (1961).98
SECTION 3. ACCEPTANCE OF TENDER
(1) Legal Effect of Tender
3·053 As explained in section 1(1), supra, in normal circumstances the almost
invariable purpose of an invitation to tender is to obtain from tenderers a
firm offer capable of acceptance and hence of immediate conversion into a
binding contract. The principles of offer and acceptance have already
been discussed99 and it follows that in the usual case there is no obligation
on the owner to accept the lowest or any tender. 1 Many tenders contain an
express exclusion of the obligation to accept the lowest or any tender, but
this is not necessary. On the other hand, an invitation to tender can be so
expressed as to impose such an obligation and if so will be supported by
c~nsiderati~n.2 But no such obligation and if so will can be implied, nor
will an architect have any implied authority to accept the lowest or any
tender, though he may, of course, have express authority to do so.3 On the
other hand, in certain situations there will be an implied obligation to con~
sider a conforming tender in conjunction with other conforming tenders,
and failure to do so will be a breach of contract.
·~ 117 E.G. 589. See ante, Chap. I, Section 10, for estoppel, and contrast the cases of Robertsv.
Leicestershire Counly Council [1961] 1 Ch. 555, see ante, paras. 1 ·119-1·120, and Carlton
Contractors v. Bexley Corporation (1962) 60 L.G.R. 331, see ante, Chap. 2, Section 4(3),
para. 2·064. See also a very comparable case, Tharsis Sulphur & Copper Co. v. McElroy
(1878) 3 App. Cas. 1040, illustrated post, Chap. 7, Section 2. See also Boot (Henry) & Sons
Ltd. v. London County Council [1959J 1 W.L.R. 1069, see ante, Chap. 1, paras. 1 ·115-1 ·116.
w See ante, Chap. 1, Section 2.
1
See ante, paras. 1 ·023-1 ·024. For cases where the invitation to tender is fraudulent in that
the employer has no intention of letting a contract to the person invited to tender s;e infra
paras. 3·075-3·076. ~·'
2
See, e.g.,per Willes J. in Spencer v. Harding (1870) L.R. 5 C.P. 561, at p. 563.
J See Pauling v. Pontifex (1852) 20 L.T.(O.S.) 126.
SECT. 3] ACCEPTANCE OF TENDER 445
ILLUSTRATIONS
(1) A local authority sent out invitations to tender for the renewal of a 3·053A
concession to operate pleasure flights from the local airport. The form of
tender stated that they did not bind themselves to accept any tender, and also
that no tender received after the specified date and time would be admitted
for consideration. The existing concessionaires delivered their tender on time
by hand, but there was a failure to clear the letter-box by the Town Clerk's
staff, so that their tender was not considered in time and the Council in fact
accepted a tender lower than that of the plaintiffs, who claimed damages for
breach of contract and also alleged a duty of care in tort. Held, by the Court of
Appeal, affirming the judge on a preliminary point, that although the form of
tender did not explicitly state that timely and conforming tenders would be
considered, and although contracts were not to be lightly implied, there had
been a clear intention to create a contractual obligation on the Council to
consider the plaintiffs' tender in conjunction with other conforming tenders,
and that the Council were in principle contractually liable to the plaintiffs. It
was therefore unnecessary to consider whether a duty of care existed in tort:
Blackpool & Fylde Aero Club Ltd. v. Blackpool Borough Cowtcil (1990). 3"
(2) A Council advertised for construction companies to apply for inclusion
on a· selective tendering list, and after short-listing the contractors were
included in the list and invited to tender. By the date of tender the wife of the
contractor's construction director, who had been in the employment of the
Council, had become its Principal Architect. Following submission of the ten-
der the Council, after taking Counsel's opinion, decided to remove the con-
tractors from the tender list, although the interest had been fully disclosed at
all stages. Held, by the Court of Appeal, that while there was a contract to be
implied from conduct that the Council would consider the contractors' ten~
der, the Council had acted reasonably in deciding to remove the contractors
from the list once they had decided that the contract could not. properly be
placed with them, and accordingly were not in breach of contract: Fairclough
Building Ltd. v. Port Talbot B.C. (1992). 3b
The same principle has been applied in Canada, where conforming bids
have been held to constitute a limited contract with the inviter owner, and
with damages in the form of costs of tendering thrown away, or even loss
of profit, notwithstanding the presence of a so-called "privilege" clause
(entitling the owner to reject lowest or any tenders). Thus a public auth-
ority with an undisclosed policy of awarding to local tenderers, if within 10
per cent. of the lowest bid, was held liable to the lowest bidder by the
British Columbia Court of Appeal.:.c Similarly, where there was an under-
taking in the documents to consider bids "in the best interests of the
province" and a better qualified lower tenderer was rejected in
Saskatchewan. 3d
Whether an offer is capable of acceptance or is merely an expression of
willingness to bargain, or of the possible terms on which a bargain can be
,. [1990] l W.LR. 1195.
' :io (1992) 62 BLR 82.
x See Chinook Aggregates Ltd. v. District of Abbotsford [1990] 1 W.W.R. 624.
l
:id Kencor Holdings Ltd. v. Government of Saskatchewan [1991} 6 W.W.R. 717, Halvorson J.
 446 TENDERS AND ESTIMATES [CttAP.3
arranged, is a question of construction in which the line of demarcation
can in some cases be very fine. This is not usually a difficulty in the case of
tenders for building contracts, since it is generally known that the purpose
of the invitation to tender is to obtain a firm offer, and that any tender
which sought to depart from this understanding would not be seriously
considered by the owner.
There are, however, rare cases, usually in the context of contracts for
the supply of materials or the doing of an indefinite amount of work,
where acceptance in general terms will not create a binding contract,
which will only occur as and when actual orders are placed for distinct and
definite goods or work. 4
(2) Whether Acceptance Creates Contract
3,054 When the owner accepts a builder's tender, and the fact is notified to the
builder, the parties usually consider themselves bound, and frequently
work is commenced by the builder on this assumption. But there are at
least three reasons which can easily occur in practice why this may not be
so, and in consequence the builder's entitlement, if he has carried out
work, may only be to a quantum meruit remuneration in accordance with
quasi-contractual principles.5 A binding contract may not come into
existence:
(a) because the acceptance is expressed to be subject to some over-
riding condition;
(b) because the parties are still not ad idem as to an important term of
the contract; or
(c) because the tender, by passage of time, may no longer be capable of
acceptance.
(a) Acceptance of tender subject to condition
(i) Condition as to a formal contract
3·055 The condition which most often arises in practice is due to the expec-
tation of the parties that a formal contract will be signed at a later stage,
which frequently finds verbal expression in the tender documents.6 The
reasons why this may be desirable, and often occurs in construction
contracts in practice, have been explained supra.7 It is then a question of
construction of the language used whether the execution of the further
contract is a condition of the offer or invitation, or whether it is a mere
4
These cases are dealt with infra, paras. 3·073-3·074.
5 For these see ante, Chap. 1, Section 11.
~ Thus by the form of tender in the standard ICE form of contract it is provided "Unless and
until a formal agreement is prepared and executed this tender, together with your written
acceptance thereof, shall constitute a binding contract between us". ·,,.
7
See Section 1, paras. 3·008-3·009.
SECT. 3] ACCEPTANCE OF TENDER 447
expression of desire or intention that a formal contract should be drawn
up embodying the transaction already agreed upon. 8
In considering the cases below, it should be remembered that words
cannot be construed in isolation from their surrounding circumstances,
and that those circumstances in a contract for the sale of land or the grant
of a lease (where questions of title can rarely be considered in detail by
parties who may be in agreement on all other terms) are very different
from those in building contracts, where the parties are frequently, under
the modern practice in preparing tender documents, ad idem on all poss-
ible terms when acceptance of the tender takes place. In Rossdale v.
Denny9 where the conveyancing cases were fully considered, Lord Stem-
dale M.R., commenting on the fact that the trial judge had noted that in all
but two cases where the words "subject to a formal contract" had been
used they had prevented a contract coming into existence, said10:
"I am far from saying that there may not be an unconditional offer and
acceptance of a binding contract although the letters may contain the words
"subject to a formal contract," but certainly those words do point in the direc-
tion of the offer or acceptance being conditional."
There is no doubt that the "subject to contract" expression (for example, 3·056
when used by solicitors or estate agents in relation to the sale of land or
granting of leases or indeed by ordinary individuals when negotiating to
buy or sell) will usually be taken to indicate that no immediate contracting
intention exists. 11 That precise expression is not, however, often found in
the documentation leading up to a construction contract, which usually
provides for or contemplates a later formal agreement, often without any
express wording suggesting conditionality. In the quite different context
of construction contracts, therefore, and with substantial expenses likely
to be incurred by tenderers on major projects following the intimation of
acceptance of their tenders, it is submitted that this type of wording will
not prevent a contract coming into being, a fortiori if there has been an
unqualified acceptance and the reference to a formal contract is elsewhere
in the contract documentsr In addition, if one party in such a situation
commences work with the acquiescence of the other, it is submitted that
this will usually amount to a mutual waiver by both parties of any such
condition. 12
Thus in the High Court of Australia the distinction has been well
described as lying between a class of case where, on the one hand, "the
terms of the agreement are not intended to have, and therefore do not
have, any binding effect of their own" 13 and, on the other hand, "the par-
8
See the discussion ante, Chap. 1, paras. 1 ·057-1 ·060.
• [1921]1 Ch. 57.
10
At p. 66.
11
See the authorities examined by Goff J. in Michael Richards Properties Ltd. v. St. Saviours
Parish, Southwark [1975) 3 All E.R. 416, at pp.'421-423.
12
See M.R. Hornibrook (Pty.) Ltd. v. Eric Newham (1971) 45 A.L.J.R. 523.
13
Masters v. Cameron (1954) 91 C.L.R. 353, at p. 360.
 448 TENDERS AND ESTIMATES (CHAP. 3
ties were content to be bound immediately and exclusively by the terms
which they had agreed upon, while expecting to make a further contract in
substitution for the first contract containing, by consent, additional
terms". 14 Subject to the additional terms referred to being a possibility
rather than a firm or expressed intention, most construction contracting
arrangements where this issue arises will fall into the latter class, it is
submitted.
ILLUSTRATIONS
3·057 (1) Guardians of the poor of Hull issued an advertisement inviting tenders
for the supply of meat for three months, which stated that sealed tenders were
to be sent to the clerk of the corporation, and that all contractors would have
to sign a written contract after acceptance of tender. Held, acceptance of the
tender did not form a binding contract, as a written contract was to be
executed: Kingston-upon-Hull (Governor, etc.) v. Petch (1854).15
(2) A plaintiff owner, being desirous of making certain alterations in his
premises, sent bills of quantities through his architect, H., to several builders
inviting them to send in tenders stating the amount at which they would be
willing to execute the work. The defendant sent in a tender in these terms: "I
hereby agree to execute complete, within the space of twenty-six weeks from
the day of receiving instructions to commence, the whole of the work required
to be done in alterations and additions to the above premises, with the best
materials, in strict accordance with the plans and specifications, and to the
entire satisfaction of the architect for the sum of £4,193". The plaintiff's archi-
tect thereupon wrote to the defendant: "I am instructed by my client L. to
accept your tender of £4,193 for works as above referred to. The contract will
be prepared by Messrs. U. and C., Mr. L.'s solicitors, and I have no doubt it
will be ready for signa_ture in the course of a few days." The defendant after-
wards found that he had made a mistake in his tender, and thereupon pur-
ported to withdraw it. Held, by the Court of Appeal, that though the later
contract might have contained further terms-such as provisions for interim
payment-the parties had nevertheless concluded a binding contract: Lewis
v. Brass (1877).16
(3) A term of a local authority's advertisement for tenders for a sewerage
works Was that the tenderer should obtain sureties and execute a contract
under seal for due performance of the works. The plaintiff's tender was
accepted by a letter to which the seal of the council had been attached in
accordance with a resolution of the council, but the tenderer never executed a
contract under seal. Held, the acceptance of the tender did not conclude a
contract between the parties: Bozson v. Altrincham Urban District Council
(1903)."
[Note: There were other grounds for this decision and it needs careful anal-
ysis before any general conclusions can be drawn from it.] 18
3,058 (4) The plaintiff sent to the defendant's agent a written offer for certain
leaseholds, stating that the offer was "subject to a formal contract to embody
14
Sinclair Scott & Co. v. Naughton (1929) 43 C.L.R. 310, at p. 317.
15 10 Exch. 610.
16 3 Q.B.D. 667, C.A.
17
67 J.P. 397 (see the fuller note on this case, infra, para. 3·066).
13 See infra, para. 3·066.
SECT. 3] ACCEPTANCE OF TENDER 449
such reasonable provisions as my solicitors may approve, and to the lease
containing no unusual provisions or covenants". The agent replied on the
same day that he was instructed to accept the offer, and that he would take
steps to get the vendor's solicitors to prepare the formal contract. Held,
that the offer was conditional only, and that there was no binding contract:
Rossdalev. Denny (1921).19
(5) Considerable changes in the work were notified to tendering sub-con-
tractors after they had submitted their price in February 1959. In June 1959
they were asked by letter to start work in the following tenns: "We have to
inform.you that it is our intention to enter into a contract with you for (the
works). As soon as matters outstanding between us are settled we will enter
into a contract agreement with you, and in the meantime please accept this
letter as an instruction to proceed with the work necessary to permit you to
meet the agreed programme". By April 1960 all the terms of the contract had
been agreed between the parties, but no contract was ever actually signed.
The sub-contractors contended there was no contract in being, and sought
remuneration on the basis of a quantum meruit. Held, by Megaw J., that there
was a binding contract: Trollope & Coils Ltd. v. Atomic Power Construction
Ltd. (1963).W
(6) An excavation sub-contractor orally agreed a definition of rock with the
main contractor, and requested the latter to confirm it in writing. He then sent
in a quotation. The main contractor accepted the quotation without
mentioning the rock definition. The sub-contractor decided he wished to
withdraw his offer. Held, by the Ontario Court of Appeal (McGillivray J.A.
dissenting), that the confirmation in writing was a condition precedent, and he
was entitled to do so: Pigott Structures v. Keillor Construction (1965). 21
(7) Tender documents of a local authority in Victoria.required completion 3,059
by the contractor of a formal contract containing such further conditions as
the council might deem necessary for the purpose of carrying out the contract.
In March the council accepted the tender unconditionally and made no
request for any further contractual provisions, and the contractor com-
menced work. In July, when called on to do so, the contractor did execute a
formal contract. Meanwhile an accident had occurred and the question was
whether the authority could rely on an indemnity clause in the contract docu-
ments. Held, by Pope J., that since no further conditions had been called for
there was a binding contract following ~he unconditional acceptance of the
tender. Alternatively, if the contract was concluded in July it operated, fol~
lowing Trollope & Coils v. Atomic Power2 with retrospective effect: City of
Box Hill v. E. W. Tauschke (1974). 23
(8) In an advertised sale of property by tender, the documents provided
that acceptance of the tender would constitute a contract subject to the
approval of the Charity Commissioners. The tender documents were fully
detailed and contained all necessary particulars and there was nothing left for
further agreement. The words "subject to contract" were by a clerical error
appended to the acceptance. The sellers later refused to proceed. Held, by
Goff J., while on the facts rectification or mistake could not avail the pur-
19 (1921) 1 Ch. 57. The case of Sweet& Maxwell Ltd. v. Universal News Services Ltd. {1964] 2
Q.B. 699, see ante, Chap. 1, Section 2(6), paras. 1·048-1·049, shows that the wording was
not too vague to be enforced had the words "subject to formal contract" not been present.
w {1963] l W.L.R. 333, further illustrated infra, para. 3·067.
21 50 D.L.R. (2d) 97 Canada. See the fuller illustration of this case, ante, Chap.1, para. 1·029.
22 See infra, para. 3·067.
a [1974] V.R. 39.
 450 TENDERS AND EsTIMATES [CHAP. 3
chase~s: and notwithstanding that in a conveyancing context such words used
by sohc1tc.us, estate agents or private individuals would normally prevent any
contract, m this particular transaction with nothing left for further agreement
the words were meaningless and could be disregarded: Michael Richards
Properties v. St. Saviour's Parish, Southwark (1975).24
The above cases show, it is submitted, that where phrases of this kind
are used, the factual context will be more important than the particular
form of words used. Where there is not as a fact agreement on all necess-
ary matters, it is obvious that on general principles no contract will come
into being, but in these circumstances work may commence in anticipation
of future agreement, and more limited claims for reimbursement of cost
may arise contractually from "letters of intent" in these situations25 or on
quasi-contractual principles. 26
(ii) Conditions as to third party approval or permission
3·060 Apart from "subject to contract" stipulations, however, the parties may
seek to attach some other condition to the tender or invitation to tender or
acceptance. For instance, it is not unusual for an acceptance by a local
authority to be given "subject to loan sanction" or "subject to the approval
of the Ministry of------", or for that by a charity to be subject to the
approval of the Charity Commissioners.27 In all such cases it is a question
of construction whether the stipulation is a condition precedent to a con-
tract coming into being, or a condition subsequent-that is to say, whether
the parties are not bound at all, or whether they are bound immediately,
subject to their contractual obligations being cancelled in the event of the
condition occurring or not occurring. The practical difference is that in the
one case withdrawal, in the absence of any binding option, is possible by
either party at any time before the condition occurs, whereas in the other
the parties can be held to their bargain and no withdrawal will be
effective. 28 Since in construction contracts commercial reasons will usually
?ictate that a tender must be accepted within a comparatively short time,29
1t may be that the expected length of time before the conditional event
may affect the question whether the acceptance is to be treated as subject
to a condition precedent or subsequent.
Where permission or approval is expressed to be necessary, there is an
implied term that the party seeking approval or permission will exercise
24
[1975] 3 All E.R. 416. See also Alpenstow Ltd. v. Regalian Properties plc [1985] 1 W.L.R.
721 for another exceptional case.
25
See ante, Chap. 1, Section 2(7), and see, for a contractual example, Turriff Construction
Ltd. v. Regalia Knitting Mills Ltd. (1971) 9 BLR24.
26
See ante, Chap. 1, Section 11 and infra, Section 4.
27
Cf. the St. Saviour's case, supra.
28
Cf. the case of Churc_hward v. R. (1865) L.R. 1 Q.B. 173, where the effect of a provision for
payment out of parliamentary funds was considered. ,.,.
2<J See infra, para. 3·068.
SECT. 3] ACCEPTANCE OF TENDER 451
reasonable diligence to obtain it. 30 On the other hand, if at the time of the
contract the other party does not know that the pennission or approval is
necessary, but the party needing it does, or should do, or if the contract is
silent on the matter there will usually be an implied term that it will be
obtained within a reasonable time 31 and consequently no room for the
doctrine of frustration if, independent of fault, it is refused.
Again, the carrying out of work in anticipation of an approval not sub- 3·061
sequently obtained in the event may in some cases be treated as a waiver
of the condition so that the contract is operative, or alternatively the con-
tractor may be entitled to remuneration in quasi-contract. 32
ILLUSTRATION
A sub-contract provided that "This Agreement is subject to approval of the
Toowoomba City Council". The council had given a general approval, but
had expressly disclaimed any approval of differences in the unit prices
between the main and sub-contract. The main contractor disputed a claim by
the sub-contractor that the prices should be adjusted in accordance with the
main contract fluctuations clause. Held, by the High Court of Australia, when
granting rectification of the sub-contract33 and dealing with the difficulty that
the rectified sub-contract had not been approved, that since it had been fully
executed the parties could be treated as having waived the condition.
Alternatively, if there was no contract because the failure to approve oper-
ated as a suspensory condition, the plaintiff could recover on an implied con-
tract34 or quantum meruit, with the contract as evidence of reasonable
remuneration: M.R. Hornibrooke Ltd. v. Eric Newham (1971). 35
(iii) Other conditions
Attempts by contractors to qualify their tenders, which are frequently 3·062
informally phrased, often in documents attached to or contemporaneous
with the tender documents, may give rise to considerable difficulty of
interpretation. Thus a condition may be intended to affect or cancel the
contract as a whole (and hence be relevant to the present discussion), or
merely to qualify the prices, or some of them, in the contract, or some
other obligation of the builder or employer. So in the case of Davis
Contractors Ltd. v. Fareham Urban District Council 36 the contractors, in a
30 Compagnie Algerienne, etc. v. Katana Societa, etc. [1960] 2 Q.B. 115. However, an obli-
gation to use best endeavours does not impart a duty to appeal from an adverse planning
decision: see Hargreaves v. Lynch [1969] 1 W.LR. 215. See also, for planning permission,
Batten v. White (1960) 12P. & C.R. 66. For co-operation and best endeavours terms gener-
ally, see ante, Chap. I, Section 6(2), paras. 1·186 et seq.
31 Ibid. See alsoSethia (/944) Ltd. v. Partabmull Rameshwar[1951] 2All E.R. 352n, H.L., and
in Canada the important case of Ellis-Don Ltd. v. Parking Authority of TOronto, reported
in (1978) 21 BLR 7,post, Chap. 4, paras. 4·166-4·170.
32 As to which, see ante, Chap. 1, Section 11.
33 As to which, see the case illustrated ante, Chap. 1, paras. 1·125-1·126.
:14 The then usual description of the quasi-contractual remedy: see ante, Chap. 1, Section 11.
3-' 45 A.L.J.R. 523. See also the City of Box Hill case, see supra, para. 3·059.
36
[1956] A.C. 696, illustrated post, Chap. 4, paras. 4·253-4·258.
 452 TENDERS AND ESTIMATES [CHAP. 3
letter accompanying their tender, stated: "Our tender is subject to
adequate supplies of material and labour being available as and when
required to carry out the work within the time specified." This letter,
which also included statements relating' to the .fluctuations clause in the
contract, was referred to in an appendix to the tender, which itself related
to and was concerned with the fluctuations clause only. The House of
Lords (which held for these reasons that the letter was not, so far as this
particular sentence was concerned, incorporated in the later formal con-
tract concluded by the parties) pointed out the extreme difficulty of defin-
ing its precise content and effect, had it formed part of the contract,37 and
there had been considerable judicial conflict as to this in the courts below,
where it had been held to be a part of the contract. It will be readily seen
that such a condition might have been intended to qualify either:
(a) the builder's obligation to carry out the works at all;
(b) the builder's prices; or
( c) the liability pf the builder under the contractual provisions relating
to the time of completion.
3·063 The Court of Appeal in the Davis Contractors case held that it referred to
the time of completion only. But in a later case where rather similar word-
ing was used a different view was taken.
ILLUSTRATION
A covering letter from contractors stated: "In offering our tender we have
made the following assumptions:
(1) Labour. Labour is reported to be available in Yeovil and from all the
inquiries made providing the present circumstances are maintained there
should be sufficient quantity of men available for the work. We have accord-
ingly allowed for the daily transport costs of labour from Yeovil and for no
other importation. Our tender is based upon the assumption of continuous
availability of a sufficient quantity of suitable workmen to enable the work to
be completed in the time which we have stated.
(2) Material. We have assumed the availability of all necessary materials
for both permanent and temporary works and of all facilities required
enabling the work to be completed in the time stated. We would particularly
draw attention to the current difficulty in delivery of special iron fittings.
(3) Earthworks. Our excavation sub-contractors' prices which are funda-
mental to our offer are based upon the use of tractor-drawn plant and assume
that in the case of the main fill for the dam the borrow pits selected by the
engineers will be in suitable positions for the use of such plant.
3·064 (4) Diversion Works. We assume that the whole of the excavation for the
culvert would be carried out in open cut with battered sides and have taken
the appropriate excavation item in the Bill to be measured on this basis."
The contract was in the ICE standard form, slightly amended and with the
liquidated damages clause deleted. As a re.sult of the covering letter the ten-
>1 Per Simonds L.C., at p. 713.
Seer. 3] ACCEPTANCE OF TENDER 453
der figure was revised upwards from approximately £358,000 to £401,000;
£20,000 being allocated to the diversion works, £15,000 to cut-off trench, and
a provisional sum of £5,000 being inserted for transport of labour, but the
letter was, nevertheless, expressly incorporated in the contract. Held, per
Danckwerts L.J., distinguishing the view of the Court of Appeal in Davis
Contractors v. Fareham Urban District Council, that if any of the matters the
subject of the letter turned out otherwise than as assumed so as to cause extra
cost to the claimants, then the claimants should receive reasonable remuner-
ation therefor: Holland & Hannen & Cubitts Ltd. v. Yeovil Rural District
Council (1964). 38
[Note: This is, even on its very special facts, a most difficult case. Danck-
werts L.J. considered that important factors enabling him to distinguish the
Davis Contractors case were the failure in that case expressly to incorporate
the letter, and the fact that in the present case the deletion of the liquidated
damages clause, while it might leave the owner to his common law right to
damages for delay, meant that delay was a less compelling matter to the par-
ties. No weight appears to have been given to the extraordinary difficulty of
giving precise effect in financial terms to the letter, to the fact that the parties
in at least two respects appear to have altered the contract price to take
account of matters in the letter, or to the very wide scope of possible financial
claims under the terms Of the letter. On the other hand, this was, unlike the
Davis Contractors case, an engineering contract, where the power to grant an
extension of time was in completely general terms (see clause 44), whereas in
the RIBA form and in the Davis Contractors case the grounds for an exten-
sion of time were far more precisely defined and did not include shortages of
labour or materials.]
A condition attached to invitations to tender by the owner and fre- 3·065
quently found in practice, especially with local authorities, imposes an
obligation on the tenderer to provide sureties, in the event of his tender
being accepted, for due execution of the contractor's obligations under
the contract.39 In such a case the tender documents should contain or
identify by reference the precise wording of the surety bond required and
the amount of the bond. Failure to inform the tenderer of the precise form
required may lead to deadlock at the time the bond is required, since many
bonds giving unsatisfactory protection are today on offer in the market,
and may also afford an opportunity for the contractor to withdraw from
his tender should he desire to do so for other reasons, since it can be con-
tended that the parties are not ad idem as to a material term of the con-
tract.40 Such a term is indeed fundamental, and failure to comply with it
will justify the owner in treating the contract as repudiated. 41
(b) Parties not ad idem
Before a contract can be concluded, the parties must be agreed as to all J.066
its terms. The law does not recognise an "agreement to agree" and failure
Js Unreported, Q.B.D. special paper.
9
J Compare the forms of tender and bond in the ICE conditions, and Clause 10 of those
conditions.
40
See Bozson v. Altrincham Urban District Council (1903) 67 J.P. 397, there illustrated infra.
41
See Swartz & Son (Pty.) Ltd. v. Wo/maransstad Town Council 1960 (2) S.A. 1, South
Africa. For bonds and guarantees generally see post, Chap. 17.
 454 TENDERS AND ESTIMATES [CHAP. 3
to agree on any term will prevent the contract as a whole from coming into
existence. 42 In practice, however, offer and counter-offer or acceptance
may not be in identical terms-thus a person purporting to accept a con-
tract may at the same time seek to introduce a new term. The question
then is whether and, if so, when a stage has been reached where agreement
between both parties is complete. In building contracts conduct such as
starting work or permitting it to be started can be very important as show-
ing acceptance by the contractor or owner of the last offer by counter-
offer by the other party.43
ILLUSTRATIONS
(1) The D. guardians advertised for tenders for stone. T. tendered, and his
tender was accepted. A form of contract was to sent to T. who signed it after
having added a term. The guardians wrote to T., saying that they had erased
the additional term. The same day T. wrote that he had put the order in hand.
Four days later the guardians affixed their seal to the contract. Held, that as T.
had assented to the alteration made by the guardians, there was mutuality
between the parties at the time the seal was affixed, and the contract was
binding: Dartford Union v. Trickett (1889). 44
(2) Section 174 of the Public Health Act 1875 required urban district coun-
cils to enter into contracts under seal where the consideration was in excess of
£50, and stipulated that the contracts should state the time for performance of
the works. The tender documents required the contractor to obtain sureties
for due performance and to execute jointly with them a contract under seal
for due performance of the works. The documents made no mention of the
time of commencement, and did not identify the sureties. The clerk to the
council, following a resolution of the council, accepted the tender by letter, to
which he affixed the seal of the council. The contractor attended with his sure-
ties for signature of the formal contract, but for various reasons no contract
was in fact signed. Held, the tender left two matters for further agreement,
namely the time for commencement of the works and the selection of sureties,
and there was accordingly no binding contract: Bozson v. Altrincham Urban
District Council (1903). 45
[Note: The judgments in this case appear to depend upon the failure to
agree these two terms, upon non-compliance with the statute (now repealed),
and upon the tender requirement for entry into a formal contract. It is not
entirely clear to what extent the court considered these were independent
reasons for holding that there was no contract.]
3·067 In construction contracts a complicating factor is that negotiations
between the parties frequently take place in the general framework of
contract documents incorporating a contract in the standard form, and
often in practice continue for a substantial period after work has com-
42
See Chap. 1, Section 2(6).
43
Not always, however: see Peter Lind & Co. Ltd. v. Mersey Docks and Harbour Board
[1975] 2 Lloyd's Rep. 234, illustrated ante, Chap. 1, para. 1·038.
4
' 59 L.T. 754. Compare the decision of Blain J. in Davies & Co. Shopfitters f.-.td. v. William
Old (1969) 113 S.J. 262, see post, Chap. 13, para. 13·018.
45
67J.P.397.
SECT. 3] ACCEPTANCE OF TENDER 455
menced, whereas the standard forms assume and are drafted on the basis
of complete agreement between the parties before work commences. The
negotiations may finally lead to a concluded agreement, but the parties
may have failed to realise that there might be difficulty in applying the
wording of the contract conditions to work done prior to the final agree-
ment. In such a case the courts will do all that they can to give effect to the
parties' intention, either by implication of ad hoc terms in the contract or
by construing the final acceptance as having retrospective effect.
ILLUSTRATION
Sub-contractors tendered their price in February 1959 on contract con-
ditions which included a power to vary the work and a fluctuations clause.
Considerable changes were made in the work after the date of the tender,
necessitating amendment of the drawings, specification, and bills of quanti·
ties, and in June 1959 the sub-contractors were asked to start work by a "letter
of intent". 46 By April 1960 all the conditions of the contract had been agreed
between the parties but no contract was actually signed. Both parties from the
outset had intended to make a legally binding contract. The contractors con~
tended that, no contract having been signed, they were entitled to be paid on a
quantum mendt and not at the tender prices. They pointed out that no amend-
ment of the original tender price had been made, notwithstanding the
changes in the work, and that the conditions of contract made no provision for
valuing variations made before the contract was concluded. Held, by Megaw
J ., that (1) contractual conditions could not become binding piecemeal, and
no binding contract therefore existed before April 1960; (2) there must have
been a continuing intention up till that date by both parties to make a con-
tract; (3) the parties must have agreed at that date not only on all terms which
they regarded as required to bring the contract into existence, but also on any
terms which, even though they did not realise it, were essential if the contract
was to be commerically workable; (4) there must be some clear indication of
acceptance by the offeree. On the facts (2) and (4) had been satisfied. As to (3)
it was necessary, for the contract to be commercially workable, that its pro-
visions for adjustment of the tender price should apply retrospectively to the
changes which had occurred between the tender and April 1960. The parties
having acted in the course of negotiations on the understanding and in antici-
pation that a contract, once made, would govern what had been done maan-
while, there was an effective contract in April 1960, either because a term
would be implied that the variations clauses should apply retrospectively, or
because the ultimate acceptance of the tender (which itself contemplated
variations) applied to and embraced the changes requested and agreed in
anticipation of ultimate acceptance: Trollope & Coils Ltd. v. Atomic Power
Construction Ltd. (1963). 47
(c) Acceptance within reasonable time
Unless withdrawn, an offer or tender remains in force until it is accepted 3·068
or lapses by effluxion of time.
•6 For its terms, see supra, para. 3·058.
47
[1963] 1 W.L.R. 333 followed by Pope J. in the Supreme Court of Victoria: see city of Box
Hillv. E.W. Tauschke [1974) V.R. 39, illustrated supra, para. 3·059.
 456 TENDERS AND ESTIMATES [CHAP. 3
Acceptance (or ratification of any unauthorised or informal acceptance
if this is necessary) must take place within a reasonable time. 48 If the con-
tract specifies a date of commencement, acceptance after that date would
usually, unless waived, be too late, particularly, it is suggested, in building
and engineering. contracts where the contractor will need considerable
notice to prepare a site and plant organisation and labour force.
ILLUSTRATION
A board advertised for tenders for the supply of goods as from September
30. K. tendered. On September 22 the board passed a resolution that K. 's
tender be accepted, and that the board's seal should be affixed. On the same
day the clerk to the board (who was not an authorised agent for this purpose)
wrote to K. informing him that his tender was accepted. On September 24 K.
withdrew his tender. On October 6 the board resolved that K. should be held
to his offer. The seal was not, in fact, affixed till after October 6. Held, that as
the ratification of the acceptance by the clerk was not within a reasonable
time and was after the date fixed for performance to commence, it was too
late: Metropolitan Asylums Board v. Kingham (1890). 49
Where, however, the contractor has in fact commenced work in the
expectation of a contract being entered into ( as stated, an extremely com-
mon state of affairs in building and engineering contracts), an acceptance
after the date for commencement will be valid50 since this requirement will
have been waived.
(d) Commencement of work
3·069 The practice of public authorities and corporations in accepting tenders
at the present day leaves much to be desired. The tendency to put con-
tracts out to tender (particularly in engineering contracts) in a relatively
unplanned state, and to allow contractors a wholly insufficient period for
making a careful investigation of the site and of any other technical prob-
lems involved, has already been mentioned.51 This is accompanied,
paradoxically often in the same cases, by precipitate acceptance of tenders
and orders to commence work before a start is really practical (often in the
United Kingdom in order to obtain loan sanction within a particular
accounting year), followed by a lengthy period (usually because pos-
session of the whole of the site has not been arranged in advance and other
difficulties due to lack of pre-planning, such as difficulties with ground
@ Murray v. Rennie (1891) 24 R. (Ct. ofSess.) 965; Ramsgate Hotel Co. v. Montefiore (1866)
L.R. 1 Ex. 107.
49
6 T.L.R. 217. (If in time, the ratification would have been valid and binding notwithstand-
ing the prior withdrawal of the offer: see infra, para. 3·072.)
so See, e.g. Trollope & Golfs Ltd. v. Atomic Power Construction Ltd. [1963],J.:W.L.R. 333,
supra.
51
See ante, paras. 2·124-2· 129.
SECT. 3] ACCEPTANCE OF TENDER 457
conditions, and lack of information in regard to foundations, foundation
concrete, and column bases, have emerged) during which the whole pro-
ject hangs fire after the commencement date. Many large contracts let
prematurely by private property developers suffer from similar deficien-
cies of administration, which can be grossly unfair to the contractor and
make effective pre-planning on his part very difficult. On the other hand,
very similar results can also occur in both public and private projects for
the quite different reason that it is a common practice of contractors
whose· resources are fully employed elsewhere to seek to conclude new
contracts prematurely in order to maintain an uninterrupted fl.ow of work,
with the result that the start of work on a later project is in such cases likely
to be largely cosmetic until earlier projects· are nearer completion.
From the legal point of view, the subject of time for acceptance is closely
allied to the subject of time for commencement, since it makes little practi-
cal difference to a contractor if he is informally told that he is the success-
ful tenderer but does not receive formal acceptance for a long period, or if
conditional acceptance of his tender has to await fulfilment of the con-
dition for a lengthy period, or if his tender is promptly accepted but he
does not receive an order to commence for a long period. 52 The ideal is a
contract put out to tender with a stated and realistic date for starting work,
sufficiently distant in time to enable all parties to plan and be ready for an
effective start when the date arrives.
The RIBA standard forms have blank dates for insertion in their appen- 3·070
dices showing the date for possession. This introduces a sensible degree of
certainty into the position, provided the documents go out to tender with
the date inserted. If the documents go out to tender in blank, it is very
arguable that a vital term has not been agreed upon, since the liability for
liquidated damages for delay under these forms hinges upon this date, so
that the contractor will not be bound by any purported acceptance on
behalf of the employer. Should he, however, notify his agreement to the
acceptance of his tender by starting work, then he will either have
accepted the date put forward in the acceptance or, if none was, the obli-
gation on the parties will be, it is suggested, to afford possession and to
start work within a reasonable time, usually, of course, the actual date of
starting.
The ICE standard form seems less satisfactory, since here the contract-
or is obliged to commence work within 14 days of receiving the order in
writing to do so from the engineer. In this case the tender can be accepted
and the contractor kept waiting for as long as the implication of a term of
reasonable time will allow. The only really satisfactory arrangement, to
avoid disputes of the greatest difficulty and consequence, is for the tender
documentation to state the proposed date for commencement or pos-
session of the site, but if this is not possible contractors should qualify their
tenders by imposing time limits for the notification of acceptance or the
date of commencement, or both.
52 As to this, see post, paras. 4·146-4·148.
 458 TENDERS AND ESTIMATES [CHAP. 3
In considering what is a reasonable time for these purposes, the nature
of the work and the period in which the contract is to be completed may be
particularly relevant, since the costs of both building and civil engineering
works are likely to be substantially affected by the weather and duration
of daylight. So, for instance, a tender in the spring for work which, if
accepted at once, would be completed before the winter would not be
likely to be held open for acceptance in the autumn or even mid-summer.
Similar considerations will apply to coast defence or sea outfall work
likely to be affected by spring tides or seasonal weather. Another relevant
factor may be the presence or absence of a fluctuations clause. So
too the size of the plant and labour force and site organisation which the
contractor will have to organise and provide. 53
In most cases, of course, and particularly main contracts, difficulties
about starting dates and the contract period will be dealt with by ad hoc
agreement and waiver of strict rights. A typical example of this occurred in
a recent case where contractors' sureties unsuccessfully sought to escape
liability because work started by agreement some three weeks Jate.s3a
(e) Letters of intent
3·071 Where construction work is commenced in advance of a contract being
signed, or indeed other expenses incurred such as preparatory work in
preparing tenders or estimates, or preliminary design work and work
done to obtain necessary approvals or consents,54 it is not uncommon for
the party incurring expense to request or be given ·a "letter of intent"
which, whether or not so described, may affirm a present intention to enter
into a future contract.. It has been said that such a letter "is no more than
the expression in writing of a party's present intention to enter into a con-
tract at a future date", and it has also been said that "save in exceptional
circumstances it can have no binding effect" and that "it will create no
liability in regard to that future contract".55 These latter remarks should,
however, be interpreted strictly, since while there is no sufficiently certain
effect to be given to the use of "letter of intent" wordirig as a matter of
commercial or trade usage, and every such document must be interpreted
individually in the light of the circumstances of the case, the more usual
commercial intention of such documents, it is submitted, will be to
authorise accept responsibility, whatever the· final outcome, for
expenditure incurred by the other party in furtherance of the prospective
contract (such as, in a construction context, the placing of orders for
materials). Thus, in the case in question, which involved a turnkey
contract, a request for "an early Letter of Intent to cover ... the intensive
s) See generally the cases post, Chap. 4, Section 2(3), on failure to give possession.
Mercers v. New Hampshire Insurance Ltd. [1992) 2 Lloyds Rep. 365,post, para. 17·013.
s:1a
54
As to which latter, see infra, Section 4. ~-
" Turrif!Construction Ltd. v. Regalia Knitting Mills (1971) 9 BLR20,at pp. 29,32,per Judge
FayQ.C.
SECT. 3] ACCEPTANCE OF TENDER 459
design work now commencing and for the essential early orders on sub-
contractors" was held to have been a contractual offer accepted by a letter
from the owner simply confirming the intention to award the contract and
its principal terms, but making no reference to any preliminary expendi-
ture by the contractor.56
On the other hand notwithstanding a "letter of intent", Robert Goff J.
held in 1984 that the entitlement of a contractor, who eventually com-
pleted the entire order in a case where neither price nor delivery dates
could be agreed, was quasi-contractual and based on benefit received, and
express or implied contract must be rejected.57
However, in all cases the exact ambit of the letter of intent needs to be
ascertained, and if further work is done beyond that expressly authorised
the contractor's entitlement will have to satisfy quasi-contractual
requirements.
ILLUSTRATION
A "letter of intent" gave authority "for you to proceed with mobilisation 3·071A
and ordering materials up to a maximum expenditure of £100,000. In the
event that our client should not conclude a contract with you, your entitle-
ment will be limited to the proven costs incurred by you in accordance with
the authority given by this letter". Later the contractors started to work on the
contract and wrote requiring it to be noted "for the benefit of the client under
the tenns of our letter of intent, that this is done without prejudice to the
contractual position which is still unresolved ... " Much later and after a con-
siderable amount of work had been done, the contractors wrote that they
were continuing on the basis of the letter of intent "which in the event of no
fonnal contract being agreed, entitles us to reimbursement of our proven
costs". No contract was ever concluded, and the owners contended that the
words "proven costs" in the letter of intent governed the entire project, and
that on their true construction the contractor was not entitled to profit, and
that there were other restrictions on the costs which the contractor could
recover. Held, by the Court of Appeal, affirming the Official Referee, that the
letter of intent only authorised mobilisation expenses and ordering of
materials up to the maximum figure in case the contract did not proceed, and
were not intended to govern the main contract work, as to which there was no
contract, so that the contractor was entitled to a quantum meruit which would
include reasonable profit: Monk Construction Ltd. v. Norwich Union Life
Assurance Society (1992).57a
(3) Withdrawal of Tender
The subject of withdrawal is considered fully; ante, Chapter 1, Section 2, 3·072
ante. An offer may be withdrawn by notice at any time before accept-
Sii See Turriff's case, supra.
"British Steel Corporation v. Cleveland Bridge & Engineering Co. Ltd. [1984} 1 AllE.R. 504;
(1981) 24 BLR 94, illustrated ante, Chap. 1, Section 2, para. 1·051, Section 11, para. 1·268.
~ • (1992) 62 BLR 107.
1
 460 TENDERS AND ESTIMATES (CHAP. 3
ance,58 unless it is supported by consideration and amounts to an option.
Where the offer is made in such circumstances that acceptance by post is
within the contemplation of the parties, the date of posting is the date of
acceptance, and a withdrawal of the offer not received prior to the posting
will be inoperative.59 Mistakes made by a contractor in pricing a contract
will not prevent a contract being accepted under such an option even if
communicated before aCceptance.59a
An unauthorised acceptance by an agent can be subsequently ratified,
and, if so, this will create a binding contract notwithstanding that an
attempt may have been made to withdraw the offer before the
ratification.60
(4) Tender for Such Work as Employer may Order
3,073 When an offer to supply certain goods or do particular work has been
accepted, both parties are normally bound·, the one to do the work and the
other to permit its execution. But in rare cases tenders may not be of this
kind, particularly tenders by sub-contractors and suppliers. In such cases,
it is sometimes a difficult question of construction whether the owner or
purchaser is bound by his initial general acceptance, or whether his liabil-
ity arises only as and when he specifically orders work done or goods to be
supplied under the tender. Thus it has been said that contracts of this type
might on acceptance form a contract to buy the stipulated quantities; on
the other hand, they might impose an obligation to sell but not to buy; and
that an intermediate type might oblige the buyer to buy all his require-
ments but without any other obligation as to quantity. 61
ILLUSTRATIONS
(1) A railway advertised for tenders for the supply of stores. W. tendered to
supply at a fixed price, "in such quantities as the company's storekeeper might
order from time to time". W.'s tender was accepted. Held, that there was a
sufficient consideration for W.'s promise to supply the goods, although there
was no contract binding on the railway to order any: Great Northern Ry. v.
Witham (1873).~
(2) The Admiralty accepted a tender for the supply of2,000,000 tons, or as
much as might be required, of stone for a breakwater. After a small quantity
had been supplied they gave notice that no more would be required. Held, by
the House of Lords, that they were not liable in damages for breach of con-
tract: Stewards v. Admiralty (1901).63
511
Routledge v. Grant (1828) 4 Bing. 653, illustrated ante, Chap. 1, para. 1·029.
>'lByrne v. Van Tienhoven (1880) 5 C.P.D. 344, illustrated ante, Chap. 1, para. 1·029.
s~. See the Ron Engineering and City of Calgary cases, ante, Chap. 1, paras. 1 ·025, 1·108 and
1·117.
m Bolton v. Lambert (1889) 41 Ch.D. 295.
61
Percivalv. London City Council Asylums (1918) 87 LJ.Q.B. 677,per Atkin...J,
02 L.R. 9 C.P. 16. -~:.
63
18 T.L.R. 131, H.L.; reversing 17 T.L.R. 111.
SECT. 3] ACCEPTANCE OF TENDER 461
(3) The defendants were under contract to construct a dock for the Wel- 3-074
lington Harbour Board. The plaintiffs contracted to supply them with "all
gravel and sand-required by and in accordance with the specifications" for the
contract "which shall from time to time be ordered or required by the
employer", and the defendants undertook to order all the necessary gravel
and sand from the plaintiffs. The designs for the docks proved impracticable,
and the defendants were released from their contract with the board. The
plaintiffs sued for the amount of the profits that they would have obtained on
supplying the quantities of gravel and sand that would have been required if
the work had been carried out. Held, by the Court of Appeal of New Zealand
(Williams J. dissenting), affirming the decision of Stuart CJ., that the defend-
ants need only order what they required, and that the action failed: Pitcaithly
& Co. v. McLean & Son (1911). 64
(4) In June 1921 the government, in consideration of payment of a sub-
stantial deposit, confirmed the sale to general contractors of "the whole of the
old tentage which may become available up to and including December 31st
1921". Price and dates were to be agreed "as the quantities of old tentage
become available for disposal and are offered to the purchasers". Delivery
terms were similarly to be agreed. There was an arbitration clause in general
terms. A dispute as to price arose. Held, by the House of Lords, that there was
no enforceable agreement: May & Butcher Ltd. v. R. (1929).65
[Note: This case, in the light of later decisions and modem tendencies,
might not be so decided at the present day, it is submitted.66]
These cases require to be distinguished from tenders to complete work
although the actual quantities or extent may not be known, for example, to
carry out a particular engineering or building project in accordance with a
schedule of rates. 67 Here the obligation and right of the contractor is to do
the whole work (subject to any express power of the owner to order omis-
sions )68 and the parties will be bound on acceptance notwithstanding that
the extent of the work may then be unknown.
SECTION 4. LIABILITY APART FROM CONTRACT
(1) Cost of Tendering
The costs of tendering or estimating for a substantial building project may 3·075
be extremely heavy, since it will involve the employment of surveyors and
estimating staff in making the necessary estimates and attending at the
siteof the works and examining the drawings. In general, however, this is
an expense undertaken by the builder in the hope of obtaining the con-
tract, and should he fail to do so the owner will not be liable to him for the
expense involved.
64
31 N.Z.L.R. 648.
65
[1934] 2 K.B. 17n.
""See ante, Chap. 1, Section 2(6).
67
See supra, paras. 3·024 et seq., and post, Chap. 7, Section 1(2).
68 As to which see post, Chap. 4, para. 4-202 and Chap. 7, Section 2(2).
 462 TENDERS AND ESTIMATES [CHAP. 3
If, however, it can be shown that an owner has no intention of letting the
contract to the person invited to tender, or to one of a number so invited,
the invitation is clearly fraudulent and ·an action will, it is submitted, lie to
recover such expenses by way of damages.69
Even in the absence of fraud, however, a builder may render prepara-
tory services falling outside the normal work performed gratuitously
when asked to submit a tender. In some circumstances he may render such
services in the firm expectation of receiving a contract, while not intending
to receive separate payment for them additional to his remuneration un-
der the contract.
In these cases the services will have been rendered in the expectation,
not the mere hope, of reward. However, similar services, such as the giving
of estimates and quotations, and sometimes a limited degree of design
services, may be performed in circumstances where it is known to all par-
ties that an order may not eventuate at all (the major examples being the
cost of competitive tendering or tendering in response to a request for a
price). Here the services will have been rendered gratuitously in return for
the hope or possibility of obtaining business. Both these contrasting situ-
ations need to be distinguished from services which, if requested to be
performed, are of such an extent or nature as to justify an implied promise
to pay in the full contractual sense, such as actual building work carried
out by a contractor at the request of the owner with nothing said as to
payment or price.
The better view today is that, in the cases where the services in question
are neither performed gratuitously on the one hand nor clearly such as to
justify an implied (con.tractual) promise to pay a reasonable price on the
other, the entitlement to payment, if any, will be in quasi-contract, al-
though until recent years these latter cases were often somewhat confus-
ingly described by the courts as being based on "an implied promise to
pay". The distinction is of considerable practical importance, since the
quasi-contractual entitlement ( as opposed to a contractual entitlement to
a reasonable price) is to compensation for benefit received from the work
or services, which, depending on the facts, may be less than the reasonable
cost of providing the services, or even nil. This subject is fully discussed
ante, Chapter 1.10
3·076 The entitlement of NEs to be paid for probationary or other services of
a similar kind rendered in the expectation of a contract have already been
considered. 71 Similar principles apply in the case of contractors. Thus a
builder who provided "before and after" estimates and drawings for a war
damage claim at the request of the owners, together with bills of quantities
and a new specification, in the expectation of receiving the contract,
was held entitled to recover in quasi-contract when the owner
~
9
Cf Richards~n v. Silvester (1873) L.R. 9 Q.B. 34, referred to ante, Chap. 1, paras. 1·020-
1·021, where 1n the case of a vendor advertising a property for sale by auction a plea to this
effect was held to give a good cause of action. ~ '
70
Section 11.
71
See ante, Chap. 2, Section 9(1)(c), paras. 2·249-2·254.
SECT. 4] LIABILITY APART FROM CONTRACT 463
subsequently sold the property with the benefit of the claim.72 Again, a
joiner who under the same expectation prepared a number of drawings for
alterations to a building and obtained all necessary permissions was simi-
larly held entitled in a Scottish case.73 See also the expenses recovered by a
developer against a local authority which ultimately decided to abandon
the development. 74
Summarising, the nature of the work done, and whether it is of the kind
·usually performed gratuitously, may be a deciding negative factor against
liability. On the other hand, if the services are not of a kind which would
normally be requested without payment, a full contractual promise to pay
reasonable remuneration may be implied. In intermediate situations,
where a legitimate expectation of payment has been falsified, liability may
be quasi-contractual and dependent on theories of unjust enrichment
(that is, benefit received). 75
There are now a number of important decisions in several jurisdictions
where the cost of tendering and of other abortive preparatory costs have
been recovered in quasi-contract by contractors or others rendering ser-
vices on the principle of unjust enrichment.76
(2) Misrepresentation
The subject is dealt with more fully ante, Chapter 1.77 An owner will be 3·077
liable in damages for any fraudulent misrepresentations made by himself
or his agent in inviting tenders, and any provision requiring the contractor
to ascertain matters for himself or offering inspection of documents or
other sources of information from which the truth could be ascertained
will not avail to protect him where the misrepresentation is fraudulent.
ILLUSTRATION
Contractors tendered on plans which showed a wall existing nine feet
below ordnance datum. The contract contained a provision that the contract-
ors must not rely upon any representation made in the plans, but must ascer-
tain the facts for themselves. The wall did not extend to the depth shown, and
after completing the contract (under an arrangement that such completion
12 William Lacy (Hounslow) Ltd. v. Davis [1957] 1 W.L.R. 932, illustrated ante, Chap. 1,
Section 11, para.1·266.
73 Sinclairv. Logan (1961) S.L.T. (Sh. Ct.) 10.
1• Sabemo Pty. Ltd. v. Sydney Municipal Corporation [1977] 2 N.S.W.L.R. 880, illustrated
ante Chap. l, Section 11, para. 1·267.
75 Compare Landless v. Wilson (1880) 8 R (Ct. ofSess.) 289, ante, Chap. 2, para. 2·254, in an
architect's case, where the defendant also sold the building with a benefit of pennission
and plans.
70 See ante, Chap.1, Section 11 paras. 1·265 et seq., and in particular, apart from the William
Lacy case, Hill v. Waxberg 237 F. (2nd) 936 (1956) and Sabemo Pty. Ltd. v. North Sydney
Municipal Corporation [1977] 2 N.S.W.L.R. 880, there illustrated.
n Section 5(4).
 464 TENDERS AND ESTIMATES
should be without prejudice to their claims) the contractors brought an action
for deceit. There was evidence that the representation in the plan was fraudu-
lent. Held, that the provision gave protection against honest mistakes, but
[CHAP. 3
none against fraud by the owner or his agent: it might well be part of the fraud,
being inserted in the hope that no tests would be made: Pearson & Son Ltd. v.
I SECT. 4]
Dublin Corporation (1907). 78
In such a case, in addition to his right to damages, the innocent party
may elect to treat the contract as rescinded, but his right will be lost
if he continues to act under the contract after discovering the
misrepresentation.79
In the cases of innocent misrepresentation, the only remedy prior to the
Misrepresentation Act 196780 of the party aggrieved was rescission of any
contract entered into as a result of the representation, and this right, too,
was lost by acting under the contract with knowledge.81 Indeed, the right to
rescission in cases of innocent misrepresentation could be lost merely
because the contract had been executed or partly executed, so that restitu-
tio in integrum was impossible, even though the misrepresentation might
not have been discovered.82
3·078 For these reasons, innocent misrepresentations in contract documents
were seldom likely to be a practical factor in building contracts. Either a
representation was a term of the contract, in which case the remedy of
damages was available to the contractor, or the truth of the misrepresen-
tation was unlikely to be found out until it was too late for rescission to be
available. Furthermore, in important matters, such as the state of the site,
it is almost universal to find express exclusions of liability for the accuracy
of information in the contract documents,83 and there is certainly no
implied obligation or duty on the owner's part in these matters, so that
prior to 1967 the scope for invoking the doctrine in building contracts was
extremely limited ( the most likely representations to arise in building con-
tracts being, of course, on the part of the owner as to the nature of the site,
availability of possession, availability of access roads, availability of facili-
ties, and other matters affecting the difficulty and expense of carrying out
the contract work).
The Misrepresentation Act has introduced considerable possibilities in
this context, since it confers a right of damages for innocent misrepresen-
tations for which there is no reasonable justification, has removed the bar
78
[1907} A.C. 351. See also Atlas Construction Ltd. v. City of Montreal (1954) 4 D.L.R. (2d)
124, illustrated ante, Chap. 1, paras. 1·165-1 ·166.
1
• See, e.g. Sharpley v. Louth and East Coast Ry. (1876) 2 Ch.D. 663; Selway v. Fogg (1839) 5
M. & W. 83; Onnes v. Beadel (1861) 30 L.J.Ch. 1.
80
Discussed fully ante, Chap. 1, Section 5(4).
81 See Glasgow & S. W. Ry. v .. Boyd [1915] A.C. 526, illustrated ante, para. 1·147.
82
Angelv.lay [1911] 1 K.B. 666 (but see criticisms of this view by Scrutton L.J. in Lever Bros.
v. Bell [1931] 1 K.B. 557, at p. 538 and Denning L.J. in Solle v. Butcher [1950] 1 K.B. 671, at
~~J ~
sJ See, e.g., the case of Atlas Construction Ltd. v. City of Montreal (1954) 4 D.L.R. (2d) 124,
illustrated ante, Chap. 1, para. l ·166.
LIABILITY APART FROM CONTRACT
on rescission after a contract is partly executed, and has imposed a test of
reasonableness on clauses excluding liability for misrepresentations.84
In addition, there is now at least the possibility of establishing liability
for careless statements in the tender documentation under the Hedley
465
Byrne principle in tort. 85 However, in the light of very recent cases, the
"contract structure" may well militate against permitting such a liability,
both in the case of owners86 and their AfEs.'ol
(3) Bribery and Secret Commissions
If a contractor obtains acceptance of his tender by offering a commission 3·079
to the owner's architect or other agent, the owner can either repudiate the
contract, or treat it as subsisting. In either event, he can recover the bribe
from his agent, and in addition damages both from the agent and the
contractor.
ILLUSTRATION
An owner invited tenders, and the person tendering, with a view of obtain-
ing a recommendation from the agent of the owner, offered him a com-
mission, and in order to recoup himself for such a commission inserted in his
tender a sum in excess of the market price by the amount of commission.
Thereupon the agent advised the owner to accept the tender. Held, that this
was a gross fraud giving a right to the owner to recover both damages from the
contractor and the commission from the agent: Salford Corporation v. Lever
(1891).~
So strict is the rule that a party who wrongfully terminates a contract
may subsequently justify the termination if the contract, unknown to him
at the time of termination, had been brought about in fraud of him in this
way.s9
On the other hand, the right of the owner to receive the secret com-
mission is the right of a creditor, and not of a beneficiary under a trust, so
that he will not be able to follow the proceeds of the commission as he
could in the case of trust money. 90 Nor can he compel his agent to enforce
iw For misrepresentation generally, and the effect of this Act, see ante, Chap. 1, Section 5(4),
and for warranties as to the state of the site, see ante, Chap. 1, paras. 1·158-1·161 and
1·283-1·287, and post, Chap. 4, paras. 4·142-4·143 and 4·203.
ss See ante, Chap. 1, Sections 5(4)(e) and 12(2).
86 See, e.g. Dillingham Construction Ltd. v. Downs [1972] 2 N.S.W.L.R. 49, see ante, paras.
1·158-1·159. .
87 SeePacificAssocillteslnc. v.Baxter[1990] 1 Q.B. 993,ante,Chap. l,paras.1·303--1·304, and
see also Edgeworth Construction Ltd. v. N.D. Lea & Associates, ante, paras 1·295-1 ·296,
Ill! [1891] 1 Q.B. 168. See also Re North Austra/Uln Territory Co. [189211 Ch. 322.
11<1 Alexander v. Webber [1922] 1 K.B. 642, applying Panama & South Pacific Telegraph Co. v.
India Rubber Co. (1875) L.R. 10 Ch. 515.
'll• Listerv. Stubbs (1890) 45 Ch.D:1.
 466 TENDERS AND ESTIMATES [CHAP. 3
an improper contract for receipt of commission, so as to obtain it for him-
self, his right of recovery being limited to any moneys actually received by
the agent. 91
SECTION 5. COLLUSIVE TENDERING
3·080 The frequently heavy cost of tendering sometimes leads contractors to put
forward tenders which are not genuine, in the sense that, rather than
refuse to make a tender when invited to do so, the contractor tenders a
price higher than that "taken'' from another contractor, who does desire
to obtain the contract, thus avoiding expense and leading the owner to
believe that he has had genuine competitive tenders for the work. This
practice of "taking a price" was considered by the Monopolies Com-
mission under the Monopolies and Restrictive Practices Act 1948 and
found to be against the public interest, but no order was made under the
Act, so no legal consequences appeared to follow at that time. On the
authority of Mogul Steamship Co. v. McGregor Gow & Co., 92 Sorrell v.
Smith 93 and Crofter Hand-Woven Harris Tweed Co. v. Veitch 94 it would
seem that combinations not to tender, if made with·the dominant object of
protecting and extending the business of the parties, rather than inflicting
damage on the plaintiff, do not amount to actionabl~ conspiracies, and
would afford an owner no remedy as between himself and a contractor
whose tender he had accepted.95 Thus, after an early conflict of judicial
authority, it was held that an agreement between two or more persons not
to bid against each other, or to deal with profits accruing to the successful
bidder, was not unlawful.
ILLUSTRATION
(1) Tenders for the supply of stone having been invited by a corporation, it
was agreed between A., B., C., and D. thatB. should not tender, that C. and D.
should tender above A. 's price, that A. should purchase certain quantities of
stone fromB., C. and D., and that B., C. and D. should not supply the corpor-
ation with stone during 1875. B., in breach of the agreement, Sent in a contract
which was accepted. Held, that a bill would lie by A. to restrain B. from sup-
plying the corporation with stone directly or indirectly during 1875: Jones v.
North (1875).%
"'Powellv. Evans-Jones & Co. (1905] 1 K.B.11. (For cases of bribery and secret commissions
not involving acceptance of the tender, see ante, paras. 2·233-2-234.)
2
• [1892] A.C. 25.
93
[1925] A.C. 700.
""[1942] A.C. 435.
95 See further on this Lonrho Ltd. v. Shell Petroleum Co. Ltd. (No. 2) [1982] ~~·.C. 173, at
p. 189, per Lord Dip lock. ,,.
96
L.R. 19 Eq. 426.
SECT. 5] COLLUSIVE TENDERING 467
(2) At a sale by a public auction of surplus property belonging to the Minis-
try of Munitions, the plaintiff and the defendant agreed, in order to avoid
competition, that the defendant alone should bid for certain goods and the
goods if purchased should be divided equally between them. Held, by Banks
and Atkin L.JJ. (Scrutton L.J. dissenting), that the agreement was neither
fraudulent nor in restraint of trade and not illegal: Rawlings v. General Trad-
ing Co. (1921). 97
A small inroad on this doctrine was made by section 1 of the Auctions 3,081
(Bidding Agreements) Acts 1927, which made certain agreements in
relation to sales of goods by auction an offence and agreements not to bid,
provided one party is a dealer, were made offences by the 1927 Act as
amended by the Act of 1969, s.1 and 2, and can be set aside by the owner of
the property auctioned. The Act does not apply to tendering for building
contracts, or even to sales of land by auction however.
Collusive agreements in regard to tenders first became registrable in the
United Kingdom under the Restrictive Trade Practices Act 1956, and are
accordingly void, unless so registered, as being against the public inter-
est. 98 Furthermore, the Act of 1968 has introduced sanctions for failure to
register such agreements. It is not, however, clear to what extent the
owner in a contract so obtained could avoid it, or have any other remedy
against the successful tenderer. Article 85 of the EEC Treaty would also
appear to have no application to domestic as opposed to international
contracts, as well as for other reasons.
At the present day it is fairly common, however, for local authorities to
require an express undertaking from all tenderers that the tenders have
been arrived at without agreement or collusion with other tenderers.
Breach of this undertaking might, subject to proof of damage, entitle own-
ers to proceed in tort for procurement of breach of contract and
conspiracy.
SECTION 6. OTHER STATUTORY REQUIREMENTS
Most Western countries, in particular the United States, have statutory 3,082
requirements or administrative law of considerable complexity governing
the tenders of public authorities. In general, these are outside the purview
of this book. However, under Part II of the Local Government Act 1988,
the introduction by local authorities in the United Kingdom of what are
~[1921] 1 K.B. 635.See also Galtonv.Emuss(1844) 13 L.J.Ch. 388; ReCarew's Estate (1858)
26 Beav.187;Hefferv. Martin (1867) 36 L.J.Ch. 372; Cohen v. Roche [1927} 1 K.B.169; Levi
v. Levi (1833) 6 C. & P. 239; a decision to the contrary was disapproved in Rawlings v.
General Trading Co. [1921] l K.B. 636.
~Seethe injunctions granted by Mocatta J. in the R. P. Court, July 31, 1970, in the case of
electrical contractors, and his earlier decision in Re Birmingham Association of Building
Trades Employers' Agreement [1963] 1 W.L.R. 484, see ante, Chap. l, Section 7. See now
the 1976 consolidating Act.
468 TENDERS AND ESTIMATES [CHAP. 3

defined as "non-commercial matters" in the exercise of any of their

functions in relation to supply or works contracts is prohibited.
These functions themselves are very widely defined99 and the prohibited
"non-commercial matters" are listed in considerable detail,1 as also the CHAPTER4
extent to which the Race Relations Act 1976 can be taken into account by
a local authority in exercising these functions. 2
One very important and wide-ranging "non-commercial" (and so PERFORMANCE
prohibited) area under the Act relates to "the terms and conditions of
employment by Contractors of their workers or the composition of, the
PARA.
arrangements for the promotion, transfer or training of or the other op- Section l. Obligations of the Contractor
portunities afforded to, their workforces".3 (1) Obligation to Complete .................. . 4·003
The Act was necessitated because of an increasing practice by a number (a) Entire contracts and substantial performance
of local authorities in the United Kingdom of introducing what were seen (i) Completion of contract as a whole ......... . 4·006
(ii) Substantial performance ......................................... . 4·014
as political considerations or requirements into the contract documen- (iii) Completion for purposes of interim payments ..... . 4·023
tation, or otherwise in the selection of tenderers for public works con- (iv) Contracts which are not entire ............................... . 4·035
tracts. Failure of the local authority to comply with the Act will entitle (b) Extent of work included in obligation to complete:
the "inclusive price" principle ............... . 4·036
persons to recover any loss or damage suffered as a result. 4 (i) Indispensably necessary work expressly or
One possibly very important substantive power conferred by the Act is impliedly included ........................................... . 4·039
the right of a contractor to be given reasons should an application by him (ii) Work contingently necessary to achieve com-
to be included in a tender list be refused. 5 While admittedly necessary pletion .................. . 4.043
(iii) Contractor's unqualified obligation to complete:
machinery in an Act designed to protect contractors from a growing prac- the United States position ....................................... . 4·061
tice of primarily political refusals of their tenders, this provision, probably (2) Obligations as to Design and Quality of Materials and Work .. 4·063
unwittingly, may in practice render less effective this particular commer- (a) Design and suitability
(i) Where there is reliance on the contractor .... 4·075
cial sanction available against contractors who have not given commercial (ii) "Dutytowam"cases .......... 4·100
satisfaction on previous occasions (that is, removal from future tender (iii) Houses in the course of erection ............................ . 4·105
lists). (iv) Nominated sub-contractor design .................. . 4·108
(v) Express terms as to design, performance or suit-
ability ............................ _............................................ . 4·111
(vi) By-laws obligations of contractor..................... . 4·115
(vii) Generally ....................................... . 4·116
(b) Materials ............................ . 4·117
(c) Workmanship .......... . 4·124
(d) Work to satisfaction of A/E ............................................. . 4·126
(3) Obligations as to Progress ...................... . 4·128
(4) Obligations as to Cost 4·130
(5) Notices before Claims .................................................................... 4·132
Section 2. Obligations of the Owner
(1) General Summary of Obligations ................................................ . 4·136
(a) Administration ...................................................... . 4·137
(b) Possession of the site ......................................................... . 4·138
(c) Information and instructions ....................... . 4·139
(2) Payment ................................................. 4·140
(3) Giving Possession of the Site ...................................................._. .. . 4·141
(a) State of the site................................................................... . 4·142
911
S.17(4). (b) Extent and time of possession ............... . 4·144
I
S.17(5). (c) Quiet possession .............. . 4·150
2
8.18. (i) Other contractors of the owner .............................. . 4·151
3
S.17(5)(a). See the purposive attitude to this section adopted by the Court of Appeal in R. (ii) Sub-contractor's possession ............ . 4·157
v. London Borough of Islington, exp. Building Employers' Confederation (1989) 45 BLR (iii) Statutory undertakers ........... 4·161
45, at pp. 57-59,perParker L.J. · (iv) Strikes and industrial action ................................... . 4·164
'S.19(7)(b). , , (v) Title and third parties ...................... . 4·166
5
S.20(2)(b)(i), and see R. v. London Borough of Enfield, exp. T.F. Unwin (Rbydon) Ltd. (vi) Implied indemnity .................................................... . 4·171
(1989) 46 BLR 1, C.A. (vii) Other interferences by the owner .......................... . 4·172

469
 470 PERFORMANCE [CHAP. 4
(4) Supplying Instructions as to the Carrying Out of Work
(a) Generally ...................... .
(b) Original contract work ............... .
(c) Variations ordered by the owner .................................. .
(5) Nomination of Specialist Sub-Contractors and Suppliers
(a) Original nomination ............................................... .
(b) Re-nomination on failure of first sub-contractor .. .
(6) Appointing an Architect, Engineer or Surveyor
(a) Duty to make appointment.........................................
(b) After appointment.............................................................. 4·200
(7) Obligation to Permit the Contractor to Carry Out
the Whole of the Work.................................................................. 4·202
(8) Duty of Disclosure.....................................
Section 3. Discharge From Further Performance........................................... 4·204
(1) Repudiation and Termination for Breach
(a) Generally............................................................................. 4·205
(b) What breaches are repudiatory?
(i) Fundamental terms ............................. .
(ii) "Conditions", "conditions precedent" and "of the
essence" obligations
(iii) Non-fundamental breaches after notice................. 4·212
(c) Need for clear and prompt election................................. 4·213
(d) Wrong interpretation of contract
(e) Payment obligations and set-off....................................... 4·221
( f) Whether power to suspend................................................ 4·223
(g) Anticipatory breach..
(h) Effects of rescission ............................................................ 4-227
(i) The right to damages.......................................................... 4·228
(j) Quantum meruit: a remedy on rescission......................... 4·230
(k) Recovery of sums paid in quasi-contract ......................... 4·231A
(2) Release............................................................................................. 4·232
(3) Impossibility and Frustration
(a) Generally............................................................................. 4·233
(b) Theory of frustration................
(c) Leases................................................................................... 4·238
(d) Effect of frustration
(i) Before the English Act of 1943.
(ii) The Frustrated Contracts Act 1943......................... 4·241
(e) Incidence of frustration in construction contracts.......... 4·245
(4) Act of God and Force Majeure
(a) Act of God........................................................................... 4-265
(b) Forcemajeure ...................................................................... 4·267
(5) DeathorillnessofaParty.........................................
(6) Illegality........................................................................................... 4·273
(7) Limitation of Actions..............................................
(a) Summary of current legislation in England..................... 4·284
(b) Accrual of cause of action in contract.............................. 4·288
(c) Contractual indemnities..................................................... 4·289
(d) Contractor and owner......................................
(e) Defective work .................................................................... 4·292
(f) Deliberateconcealment...
Section 4. Specific Performance
(1) Generally
(2) Injunctions Having Effect of Compelling Performance............ 4·305
(3) Decrees in the Case of Agreements for Building Leases
4·001 In this chapter, it is proposed to discuss a number of the obligations of the
parties associated with the performance of the work of a building or engin-
eering contract, and also the various ways in which the parti~s'. may be
discharged from their liablity for further performance, including frus-
PERFORMANCE 471
tration, discharge by breach, illegality, and (not strictly a case of dis-
4·174
4·176 charge) limitation. Much of the present chapter is concerned with matters
4-183 which, though of fundamental importance, are only rarely the subject of
detailed express provision even in formal written contracts, 1 and conse-
4-184
4·191 quently are regulated by general principle and terms implied by law, in
turn derived almost entirely from the nineteenth century case-law in
4·197 England. The draftsmanship required to encapsulate in detail the com-
mon law jurisprudence on the fundamental performance obligations of a
contractor under a priced contract, in the traditional case where the works
4·203 are to be carried out to the owner's design, will be seen to be by no means
simple.2
The reasons for this failure of traditional contracts to spell out such
important areas of the contractor's obligations appear to be historical, and
4-209 may be due to a lack of knowledge or experience of the requirements of
4·211 construction projects on the part of the early draftsmen in the nineteenth
century, who were probably Chancery pleaders, and who tended to use
the language of leases for the early formal contracts (as evidenced by the
4·218 wording of the traditional clauses for "forfeiture", "maintenance" and the
restrictions on "assignment" in the early formal contracts, much of which
4·225 has persisted to the present day).
Professional tendencies to adopt earlier forms of precedent, combined 4-002
with a readiness to leave detailed development of the law to the judiciary,
in fact led to a remarkable similarity in the forms of contract in use in both
the United States and United Kingdom up to the second world war, and
industrial pressures for change have tended to be accommodated by
4·234 express provision grafted on to the old wording, for example, the
"changed conditions" (United States) and "Clause 12" or "unfavourable
conditions" (United Kingdom) clauses in English engineering contracts,3
4·239
modifying the otherwise strict pricing consequences for the contractor of
the basic completion obligation evolved by the judges. The drafting style
of modern United States contracts has now changed very considerably,
however.
4·270 On the other hand, certain more detailed subjects associated with per-
formance, such as maintenance and defects, 4 time for completion5 and
4·283
prices and damages are dealt with later in this book in chapters devoted
exclusively to them, as well as matters such as variations, insurance and
indemnities, approval and certificates, bonds and guarantees, liquidated
4·291 damages for delay, assignment, insolvency, nominated sub~contractors,
4·294 ownership of materials and plant, and termination-the common link
between these latter being that they tend to be the subject of fairly
4·297 detailed express provision in most formal contracts.
4·307
I
For an exception, see the Singapore SIA private sector contract, Article 5, Conditions 1(1)
(first sentence), 1(8), 2, 3(1), 3(3) and 28(2), set out in C.C.P.P., pp. 550, 553-558 and 587,
which endeavour to state the basic obligations expressly.
2
/bid.
3
See for these infra, Chap. 8.
4
See post, Chap. 5.
5
See post, Chap. 9.
 472 PERFORMANCE [CHAP. 4
SECTION 1. OBLIGATIONS OF THE CONTRACTOR
(1) Obligation to Complete
4·003 Most formal building or engineering contracts contain an initial express
obligation of the contractor in some such words as to "carry out and com-
plete the works in accordance with the contract". This is, in fact a dual
obligation that is, both to carry out and to complete the works.6
In the context of a priced contract to carry out work which is described
with sufficient precision, for instance, by reference to drawings and a
specification, and whether or not designed by or on behalf of the owner,
such a term will in any event, it is submitted, be implied, however informal
the contract. Thus, in the context of payment, in all but quite exceptional
types of contract, and in the absence of frustration or breach of contract by
the owner, the contractor cannot voluntarily abandon work, even if close
to completion, and demand payment for work done to date. This funda-
mental express or implied dual obligation has, however, a number of other
vitally important consequences in the interpretation of construction con-
tracts. These may be listed comprehensively as follows:
(a) as stated, in the context of payment, a contractor who, in breach of
contract, has failed to complete the work satisfactorily will be
unable to sue for the price, or even a part of it, for work done, in the
absence of express provision for interim payment. 7 Where com-
pletion has taken place but the work is found to contain omissions
or defects, the harsher aspects of this rule have been mitigated in all
common law jurisdictions by doctrines of substantial performance,
howevef!;
(b) in the context of price, the express or implied undertaking to com-
plete to the design, even where the design is provided by or on
behalf of the owner, constitutes a warranty by the' contractor to the
owner that the design is practicable, and of his own ability to com-
plete to the design for the price or prices quoted. Thus, if unexpec-
ted difficulties on site or inadequacies of design are encountered
during construction, the contractor's price is inclusive of any
additional work or expenditure, including varied work, which may
be needed to achieve completion, and which must be carried out by
the contractor without additional payment in the absence of
express provision, and no obligation exists on the owll.er to vary the
work in order to assist him. 9 The price is also inclusive of any ancil-
lary undescribed work necessary in any event for the completion of
the described work. lDThis obligation to do undescribed work which
6
See this passage approved by Mocatta J. in Nene Housing Society Ltd. v. National West-
minster Bank Ltd. [1980] 16 BLR 22, atp. 33.
7
See infra, subsection (l)(a)(i).
~ See infra, Subsection (l)(a)(ii).
• See infra, Subsection (l)(b )(i).
III
See infra, Subsection (l)(b)(ii).
SECT. l] OBLIGATIONS OF THE CONTRACTOR 473
is either contingently or indispensably necessary without additional
payment is here called "the inclusive price principle" 11 ;
( c) in the context of design, while under the obligation to achieve full 4,004
completion a contractor does not, in a case of owner as opposed to
contractor design, owe any duty in regard to its subsequent per-
formance, safety, durability or suitability after completion, pro-
vided the work has been carried out using proper standards of
materials and workmanship in exact accordance with the designtz;
(d) in the context of damage to the works from external causes, or site
difficulties, or other excuses for failure to complete, no defence will
be available to the contractor by reason of matters or causes pre-
existing at the date of the contract. In the case of supervening
causes or events, these, too, will not avail the contractor unless they
have the effect of permanently preventing completion of the project
( as in the case of destruction of the site itself by earthquake or sea
action, for example, or prohibitions on further construction
imposed by supervening legislation) but merely do so temporarily
( as in the case of fire or earthquake destroying a nearly completed
building capable of being re-built, or damage to the works, however
severe, caused by storm, flood civil commotion or vandals). In such
cases, the contractor will, in the absence of express provision,
be obliged to rebuild or repair the works to achieve completion
without additional payment 13;
(e) in the context of defective work, the express or implied obligation
both to carry out and complete the works in accordance with the
contract imposes, it is submitted, a continuing dual obligation,14 and
not merely, as in other contracts for work and materials where work
is not carried out on and fixed to the owner's land as it progresses, a
single ultimate obligation to hand over and deliver a final conform-
ing product or article on completion. It is unfortunately necessary
to stress this duality in view of some relatively recent suggestions
made in higher English courts putting forward a theory of what has
been called "temporary disconformity" of work during the con-
struction period, 15 under which, however serious and irremediable
the defect, it would seem, there can be no breach of contract until
the time for completion has arrived. On the other hand, the later
element in the completion obligation has the important advantage
for plaintiff owners complaining of defects of postponing the start
of any limitation period based on the date of breach until practical
completion of the work, if not later. 16
u See infra, Subsection (l)(b).
ii See infra, Subsection (2).
11 See infra, Section 3(3).
14 See the approval of this view by Mocatta J. in Nene Housing Association v. National West-
minster Bank (1980) 16 BLR 22, at p. 33, and see further post, Chap. 5, Section 1(6).
'·' See post, Chap. 5, para. 5·027, where this view is criticised.
16
See infra, Section 3(7) and see further post, Chap. 5, Section 1(6) and Section 2.
 474 PERFORMANCE [CHAP. 4 SEcr. l] OBLIGATIONS OF TI-IE CONTRACTOR 475

(f) In the context of obligations of completion to time, it will be seen (a) Entire contracts and substantial performance
that less rigorous standards are necessarily imposed, since com-
pletion of the work which is free from patent defects, so enabling (i) Completion of contract as a whole
the owner to take possession, will usually, in the absence of pro-
In a very large number of contracts in everyday life, the entire fulfilment 4·006
vision to the contrary, meet the sense of and discharge the obli-
of the promise made by one party is a condition precedent to the right to
gation to complete to time, whether or not expressly described as
call for fulfilment of any part of the promise made by the other. So if a
"substantial" or "practical" completion as in the English standard
contract of sale stipulates for payment in advance, the payment must be
forms, and whether the obligation is express or, as in many cases of
made in full before delivery can be called for. Partial payment (unless
reasonable time, implied. 17
permitted by the contract) will not do. Equally, if the contract requires
delivery of the goods before the price is payable, there must, if it is an
4·005 In addition to this principal express or implied obligation to complete,
entire contract and not a severable one, be a complete delivery of goods,
formal English-style contracts may make express reference to "substan-
conforming in all respects with the contract requirements, before pay-
tial completion" 18 or "practical completion". 19 These expressions are
ment becomes due. A well-known example is furnished by the old case of
rarely precisely defined, but are often used in formal contracts to denote
Cutterv. Powell,22 in which the defendant agreed with a sailor at Jamaica in
the start of the maintenance or "defects liability" period and to secure the
the following terms: "Ten days after the ship Governor Pary ... arrives at
release to the contractor of the first portion of any "retainage" (United
Liverpool I promise to pay to Mr. T. Cutter the sum of thirty guineas,
States) or "retention moneys" (United Kingdom). In general what is con-
provided he proceeds, continues and does his duty as second mate in the
templated by these expressions is a state of apparent coml)Ietion free of
said ship from here to the port of Liverpool ... "; the sailor having done
known defects which will enable the owner to enter into occupation and
his duty until his death on board before the completion of the voyage,
make use of the project, with the result that they will usually bring any
the plaintiff, who was the sailor's personal representative, was held not
possible liability of the contractor for liquidated damages for delay to an
to be entitled to recover a proportionate or any part of the agreed
end.20 The scheme of this type of contract thus contemplates the com-
remuneration. 23
mencement of a period when the owner enters into occupation but at the
The essence of a building contract is a promise by the contractor to carry
end of which any then known omissions or defects will be made good by
out work and supply materials in consideration of a promise by the build-
the contractor. The draftsmanship of many such contracts can be confus-
ing owner to pay for it. In most contracts for major works the contractor is
ing, since the word "completion" may be used at different points in the
given an express right to payment by instalments on account of the con-
contract without indicating clearly whether this initial form of completion,
tract price as the works proceed, and so to that extent no question of an
or the final completion of the contractor's obligations on site at the end of
entire contract arises. But the rules as to entire contracts will still apply to
the maintenance period, is intended. In many cases, the draftsmanship is
the last instalment, or to any general balance due, or to any individual
such that only the context will indicate in which sense the word is being
instalment if the work is abandoned or brought to an end before the instal-
used. 21 Some contracts may make the position clearer, at least by impli-
ment is completely earned.24 Furthermore, in many smaller contracts the
cation, since separate certifications by the A/E at each of these stages is
question whether the contractor is bound to complete the works in their
often provided for.
entirety before becoming entitled to any payment on account is of vital
practical importance.
Where entire performance is a condition precedent to payment, the 4·007
11 See infra, para. 4·029, and see post, Chap. 9, Section (9), and Chap. 10, Section 2(5), paras. builder, in order to recover his price, must either prove entire perform-
10·057 et seq. ance or else an acceptance of the works by the building owner amounting
1~ See, e.g. in the English civil engineering forms.

'" See, e.g. in English building forms.
20 This subject is further discussed post, Chap. 5, paras. 5·048--5·049 and see, in the context of
liability for delay in completion, the definitions in Westminster Corporation v.J. Jarvis &
Sons Ltd. [1990] 1 W.L.R. 637, at pp. 646C and 647B,per Viscount Dilhorne, and at pp.
649H, 650E-650F,per Lord Wilbedorce there referred to. See also,per Salmon L.J. in the
same casein the Court of Appeal; [1969] 1 W.L.R. 1448, atp.458, and.per Judge Newey in
his valuable judgment in Nevill (Sunblest) Ltd. v. William Press Ltd. (1981) 20 BLR 78, at p.
81, and the various citations post, Chap. 5, paras. 5·048-5·049. See also the definition in the
Singapore SIA contract, Clause 28(4), C.C.P.P., p. 582.
to a waiver of the condition.25 However, while in contracts for the sale of
goods the buyer must either accept or reject the goods and a failure to
reject within a reasonable time will be regarded as an acceptance, and if he
n {1795) 6 T.R. 320; 2 Sm.L.C. 1. See, however, Stubbs' case,post, para. 4·026.
n See, however, Taylorv. Laird (1856), referred to infra, para. 4·025, and Stubbs v. Holywell
Rly. (1867), illustrated, infra, para. 4·026.
2• See infra, paras. 4·023 et seq. See also Eshelby v. Federated European Bank [1932] 1 K.B.

21 See, for a typical recent example on a contractor's termination under Clause 27.4.4 of the 423 {whether guarantor liable where instalments not fully earned), infra, para. 4·012.
1980 RIBA /JCT standard forms, Emson Eastern Ltd. v. EME Developments Jitd. (1991) i:; See, e.g. Tannenbaum Meadows Ltd. v. Wright-Winston Ltd. (1965) 49 D.L.R. (2d) 386,

55 BLR 114. infra, para. 4·017. See also post, Chap. 5, Section 1.
 476 PERFORMANCE [CHAP.4
accepts them he must pay the price subject to any cross-claim for damages
for breach of contract, a building owner who merely allows works erected
on his land to remain there does n6t impliedly accept them. 26 Thus where
the contract is entire, the owner may get the benefit of valuable works not
entirely completed by the builder without having to pay for them, unless
the circumstances are such as to justify a quasi-contractual remedy. 27 So a
builder who has not fully completed the work, through no fault of the
owner, cannot overcome his difficulty by ignoring the contract and sue on
a quantum meruitfor the work he has done. 28 However, the rigours of this
rule are often considerably reduced because, in a large number of cases
where there is not entire performance, the owner may decide to sue the
builder for damages for breach of contract. If he does, he will, on general
principles of damages for breach of contract, have to give credit for what
he would have had to pay had the contract been properlyperformed.29 But
in a case where the owner decides not to sue30 he may derive considerable
advantage from the foregoing rules, which are, however, an essential and
necessary sanction to discourage the deliberate breaking or abandonment
of contracts, which would be absent if in such cases the builder was
entitled to demand partial payment notwithstanding his own breach ( or if,
to take a converse example, a repudiating owner was entitled to demand
repayment of moneys paid in advance). 31
4·008 Unlike contracts for the sale of goods, therefore, the consequence of a
rigid application of the rule could work considerable hardship and anoma-
lies in the case of contracts for services, as in Cutterv. Powell, supra, or for
work done and materials supplied, such as a building contract, since when-
ever it is not possible to sever or apportion the price and the performance
(that is, whenever itis a "lump sum"3ia or entire contract) a builder might
apparently have completed a project, but, if some omissions or defects
were then discovered, the owner could then avoid payment of a perhaps
substantial contract sum or balance otherwise overdue. The great major-
ity of building contracts in the traditional form consist of an undertaking
to complete the work for a contract price either ascertained (in the case of
a specification form of contract without quantities) or ascertainable (in the
case of a measurement contract with quantities or schedules of rates) and
are therefore "lump sum" or entire contracts, in the legal sense, save only
to the extent that they may contain express provisions for interim or stage
payment. It will be seen that, except in very rare cases, the courts will not
imply a term for interim or stage payments.32
In fact, the vast majority of priced building contracts, sophisticated or
simple, for the construction of a block of flats or a garden shed, will be
construed as being entire, even where there is no express undertaking to
2o See post, Chap. 5, Section 1.
27 See ante, Chap 1, Section 11.
2s Munro v. Butt (1858) 8 E. & B. 738.
29 See post, Chap. 8.
ia See, for a good example,/bmac Ltd. v. Marshall Ltd. (1968) 208 E.G. 851, infrllj para. 4·013.
11 See, e.g. Hyundai Heavy Industriesv. Papadopolous [1980] 1 W.L.R. 129, infra;para. 4·228.
31, In the narrow legal sense, see ante, para. 3·017. 12
See infra, paras. 4·032 et seq.
SECT.!] OBLIGATIONS OF THE CONTRACTOR 477
complete, or where the price is to be cost-based. 33 Only contracts of a day-
to-day jobbing character are likely to escape such an interpretation, which
in the absence of express provision will depend on examination of the
"matrix" or "genesis and aim" of the transaction between the parties. 34
Thus nearly all measured or schedule contracts, with or without bills of 4-009
quantities, will be entire contracts.35 So a contract to build a house in
accordance with an agreed schedule of rates, or on an agreed cost basis,
and with as yet no finalised drawings or specification and no grossed-up or
other estimate of final cost, may nevertheless be a contract to build and
complete the dwelling-house, or indeed any other project. Halfway
through construction, the contractor cannot, in the absence of express
provision or breach of contract by the owner, stop work and sue for the
value of work done to date or for an appropriate part of the price.
An account of the doctrine of substantial performance and of cases
where that doctrine has enabled a plaintiff to succeed despite a partial
failure of performance will be given infra, at para. 4·014. The following
are, however, examples of cases where the "entire contract" rule has been
applied so as to defeat a plaintiff seeking remuneration for work done. It
will be seen that this can result either from the courts' interpretation of a
particular contractual obligation as requiring strict and complete rather
than merely substantial performance before the obligation to pay can
arise, or, in later cases after the emergence and recognition of the substan-
tial performance doctrine, because the quality or extent of the plaintiff's
offered performance is considered to fall short of a sufficiently substantial
performance to enable him to recover. 36 Finally, it should be remembered
that an entire performance defence is an alternative to a claim for dam-
ages. If damages are claimed, credit must be given for the sums due under
the contract. 35a
ILLUSTRATIONS
(1) The plaintiff brought an action on a contract for building a house to 4-010
re~ver t~e balance .of the sum therein agreed on, the principal part of the
pnce having been paid. It was proved that the plaintiff had omitted to put into
the building certain joists and other materials of the given description and
measure. Held, by Mansfield C.J., the plaintiff, not having performed the
agreement he had provided, could not recover either on the contract deduct-
ing the difference in value, or upon a quantum valebat: Ellis v. 'Hamlen
(1810)."
(2) The plaintiff undertook to build a mill and, if it did not answer, to build
another, and the defe~d8:nt agreed to pay a specific sum. Held, by Ellenbo-
ro.ugh C.J., that the.pla1ntiff could not recover unless he proved either that the
mill answered or that the defendant had accepted it: Davis v. Nichols [1814].38
"For these latter, see ante, Chap. 3, Section 1(2).
34
For this principle of interpretation, see ante, Chap. 1, Section 9.
35
See ante, Chap. 3, para. 3·014, and see Ibmac v. Marshall (1968) 208 E.G. 851, infra, para.
4·013.
36
In addition to the cases illustrated, see Sacher v. African Canvas & Jute Industries [1952] 3
S.A. 31, illustrated post, Chap. 5, Section 1(2), paras. 5·003-5·004.
r.. See post, Chap. 8, Section 2(1 ). 37 3 Taunt. 52.
3
38
2 Chit.(K.B.) 320.
 478 PERFORMANCE [CHAP.4
(3) The plaintiff undertook to repair and make perfect three chandeliers
for £10 and did repair them in part but did not make them perfect. Held, by
Tenterden C.J ., that the plaintiff, not having performed his part of the con-
tract, could not in an action of assumpsit recover for the value of the work
done and materials supplied: Sinclair v. Bowles (1829). 39
(4) A. Bros. entered into an agreement with B. to erect upon premises in
B.'s possession a steam-engine and machinery. The contract consisted of a
specification containing 10 distinct parts, under each of which Were particular
descriptions of the work to be done in connection with each respectively and
the prices to be charged for the same, and concluded with the words: "We
offer to make and erect the whole of the machinery of the best materials and
workmanship of their respective kinds, and to put it to work, for the sums
above named respectively, and to keep the whole in order under fair wear and
tear for two years from the date of completion. All brickwork, carpenters' and
masons' work, and materials, are to be pro:vided for use; but the drawings and
general instruction required for them to work will be provided by us subject to
the architect's approval". The total cost of the works would have amounted to
£459. During the course of the works, when items 1-8 had been only partially
completed and some of the materials for the other items were on the prem-
ises, the premises were destroyed by an accidental fire. B. had made use of a
tank erected by A. Bros. A. Bros. brought an action to recover £419 for work
done and materials supplied. Held, by the Court of Exchequer Chamber, A.
Bros., having contracted to do an entire work for a specific sum, could recover
nothing unless the work was done or it could be shown that it was the defend-
ant's fault that the work was incomplete, or that there was something to justify
the conclusion that the parties had entered into a fresh contract: Appleby v.
Myers (1867). 40
4-011 (5) W. agreed to make a pavement of about 1,500 square yards in three
rooms ofD. 's laundry to the satisfaction of D.'s manager P. to be paid for at so
much per square yard on completion of the whole job. P. objected to the qual-
ity of the work while it was being carried out and D. would not allow W. to do
the last 200 square yards. D. entered into occupation of the laundry but
refused to pay. W. sued for £190, the sum due less a payment on account. W.
had contended throughout that his work was satisfactory. The official referee
found that, in the two rooms complained of, the floor was defective, but not so
bad that it would need to be taken up, and gave judgment for the plaintiff, W.,
for £139, plus £5 for profit on the uncompleted work. D. appealed. Held, by
the Divisional Court, that there was no evidence that D. had waived the per-
formance of the original contract, which had not been performed, or a fresh
contract to pay for the work as it had been done, and, therefore, the plaintiff
could not recover: Per A.L. Smith J., the plaintiff had throughout contended
that he had performed the contract which the defendant had from the first
denied. That was the real contest in the case. Whitaker v. Dunn (1887). 41
(6) S. contracted with H. to build two houses and stables for£565. S. did part
of the work worth £333 and had received part payment. S. told H. that he had
no money and could not go on with the work and abandoned the contract. H.
completed the work making use of materials which S. had left upon the land.
In an action by S. the County Court judge gave him judgment for tPe value of
these materials, but nothing in respect of the unpaid work he had done on the
3•9B.&C.92.
•0 L.R. 2 C.P. 651 (for the contract, see L.R. 1 C.P. 615).
• 1 3 T.L.R. 602.
SECT. l] OBLIGATIONS OF THE CONTRACTOR 479
buildings. S. appealed. Held, by the Court of Appeal, S. having abandoned the
original contract could not recover on it; there were no circumstances from
which a fresh contract to pay for the work done could be inferred; and there-
fore S. could not recover for the work done upon a quantum meruit. Since he
used and could have returned the materials, however, H. was liable for the
materials: Sumpter v. Hedges (1898). 42
(7) The ship L. having stranded, the owner instructed the master to con-
tract for her repair, limiting the price to £6,000 and limiting the work to the
repair of damage by stranding. The Master contracted with F. to do the work
for a lump sum. The contract provided that further work should_be paid for at
schedule rates, if authorised in writing by the master. F. did not carry out the
specified repairs but alleged that he had with the master's authority done the
equivalent or better. Held, by the Privy Council, that in the absence of written
authority from the master, the contract was an entire one and, not having
performed it in its entirety, F.could not recover the lump sum: Forman v. The
Liddesdale (1900).43
(8) A surety guaranteed four equal instalments of £375, due under a con- 4·012
tract for repairs and alterations on named dates "subject to the works being
duly executed". The first instalment was not paid, and it was held that £88
worth of work needed to be done for it to be "duly executed". Held, by the
Divisional Court and Court of Appeal, that whether or not the builder could
have maintained an action against the owner for the £375 less the £88, the
liability of the surety only arose on full completion: Eshelby v. Federated Eu-
ropean Bank Ltd. (1932). 44
[Note: In Hoenig v. Jsaacs, infra, Cairns L.J. considered that the Court of
Appeal in Eshelby had decided the owner was not liable as well as the surety.
The reports also do not indicate whether the complaint related to failure to
complete a stage, or to defective work.]
(9) By a contract between owners and builder/developers, the owners were
required to apply for loan finance "immediately upon completion of the
work", and to pay the contract price within 120 days of "the completion of the
work", which was to be notified in writing to them by the builders. They were
to enter into occupation within seven days of this notice. There was a "main-
tenance and upholding" clause, independent of fault, in respect of defects
appearing within a 90-day period. In default of payment of the price, the own-
ers were liable to transfer the house to the builders at a fixed price. The build-
ers did not give an actual notice in writing but informed the owners that the
house would be complete on a certain date. The owners refused to enter,
alleging defects, and ultimately the builders obtained delivery of the title
deeds of the land from their solicitor, with whom they had been deposited.
The trial judge found that there were defects costing about £150-£250 to rem-
edy and which a reasonable building owner might object to. The judge held
"completion" in this context to mean, apart from merely trivial defects, "the
reaching of a stage of construction at which the house is ready for occupation
in all ways relevant -to the contract and is free from known omissions or
defects", and the owners were entitled to the deeds. Held, by the Full Court of
Victoria, affirming Lush J ., that the proper view was that Until the work to be
done had been carried out in accordance with the contract, except for depar-
tures from the contract which were either latent or undiscovered or merely
•
2
[1898) 1 Q.B. 673.
4.l [1900] A.C. 1900.
« [1932} 1 K.B. 254, at p. 423. See the further comment infra, para. 4·022 (end).
 480 PERFORMANCE [CHAP. 4
trivial, it would not be "completed". Held, also, that there was no room for the
doctrine of substantial performance in considering provisions like clause 6:
Morgan v. S. & S. Construction Ltd. (1967). 45
(10) Roadworks contractors quoted £1,494 to developers for a road, stating
4·013
that it included an item of 5 per cent. for contingencies. They suggested pre-
paring full bills of quantities and rates to enable the work to be measured on
completion. Bills were forwarded and the developers accepted "your quo-
tation of £1,494 for the above roadworks as specified". The contractors had
not foreseen surface water difficulties, as the site was at the bottom of a steep
hill. When these arose, they blamed the developers and abandoned work,
saying they would not return till the developers put the site into a satisfactory
state. The developers attempted to improve the state of the site, but the con-
tractors did not return and ultimately the developers determined the con-
tract. In a letter they said that if the contractors did not resume work, and if
they completed by other contractors for less than £1,494, they would pay the
difference to the contractors. They in fact paid £934 to get the work done by
the other contractors. The contractor sued for £1,085 for work done. The trial
judge found for the develope.rs on all points-that they were not in breach,
that the contractor had abandoned the work without justification, and that
the work done was notworth£1,085. He awarded the contractors £545 (£1,494
less£934). Held, by the Court of Appeal, on his findings the trial judge's award
was wrong. Whether or not this was a contract for measurement or a fixed
:,
sum, it was an entire contract (9th edit. of Hudson cited). The contract had
neither been completed nor substantially performed, and the contractors
therefore had no ground for any claim at all: lbmac Ltd. v. Marshall Ltd.
(1968)."
[Note: There was, of course, no consideration present for the.developers'
promise to pay the difference in price, nor w~s t1?-5 pleade~ or_cl_a1med. In fact
the judgments show that the developers had 1nd1cated theirwillingness to pay
£474, but there was no legal obligation to do so.]
(11) A plumbing and heating contractor contracted to design and install a
heating system for £560. The system had defects which would cost £174 to
repair. As installed, the system gave out fumes when switched on, making the
living rooms uncomfortable and, due to insufficient radiators and insulation,
the heating was inadequate by 10 percent. and in some rooms by25 to 30 per
cent. The contractor refused to remedy the defects when complaint was
made. The County Court judge found substantial performance as a fact. H~ld,
by the Court of Appeal, the plaintiff contractor could n9t recover. Per Catrns
L.J ., it was relevant to take account of the proportioll between the cost of
remedying the defects and the contract price. Here, both the nature and
amount of the defects were far different from those in Dakin v. Lee, infra. Per
Sachs L.J., the general ineffectiveness of the work for its purpose, rather that
the number of defects, led to the conclusion. The plaintiff had only himself to
blame since he could have remedied the defects of which he received com-
plaint~ so as to earn his money. Held, also, that the defendant was entitled to
£15 damages for inconvenience: Bolton v. Mahadeva (1972). 47
[Note: It is not clear on what principle the damages could be awarded in this
case without giving credit for unpaid work under the contract.]
._, [1967] V.R. 149, Australia. Compare the·statements in the House of Lo~ds in _Jarvis v.
Westminster Corporation [1970] 1 W.L.R. 637, see infra, para. 4·029, when d.1scuss1ng delay
in completion.
•~ 208 E.G. 851.
4 7 [1972] 1 W.L.R. 1009.
SECT. l] OBLIGATIONS OF THE CONTRACTOR 481
(ii) Substantial performance
The anomalies resulting from entire contract interpretations did not 4-014
give rise to serious difficulty in the case of contracts for sale of goods, or for
mixed work and materials contracts, since, on easily sustainable theories
of acceptance, failure by the purchaser to reject goods bought or made for
him following their delivery would render him liable for the price, subject
to set-off for any breach of warranty by the seller. Moreover, the very real
anomalies which had arisen in the case of wages or salaries were soon dealt
with by legislation. Construction contracts, however, with their special
characteristic of fixing and incorporation of work into the land of the
owner, could not provide a satisfactory theory of acceptance to be derived
from the mere fact of the incorporation of defective or incomplete build-
ing work into an owner's land, and so might create a special and real injus-
tice where a contractor had bona fide completed a project but subsequent
defects, quite possibly minor, were raised as·a defence to the whole price
by an owner unwilling to pay even a part of it. It was consequently in the
field of construction contracts that the courts, much earlier than the case
of Dakin v. Lee in 1916, infra, which is usually credited with its inception,
evolved the doctrine of substantial performance. Modern cases where
substantial performance arguments were rejected have already been
mentioned. 48 The following are cases where plaintiffs have succeeded in
recovering remuneration for work done notwithstanding failure to com-
plete or defects of performance.
ILLUSTRATIONS
(1) The plaintiff proved a contract to build a booth on Bath race ground for 4·015
20 guineas, five guineas to be paid in advance, and to take back the materials
after the races. The plaintiff erected the booth to stipulated dimensions but it
fell down in the middle of the races. Held, by Buller J. and by the Court of
King's Bench, that the plaintiff might recover the balance of 15 guineas
though a cross action might be brought against him for building the booth
improperly: Broom v. Davis (1794). 49
(2) T. contracted to slate buildings for P. according to a specification and at
prices therein mentioned. The work was not according to the specification.
Held, by Parke J., that T. could not recover the whole of the agreed price nor
according to the actual value of the work, but the amount of the contract
price, subject to a deduction of the amount that it would have cost to alter the
work so as to make it correspond with the specification: Thornton v. Place
(1832).'"
(3) The plaintiff contracted to supply and erect a warm air apparatus. Held,
by Tindal C.J., that if the jury thought it was substantially performed in the
4ll See Morgan v. S. & S. Construction Ltd., lbmac Ltd. v. Marshall Ltd. and Bolton v. Maha·
deva, illustrated supra.
4
~ 7 East 479, at pp. 480n, 484 (doubted on its facts by Somervell L.J. in Hoenigv. lsaacs [1952]
2 All. E.R. 176, at p. 179D).
111 1 Moo. & Rob. 218.
 482 PERFORMANCE [CHAP.4
main, though not quite so complete as it might be under the contract, and
could be made good at a reasonable rate, the plaintiff might recover the price,
less the cost of completion: Cutler v. Close (1832) 51
( 4) A defendant counterclaimed for the value of work done by the defend-
ant for the plaintiffs in boring an artesian well. The contract was to sink the
well at 75 cents per foot and to supply pipe at 31 cents per foot. The defendant
bored to 160 feet without finding water and then, having encountered an
impediment through no fault of his, abandoned the work. Held, by the Onta-
rio Court of Appeal, that there was no term in the contract that the defendant
should not be paid unless he found water and that he was, therefore, entitled
to be paid for what he had done: Barrie Gas Co. v. Sullivan (1880).52
4-016 (5) A contractor in New Zealand agreed to supply wallpaper at a certain
price, and labour to fix it at a price per hour. The paper was delivered, but
before the work was complete the building was destroyed by fire. There was
no term in the contract fixing the time of payment, or that it should be only
after completion. Held, by Cooper J ., following Roberts v. Havelock53 that this
was distinguishable from Appleby v. Myers 54 ; and that the contract was not
entire; and that therefore the contractor could recover the value of the
materials actually worked into the house before the fire, and the value of the
labour thereon expended: Wyett v. Smith (1908). 55
(6) A contract for building work of an approximate value of $20,000 con-
tained a clause that in the event of failure in providing labour or materials the
building owners might, after three days' notice, enter and complete, deduct-
ing the cost from the contract sum. The architect served notice under this
clause in respect of defects totalling $150. Held, the contract had been sub-
stantially performed, but even if not, the invocation of the clause entitled the
contractor to sue for the contract sum less the deduction: Watts v. McLeay
(1911)."
(7) The plaintiffs orally agreed with the defendant to do works of repair
contained in a specification for £264, and sued for a balance due. The Official
Referee found that the concrete used to underpin the house was not of the
proper depth and was badly mixed; that certain joists had not been bolted
at the top in accordance with the specification; and that solid columns four
inches in diameter had been supplied in place of five-inch hollow columns,
and dismissed the claim altogether. Held, by the Divisional Court and the
Court of Appeal, that the defects and omissions amounted only to a negligent
performance of the contract and not to an abandonment of the contract or a
refusal by the plaintiffs to perform it, and that the plaintiffs were entitled to
recover the sum of £264 less the amount necessary to make the work accord
with the specification: Dakin (H.) & Co. Ltd. v. Lee (1916).57
[Note: No cost figure for the defective work was before the courts but, from
the judgments in both the Divisional Court and the Court of Appeal, the
items do not seem to have been thought important.]
4·017 (8) H. was employed by I. to decorate and provide furniture for I. 's flat for
£750, the terms of payment being "net cash, as the work proceeds, and bal-
ance on completion". I. paid £400 on account and occupied the flat using the
51 5C.&P.377.
s2 5 A.R. 110, Canada.
53 (1832) 3 B. & Ad. 404, illustrated infra, para. 4·033.
See supra.
54
ss 28 N.Z.L.R. 79.
56 19 W.L.R. 916, Canada.
51
[1916] 1 K.B. 566.
Seer.!] OBLIGATIONS OF THE CONTRACTOR 483
furniture but refused to pay the balance on the ground that the work was
~' defective. The Official Referee found that a wardrobe door needed replacing,
that a bookshelf would have to be remade, that a bookcase would need alter-
ation, that the cost of remedying these defects would be £55 18s. 2d., but that
the work had been substantially completed, and he gave judgment for H. for
the balance less£5518s. 2d. Held, by the Court of Appeal, (1) inan action on a
contract for work and labour and articles supplied for a lump sum payable on
completion, the defendant could not repudiate liability on the ground that the
work, though substantially performed, was in some respects not in accord-
ance with the contract; (2) there was evidence on which the official referee
could find that the contract had been substantially perfonD.ed and that the
appeal must, therefore, be dismissed; (3) even if entire performance in every
respect was a condition precedent to payment under the contract, in taking
the benefit of the work by using the defective furniture the defendant had
waived the condition and must pay the contract price subject to the appropri-
ate deductions: Hoenig v. Isaacs (1952).58
(9) A. agreed with B. to build a sewer and pumping station to serve both
A.'s and B.'s properties, subject to an agreed contribution to the cost by B.
Owing to a change in the municipality's plans, the pumping station became
unnecessary, as the joint sewer was now to be carried to a new and larger
treatment plant. A. built the sewer but not the pumping station. B. joined his
own sewer to A.'s, as planned, and constructed a pumping main as a tempor-
ary measure. Held, by the Ontario Court of Appeal, while B. might have
accepted A.'s action, which amounted to a repudiation, and built his own
complete sewer, he had not in fact done so, but had chosen to take the benefit
of A. 's work. He was therefore liable to pay the agreed sum to A., less the cost
of the pumping main. Per McLennan J., the reasoning in Hoenig v. Isaacs,
supra, was based on acceptance; in Sumpter v. Hedges, supra, acceptance
could not be inferred: Tannenbaum Meadows Ltd. v. Wright~Winston Ltd.
(1965)."
The theory of entire contracts has not escaped considerable academic 4-018
discussion and indeed criticism/'° Moreover, differing bases for the doc-
trine of substantial performance have been suggested in the courts. Thus
in Sumpter v. Hedges 61 A.L. Smith L.J. said:
"The law is that where there is a contract to do work for a lump sum, until the
work is completed the price of it cannot be recovered".
However, Denning L.J. in Hoenig v. Isaacs 62 said:
"It was a lump sum contract, but that does not mean that entire performance
was a condition precedent to payment. Where a contract provides for a spe-
cific sum to be paid on completion of specific work, the courts lean against the
construction of the contract which would deprive the contractor of any pay-
ment at all simply because there are some defects or omissions".
sa [1952] 2 All E.R.176. See, for further examples, Hutchinson v. Harris (1978) 10 BLR 19,
C.A. (architect's services) and Zamperoni Decorators v. Lo Presti (1983] V.R. 338 (paint-
ing work).
59
49 D.L.R. (2d) 386, Canada.
60
See Glanville Williams (1941) 57 L.Q.R. 373 and Goff and Jones, Law of Restitution (4th
ed.). See also the Law Commission's 1983 Report No. 121.
61 [1898] 1 Q.B. 673, at p. 674, illustrated supra.
62
[1952] 2 All E.R. 176, at p. 180.
 484 PERFORMANCE [CHAP. 4
On the other hand, in the same case he said:
"In the present case the contract provided for 'net cash, as the work proce~ds,
and balance on completion'. If the balance could be regarded as retention
money then it might well be that the contractor ought to have ~one all the
work correctly, without defects or omissions, in order to be entitled to the
balance. " 63
However in practical terms, the cases are reasonably capable, it is sub-
mitted, of sensible reconciliation.
First, it is desirable to eliminate the cases where, as a matter of
interpretation, the contracts are held not to have been entire.64 Discussing
entire contracts generally, Blackburn J. pointed out in Appleby v. Myers:
"There is nothing to render it illegal or-absurd in the workman to agree to
complete the whole, and to be paid when the whole is complete, and not
till then ... "65 On the other hand, when considering a type of contract
which was not entire, Blackburn J. said, in the same case: "Generally, and
in the absence of something to show a contrary intention, the bricklayer or
tailor or shipwright is to be paid for the work and materials he has done
and provided although the whole work is not complete." 66
4·019 The construction cases show that if a price is quoted for a whole work, a
fortiori if it is expressed not to be payable until completion, this will be
interpreted as an entire or "lump sum" contract in the legal sense.67 This
will be so whether the price is expressed as a single total, or a grossed-up
though re-measurable total, or is merely a quoted rate or price to be used
for subsequent calculation of the final total price.
The cases also show that an acceptance of the work sufficient to render
the owner liable to pay cannot be implied from the mere fact of an owner's
entry into possession and use of incomplete or unsatisfactory work which
has become incorporated into his land by the contractor.68 On the other
hand, where the facts make-a finding of acceptance possible because the
element of rejection is practical, the courts will readily make such a find-
ing.69 Hoenig v. Isaacs, not being a construction contract but one to make
and supply furniture, lent itself easily to that solution. . . . the contract.78 The duty to mitigate damage by a technical breach of con-
A further overriding principle to be deduced from the cases, 1t ts submit-
ted, is that a party consciously in breach, a fortiori a party repudiating an
obligation or abandoning work, should not be enabled to ~buse ~e doc-
trine by maintaining that position while at the same time suing for
remuneration under the contract. Thus in South Africa, there is long-
63 Ibid. at p. 181.
64 See, e.g. Barrie Gas Co. v. Sullivan; Wyettv. Smith, illustrated supra, and see also Roberts v.
Havelock, illustrated infra, para. 4-033.
65 (1867) L.R. 2 C.P. 651, at p. 660.
M/bid.
67 Appleby v. Myers; Whitakerv. Dunn; Jbmac v. Marshall, illustrated supra. . _
r,s Appleby v. Myers; Whitaker v. Dunn; Sumpter v. Hedger; F~rman v. The Liddlesdale,
Jbmac v. Marshall,supra. See also the cases post, Chap.5, Sect10n 1. ,· .,, . Whitaker v. Dunn; Bolton v. Mahadeva. See also Pickford L.J.'s judgment in Dakin v. Lee,
69 Sumpterv. Hedger (the materials); Hoenigv.lsaacs; Tannenbaum Meadowil.td. v. Wnght-
Winston Ltd., illustrated supra.
SECT.!] OBLIGATIONS OF THE CONTRACTOR 485
standing authority that substantial performance is not available where
work is abandoned, or the method of performance is inconsistent with an
honest intention to carry out the work in accordance with the contract. 70
Sumpter v. Hedges and Ibmac v. Marshall were clear cases of abandon-
ment. Again, in Hoenig v. Isaacs, Somervell L.J. said:
"In a contract to erect buildings on the defendant's land for a lump sum, the
builder can recover nothing on the contract if he stops work before the work
is completed in the ordinary sense-in other words abandons the contract" .71
Also, Romer L.J. indicated in the same case that a builder renouncing
his obligations could not claim substantial performance. 72 Similarly, in
Dakin v. Lee there are passages to the same effect. 73
Where, however, there has been apparent completion in the sense that 4·020
"the work though 'finished' or 'done' is in some respects not in accordance
with the contr3.ct"74 or "a man fully performs his contract in the sense that
he supplies all that he agreed to supply but what he supplies is subject to
defects of so minor a character that he can be ·said to have substantially
performed his promise"75 Dakin v. Lee and Hoenigv. Isaacs show that the
doctrine will apply.16
Even in such a case, however, it is submitted that, in accordance with the
overriding principle suggested above, there must be no element of delib-
erate disregard of his obligations by .the contractor, if not in the com-
mission of the original breach then at least, if detected in time, in refusing
to remedy it.77
One class of deliberate departure from the contract, however, may
nevertheless qualify as a sufficient substantial performance, it is submit-
ted. Exact performance of all details of a specification is not infrequently
impossible in construction contracts because of some subsequent event or
factor beyond the control of the contractor, for example, a particular
material or product may no longer be obtainable, or the design may prove
difficult or even impossible to construct due to unexpected physical con-
ditions in cases where the contractor is responsible for completion under
tract ( as, for example, by substituting a different available material or
10
Hauman v. Nonje [1914] A.D. 293, at p. 297; Breslin v. Hichens [1914] A.D. 312.
71 (1952] 2 All E.R. 176, at p. 178H.
12
Ibid. at p. 1820.
13
[1916} 1 K.B. 566, at pp. 569, 574,per Ridley and Sankey J.J., D.C. and 580,per Pickford
L.J.,C.A.
.,.. Per Somervell L.J. in Hoenigv. lsaacs, at p. 179.
is Per Romer LJ. ibid. atp. 182H; see also the valuable suggested definitionsof"completion"
in Morgan v. S. & S. Construction Ltd., illustrated supra, para. 4·012. See also the definition
of "practical completion" in Westminster Corp. v. Jarvis, supra, paras. 4·003-4·005.
16
.'See the authorities in Canada examined in detail by the Nova Scotia Court of Appeal in
Fred Pierce Ltd. v. Troke (1957) 8 D.L.R. (2d) 5, as commented on further in Markland
Ass. v. Lohnes (1973) 33 D.L.R. (3d) 493, N.S. Sup. Ct.
11
and see the valuable principle stated in the South African cases supra.
18
Thorn v. London Corporation (1876) 1 App. Cas. 120, see infra, para. 4·043.
 486 PERFORMANCE [CHAP. 4
varying the work to overcome a difficulty) may be consistent with bona
fide performance of the contract. 79
Clearly the doctrine will not apply if there is a substantial difference
between the work promised and the work done, or if it is of no benefit to
the owner:
"In certain cases it is right that the rigid rule ... should be applied, for exam-
ple if a man tells a contractor to build a 10 foot wall for him in his garden and
agrees to pay £X for it, it would not be right that he should be held liable for
any part of the contract price if the contractor builds the wall to 2 feet and
then renounces further performance of the contract, or builds the wall of a
totally different material from that which was ordered, or builds it at the
wrong end of the garden" .80
4·021 Equally, the doctrine will not apply if the work is of no benefit to the
owner,81 as might be the case in some very special situations where, even if
completed in all respects, the date of completion was absolutely crucial,
for example.
Where the cases, perhaps inevitably, lack precision is in failing to give a
clearcut practical guideline as to the relative size or cost of defective work
in proportion to the total which will exclude a plea of substantial perform-
ance. Some cases, and in particular the judgments in Hoenig v. Isaacs,
refer to latent defects discovered after a bona fide apparent completion
justifying an entry into occupation and use by the owner. Construction
contracts are often massive and extremely complex. With the best will in
the world, "minor breaches" or "omissions of small parts", to use the lan-
gllage of some judgments, can probably be found on most contracts on a
really careful inspection by an owner seeking an excuse to avoid payment.
It is this situation, it is submitted, which the substantial performance rule is
designed to avoid, and which appears to underlie the judgments in the not
very satisfactorily reported case of Dakin v. Lee. Bolton v. Mahadeva sug-
gests that the courts can adopt a relatively severe view in deciding whether
a particular contract departure will nevertheless be consistent with sub-
stantial performance. Cairns L.J. attached importance tO the proportion
in that case between the £174 cost of repair and the £550 contract price,
and compared it with the £80 deficiency as against the instalment of £375
and total contract price of £1,550 in Eshelby v. Federal European Bank.'irl
Unsuitability of the work for its purpose, where that is the contractual
responsibility of the contractor, would seem to be in most cases inconsist-
ent with substantial performance.
4·022 The principles involved have never been better or moi:e eloquently
expressed than by Cardozo J. in a seminal case in the Court of Appeals of
New York:
n See, e.g. Cardozo J.'s classical judgment in Jacob v. Youngs & Kent 230 N.Y. 239 (1921)
(substitution of different pipe of equal value) cited infra. · 84
• 11 PerRomerL.J.in Hoenigv.Isaacs [1952]2AllE.R.176,atp.182G; and see Forman v. The
Liddlesdale and Bolton v. Mahadeva, supra.
" 1 See the Divisional Court judgments in Dakin v. Lee inn. 8,supra.
112 See supra, and see the further comment on the case infra, paras. 4·023-4·024.
SEcr. l] OBLIGATIONS OF THE CONTRACTOR 487
"The Courts never say that one who makes a contract fills the measure of his
duty by less than full performance. They do say, however that an omission
both t_rivial and innocen!, will sometimes be atoned for b)' allowance of th~
resulting damage, and wdl not always be the breach of a condition to be fol-
lowed by~ ~orfeiture.... Where the line is to be drawn between the importarit
and the tnv1al cannot be settled by a formula ... The same omission may take
on one aspect or another according to its setting. Substitution of equivalents
may not have the same significance in fields of art on the one side and in those
of mere utility on the other. Nowhere will change be tolerated however if it
is so dominant or pervasive as in any real or substantial measu're to frustl'ate
the purpose of the contract ... There is no general licence to instal whatever
~n the builder's judgment, may be regarded as "just as good" ... The questio~
ts one of de~ee, to be answered, if there is doubt, by the triers of the facts ...
We must weigh the purpose to be served, the desire to be gratified the excuse
of deviation fro~ the letter, the c:uelty of enforced adherence. Th~n only can
we tell whether hteral fulfilment is to be implied by law as a condition. This is
not to say that the parties are not free by apt and certain words to effectuate a
purpose th~t P.erformance of_e~ery term shall be a condition of recovery.
That question ts not here. This is merely to say that the law will be slow to
impute ~he p_urpose, in the silence of ~he parties, where the significance of the
defaul~ ts gnevously out of proportion to the oppression of the forfeiture.
T_he wilful _transgress~r must accept the penalty of his transgression ... For
him there ts no occasion to mitigate the rigour of implied conditions. The
transgressor whose fault is unintentional and trivial may hope for mercy if he
will offer atonement for his wrong".83
It is probably a question of semantics whether contracts which may be
substantially performed are part of the general class of entire contracts,
and the doctrine is a mitigation in certain situations of the rules normally
applicable to such contracts,84 or whether contracts capable of substantial
performance should properly not be regarded as entire contracts at an.as It
is submitted that the true view is that in all entire contracts the degree of
compliance by one party with the obligation on which the liability of the
other party is required by the contract to depend will be a matter of
interpretation in the light of all the circumstances. There may be some
obligations, including some of those in construction contracts (as, for ex-
ample, for instalment payments payable on stage completion, of which the
Eshelby case may possibly be an example) where relatively meticulous
compliance may be necessary. 86 In general, however, the entitlement to
the price, or to a final balance, particularly in less sophsiticated contracts,
will usually arise upon substantial performance of the contract obligation
to complete the work. This will include freedom from any known defects
at that time to which an owner might reasonably object, though subM
sequent discovery of defects prior to final payment will not, of course,
prevent an owner from disputing substantial performance.
ru PerCard~zoJ. in Jacob & You?gsv. I~"entl29 ~.E. 889, at pp. 890-891 (1921);230 N.Y. 239.
See also, m the context of rehef agamst forfeiture, Lord Wilberforce's dictum in Shiloh
Spinners Ltd. v. Harding [1973] A.C. 691, at p. 722, cited post, Chap. 12, para. 12·022.
See Cheshire & Fifoot, Law of Contract (4th ed.).
!l:'I See, e.g. the language of Denning L.J. in Hoenig v. Isaacs [1952] 2 All E.R. 176, at p. 180,
quoted supra.
s5 See Morgan v. S. & S. Construction, supra and see per Lord Denning in Hoenig v. Isaacs in
regard to the release of the final instalment of retention in many construction contracts.·
 488 PERFORMANCE [CHAP. 4
Where the doctrine does apply, the prima facie presumption will be that
cost of repair will be set off rather than diminution of value:86a
"What the plaintiff is entitled to recover is the price agreed upon in the speci-
fication, subject to a deduction; and the measure of that deduction is the sum
which it would take to alter the work, so as to make it correspond with the
specification. " 116b
There may, however, be cases where this is not reasonable.860
(iii) Completion for purposes of interim payments
4·023 (A) Express terms for payment by instalments. The great majority of
substantial construction contracts contain express provisions for interim
payment. The two commoner forms of these provide either for stage pay-
ments of stipulated sums on completion of yarious defined stages of the
work ("stage payments"), or regular periodical payments based on
interim valuation of work done to date ("periodical valuation pay-
ments"). Occasionally, some provisions are not periodical, but depend
upon the value of work done reaching a certain amount, but this is com-
paratively rare in the United Kingdom at the present day.
Despite the fact that fixed stage payments are highly desirable for any
well-advised owner, since if properly weighted they can operate as a much
more effective and uncontroversial incentive to diligent progress than any
system of liquidated damages for delay,&1 industry and professional press-
ures have successfully secured periodical valuation as the system used by
all English standard forms, not only in measured contracts, but also in
fixed price "lump sum" contracts, although sometimes stage payments are
contemplated only as a possible alternative to periodical evaluation.88
Stage payments also reduce substantially the professional expense of con-
tract administration during the construction period, although special pro-
vision will no doubt be necessary for interim adjustment of matters such as
variations, measurement, and adjustment of sub-contractors' accounts. 89
4-024 It will be immediately apparent that entire performance will not be of
much relevance in cases of periodical valuation, save only that, until
expiry of any relevant stipulated period, clearly nothing will be due to the
contractor. In the case of stage payments, on the other hand, there will be
no room for any theory of substantial performance, it is submitted, save in
K6:I Miller v. Advanced Farming (1969) 5 D.L.R. 3d 369, Supreme Court of Canada.
Hfih PerParkeJ.in Thornton v.Plaice (1832) 1 M& Rob. 218,219,citedbyRidleyJ. inDakinv.
Lea, and see also, per Pickford L.J. in that case, [1916] 1 K.B. 566, 582, and, per Lord
Denning in Hoenig v. Isaacs [1952] 2 All E.R. 176, 181.
>1o< See post, Chap. 8, Section 2 for these two possible measures of damage.
xi See, e.g. C.C.P.P., paras. 23-23(c), 24-22, developed further in Construction Contracts
Policy (King's College London, 1989), pp. 225-7.
sx Compare Clause 30(2) of the 1963 JCT/RIBA forms.
x• See, e.g. the Article 2 and Clause 31(3) alternative stage payment provisi9~s in the mea-
sured as well as lump sum Singapore SIA standard forms (1987 third and subsequent edi-
tions, not in C.C.P.P.).
SECT. 1] OBLIGATIONS OF THE CON'IRACfOR 489
regard to purely trivial failures, although sometimes it may not be an easy
question of fact, when dealing with stipulated stages of construction of an
uncompleted project, to determine when sufficient completion of a stage
of the work on which an instalment depends has been achieved. Since the
purpose of such provisions is to secure an interim payment on account,
with a possibly substantial retention, extreme exactitude is no doubt not
envisaged, but effective and satisfactory completion of the required stage
will be a condition of any instalment payment, it is submitted, and there
could be no question of substantial performance arguments entitling a
contractor to sue for the instalment while giving credit for incomplete or
defective work, such as might be possible with the price or a final balance
due for work on completion. One of the difficulties of the Eshelby case9() is
that it is unclear whether the instalment there sued on was dependent on
some stage of completion by the named date, or whether the failure of
performance complained of was defective work on the one hand, or work
not yet done so as to complete the stage, on the other.
Most disputes arising from the entire contract rule in relation to interim 4-025
payments are likely to occur when the contract is prematurely terminated,
either under an express provision or as a result of repudiation and
rescission or abandonment. In such cases, it is important to consider the
position of a contractor who fails to complete the works as a whole under
such a contract. Where the contractor has become entitled to an instal-
ment payment, he will not normally forfeit his right to such payment by a
subsequent abandonment or repudiation of the contract, but will be
entitled to sue for any unpaid instalment, if he has satisfied the conditions
for it to become due, subject, of course, to the owner's right to counter-
claim for damages for breach of contract. 91 In Taylorv. Laird92the plaintiff
undertook to serve as a commander of a vessel at pay of £50 per month,
but wrongfully abandoned the contract after eight months, having been
paid for seven only. The court held that the plaintiff was entitled to
recover £50 for the eighth month, Pollock C.B. saying93: "There (that is, in
the contract) 'per month' means each month or monthly and gives a cause
of action as each month accrues which once vested is not subsequently lost
or divested by the plaintiff's desertion or abandonment of his contract".
The following passage in Salmond and Winfield on the Law of Contract94
was quoted with approval in the two South Australian cases cited in the
illustrations below:
"Every obligation which has accrued due between the parties before the
rescission of the contract, and which so creates a then existing cause of action,
remains unaffected by the rescission and can still be enforced. It makes no
90
Illustrated supra.
91
This passage, and the ensuing references to Taylor v. Laird and Salmond and Winfield on
the Law of Contract, see infra, were cited with approval by Viscount Dilhome in Hyundai
Heavy Industries Co. Ltd. v. Papadopoulos [1980] 1 W.L.R. 1129, at pp.1134-1135, illus-
trated infra, Section 3.
vi (1856) 25 L.J.Ex. 329.
93
Atp. 334.
~ (1927 ed.), p. 286.
 490 PERFORMANCE [CHAP. 4
difference in this respect whether such accrued obligation and existing cause
of action is one in favour of the party rescinding the contract or is one in
favour of the other party".95
ILLUSTRATIONS
4-026 (1) A company entered into a contract with a colonial government to build
and keep up 340 miles of railway in consideration of receiving for each five
miles, as and when completed, a grant of land and 35-year subsidy. Only 85
miles were completed. Held, by the Privy Council, that the contract was sever-
able, and that as each five miles was completed the title to land and subsidy
accrued, and that the subsidy was payable, but subject to a counterclaim for
non-completion of the whole railway: Newfoundland Government v. New-
foundland Ry. (1888). 96
[Note: This case illustrates the possibility of the contract as a whole being
an entire contract notwithstanding express provision for instalment
payments.]
(2) The plaintiffs agreed to remove two spans from a wrecked bridge in a
river for $25,000, $5,000 when one span was removed from the channel, an-
other $5,000 when it was put ashore, and the balance on completion. The
work was to be done if possible that season, but the contractors were to have
the right to complete during the next season if necessary. They removed one
span from the channel and put it ashore, but never completed the work even
in the course of the next season. Held, by the Supreme Court of Canada, that
they were entitled to the $10,000: Collins Bay Co. v. New York & Ottawa Ry.
(1902)."
(3) The defendants employed S. as a consulting engineer for 15 months at a
salary of £500, to be paid by five equal quarterly instalments. S. worked for
three quarters and was paid one instalment only. Shortly afterwards he died
and his personal representative brought an action to recover the two unpaid
instalments. Held, although S.'s death had dissolved the contract, the plaintiff
was entitled to recover the two instalments which had accrued due because
the right of action for them had vested in S. before his death: Stubbs v. The
Holywell Ry. (1867).~
4-027 (4) The Plaintiff agreed with the defendant to erect 43 miles of vermin-
proof fencing in South Australia at £37 per mile. The defendant was to pro-
vide the materials. The plaintiff was to receive 75 per cent. on each five miles
of completed fence subject to the certificate of the inspector. The defendant
failed to provide materials but the plaintiff started the work and erected 11
miles of fence and then wrongly abandoned the work. Held, by the Full Court,
(i) the plaintiff was entitled to damages for the defendant's breach in fail~ngto
provide materials; (ii) the plaintiff was entitled to 75 per cent. of the pnce of
ten miles of fencing if he had the certificate; (iii) the defendant would be
entitled to damages for breach of contract: Ettridge v. Vermin Board of the
District of Murat Bay (1928). 99
95
"Rescind" in this context means the right of the innocent party to treat the contract as at an
end. See post, Section 3.
96
13 App.Cas. 199.
w 32 S.C.R. 216, Canada.
98
L.R. 2 Ex. 311.
99 [1928] S.A.S.R. 124, Australia.
SECT. 1] OBLIGATIONS OF TI-IE CONTRACTOR 491
(5) Contractors agreed to deepen and build certain dams in South Australia
at so much per cubic foot. Time payments were to be made not oftener than
once a month and not to exceed 75 per cent. of the value of the work done. The
contractors proceeded with the work and were paid £343 on account and then
wrongfully abandoned the work. At the date of abandonment 75 per cent. of
the value of work done but not paid for was £128. Held, by Angas Parsons J.,
that immediately before abandonment of the work the contractors had a
cause of action to recover75 per cent. of the price for the work done in respect
of which nothing had been paid and, therefore, were entitled to judgment for
£128: McLachlan v. Nourse (1928). 1
There are two qualifications to the general principle illustrated by the 4-028
above cases: first, the issue of a certificate may be a condition precedent to
an instalment becoming due and, secondly; there may be a determination
clause in the contract which, if exercised by the owner, will expressly
deprive the contractor of an accrued right to an instalment. As to the first,
if a certificate is a condition precedent to an instalment becoming due and
no certificate has been given before abandonment of the contract, the con-
tractor will have no vested right of action upon which to sue.2 As regards
the second, some forms of contract contain a clause under which, upon the
power of forfeiture being exercised by the owner, no further payment will
be due until the completion of the works. 3 Furthermore, in many termin-
ation situations, the owner may be able to set-off or counterclaim damages
against any such claim by the contractor even if supported by a certificate.4
The effect of the rules as to entire performance also requires to be con-
sidered in relation to the individual instalments of retention money, usu-
ally due under the express terms of most English construction contracts
partly upon "practical" or "substantial" completion and partly on the later
making good of defects. Under the usual scheme of these contracts, it is
necessary to distinguish betwee!l three kinds of instalment, namely:
(a) true interim instalments during the course of the work;
(b) the instalment in which under most English contracts the first half
of the retention money is released; and
( c) the instalment in which the second half of the retention moneys is
released.
The first retention instalment, usually payable on the owner's entry into 4,029
occupation, signals the commencement of the "defects liability" or "main-
tenance" period ( and in nearly all contracts the end of any liability of the
'[1928] S.A.S.R. 230.
2
For this subject, and the various exceptions to the rule, see post, Chap. 6, Section 6(7),
where it is suggested that under the wording of most standard forms at the present day the
certificate is not a condition precedent, in spite of recent authority to the contrary.
J Cf Clause 25(3)(d) of the post-1963 RIBA forms and Clause 63(4) of the 1973 ICE form,
fifth edition.
• See post, Chap. 6, Section 6(7), and see infra, paras. 4·221-4·222.
 492 PERFORMANCE [CHAP. 4
contractor to pay liquidated damages for delay in completion), and in the
United Kingdom is usually expressly conditioned upon "practical"5 or
"substantial" 6 completion. Since the maintenance provisions contemplate
that there may be defects needing to be put right during the ma~tenance
period, and the liquidated damages provisions contemplate that the own-
er's damage due to delay in completion has come to an end, it seems clear
that completion for the purpose of this instalment means a sufficient
degree of completion to permit occupation and use of the works by the
owner and the departure of the contractor from the site, but not a com-
plete and perfect discharge of every last contractual liability of the con-
tractor with regard to quality or finish of the work. It is submitted that the
following definition, framed in a somewhat different context, cannot in
fact be bettered for traditional building and engineering contracts, namely
"apart from merely trivial defects, a stage of construction at which [the
house] is ready for occupation in all ways relevant to the contract and is
free from known omissions or defects". 7 So, too, it has been said:
"It follows that a practical completion certificate can be issued when, owing
to latent defects, the works do not fulfil the contract requirements, and that
under the contract works can be completed despite the presence of such
defects. Completion under the contract is not postponed until defects which
became apparent only after the work had been finished have been
remedied. "8
These definitions are of importance in showing that the subsequent dis-
covery of defects, however serious, will not affect practical completion
and its express purpose under most contracts of bringing the liquidated
damages liability to an end and starting the maintenance period running. 8"
4·030 In many building contracts, therefore, it is this practical or substantial
completion which is in fact that contemplated by the express or implied
obligations to carry out and complete the work. There is usually no further
physical obligation of the contractor, save only the conditional and usually
rigorously circumscribed duty to return and remedy those defects which
qualify under the terms of the maintenance clause. Accordingly, under
most English contracts, the latest date of breach for defective work for
purposes of limitation will usually be this completion,9 unless the defect,
by "subsequently appearing", qualifies for later remedy under the main-
tenance clause. Furthermore the risk of damage to the works will usually
pass from the contractor to the owner at this same date. 10
s Clause 15 of the post-1963 RIBA standard forms.
6 Clause 48 of the 1973 fifth edition ICE form. See also Chap. 10, paras. 10·059 et seq.
1 Per Lush J., approved by the Full Court, in Morgan v. S. & S. Construction Ltd. [1967] V.R.
149, Australia, illustrated supra, para. 4-012.
8 Per Viscount Dilhorne in Westminster Corp. v. Jarvis [1970] 1 W.L.R. 637, at pp. 646C,
647B post, para. 10.099. See also per Lord Wilberforce, at pp. 649H, 650E---650F.
11a See further on this post, Chap. 10, Section 2(5), paras. 10·057 et seq., and see also Chap. 9,
Section (9).
9 See infra, paras 4-292-4·293.
io See infra, para. 4·043.
SEcr. l] OBLIGATIONS OF THE CONTRACTOR 493
Payment of the second retention instalment, in most English contracts,
is made conditional upon the making good of defects or the expiry of the
maintenance period, whichever is the later. 11 In contracts of this kind,
where there has been "practical" or "substantial" completion at an earlier
stage, and where the second instalment is clearly retained only as security
to cover the making good of defects and insufficiencies not immediately
apparent at the earlier date, the making good of defects will be required in
a relatively strict sense in order to render the second instalment ( and any
general balance which under the terms of the contract may not be due till
that time) payable. Thus Denning L.J. said in Hoenig v. Isaacs 12:
"In the present case the contract provided for 'net cash, as the work proceeds,
and balance on completion'. If the balance could be regarded as retention
money then it might well be that the contractor ought to have done all the
work correctly, without defects or omissions, in order to be entitled to the
balance".
Although it is possible to conceive of very large sums being retained on 4-031
this strict view against comparatively minor defects, it is submitted that
Denning L.J.'s tentative view is correct, and that the making good of all
defects will be a condition precedent to the payment of a final instalment
of retention money, subject to purely trivial defects and the de minimis
rule. 13 To hold otherwise would be to deprive the owner of an effective
sanction to secure the return of the contractor to carry out this obligation,
at least in_ cases where this was practicable.
As in the case of the obligation to complete the contract as a whole, it
should be remembered that if an owner decides to claim damages for
unremedied defects, and would be relieved by entire performance rules
from having to pay a proportion of the value of the work done {fur exam-
ple, the retention money or a final balance due on the making good of
defects) he will nevertheless, when assessing the damages, have to give
credit for all the sums he would have had to pay if the contractor had duly
performed the contract. 14
(B) Implied terms for payment on account. There is undoubtedly a class 4·032
of contracts for work and services in which, from the nature of the work as
a whole, it is necessary to imply a term for reasonable paymen.ts on
account of the work at reasonable intervals, even though there may also
be a contractual obligation to complete the whole work. Thus Blackbum
J. said in Appleby v. Myers 15 : "Generally, and in the absence of something
to show a contrary intention, the bricklayer or tailor or shipwright is to be
paid for the work and materials he has done and provided a!though the
11
Clause 30(4)(c) of the post-1963 standard RIBA forms; Clause 60(2) of the 1955 ICE and
Clause 60(5)(c) of the 1973 fifth edition provide, however, for partial release if the remain-
ing defects are comparatively minor.
12
[1952] 2 All E.R. 176, at p. 181.
13
For the suggested principle in these cases, see supra, paras. 4-019 et seq.
ii See post, Chap. 8, Section 2(1).
15
(1867) L.R. 2 C.P. 651, at p. 660.
 494 PERFORMANCE [CHAP. 4
whole work is not complete". This remark envisages a type of contract
under which the consideration is apportionable and accrues due as -the
work proceeds, so that at any time the contractor can claim a reasonable
price for what he has done.
Phillimore J. made somewhat similar observations in The Tergeste 16:
"The law follows good sense and business, as shown by the case of Roberts v.
Havelock. A man who contracts to do a long costly piece of work, does not
contract, unless he expressly says so, that he will do all the work, standing out
of pocket until he is paid at the end ... and if ... payment is not made, then the
shipwright or other artificer is entitled to review his work, and say: 'I have
done work worth so much, true I have contracted to do other work but it is
not reasonable that I should do it, as I have not been paid; and in respect of
work I have done I claim payment.' "
In a contract of this kind it is a necessary corollary that the contractor
will be entitled to treat the contract as repudiated and cease work if there
is a refusal to make the interim payment. 17
However, both The Tergeste and Roberts v. Havelock were shipwright
ship-repairing cases, and the judgments in the latter case in particular
show that the practice was for shipwrights not to work on these often
costly contracts without reasonable security or payment, while in the for-
mer case work appears to have stopped only when it became likely that no
further funds would be available.
ILLUSTRATIONS
4·033 (1) The defendant's ship put into Milford Haven damaged and the plaintiff,
a shipwright, was employed and undertook to put her into thorough repair.
No price appeared to be agreed upon. -Disputes arose as to the amounts
charged by the plaintiff on account for his work, and the plaintiff was called
upon to put the vessel into a fit state to continue her voyage, which he refused
to do unless he was paid for work already done. He sued for work done with-
out finishing the work. Held, by Tenterden C.J., that there was no specific
contract to complete the work and make no demand for payment until com-
pletion, but that there was only a general employment in· the same way as
shipwrights are ordinarily employed, and that the plaintiff could recover
though repairs were incomplete: Roberts v. Havelock (1832). 18
(2) A ship needing repair berthed in a firm of shipwrights' dry dock. The
crew remained for a period during repairs, but then asserted a maritime lien
for their wages and left the country. The plaintiffs later stopped work before
the repairs were complete. There was a dispute over the shipwrights' and
crews' respective liens. Held, by Phillimore J., the shipwrights had been
entitled to a~k for payment on account at any time and were entitled to be
paid for their work though they had not finished it all: The Tergeste (1903). 19
16 [1903] P. at p. 34.
' See, in addition, the discussion on this aspect of the matter, infra, Section 3(1), paras.
7
4·221-4·222, and the early case of Rees v. Lines (1837) 8 C.P. 126, see infra, para. 4·216. See
also Pontifex v. Wilkinson (1845) 2 C.B. 349.
18 3 B. & Ad. 404.
·~ [1903] p. 26.
SEcr. l] OBLIGATIONS OF TI-IE CONTRACTOR 495
If formal construction contracts are used in the United Kingdom, 4-034
express provision for some form of interim payment is almost invariable-
but this no doubt reflects industry pressures based on the assumption that
the standard forms will frequently be used for substantial projects lasting
over a period of time. On the other hand, jobbing contracts on a daily or
weekly basis are not usually difficult to recognise.
The problem is more likely to arise in smaller projects which are priced,
and where there is a clear express or implied obligation to complete the
whole work. The prospective length of time involved and the known or
apparent resources of the builder might favour an ad hoc implied term,
but on the other hand the failure of a person holding himself out as an
experienced builder with a perhaps inexperienced client failing expressly
to stipulate from the beginning for some payment on account might well
suggest that he was content to await payment on completion. Where con-
tractual arrangements and documentation of a fair degree of precision are
used, a defnite time is agreed, and the contractor's undertaking is to com-
plete a precisely described project, it will be ·correspondingly more diffi-
cult to imply any such term, it is submitted.
(iv) Contracts which are not entire
Apart from the shipwright cases, two cases where contracts for work 4·035
associated with building and engineering have been held not to be entire
have already been illustrated. 20 Furthermore, it has already been seen that
there may be tenders apparently accepted which are no more than
unenforceable agreements to do such work as the employer may order
from time to time. 21 In addition, as has been stated in the immediately
preceding subsection, terms for interim payment may in rare cases be
implied in a construction contract, notwithstanding that completion of the
entire work is also obligatory on the contractor.
It is certainly possible to conceive of a substantial contract, for example,
a running contract to carry out repairs to a large building or block of
properties, under which the right to payment would accrue pari passu with
the execution of the work, but it is submitted that a relatively clear under-
standing from the nature of the work, or relatively clear words, in the case
of a clearly definable project, showing that the work was to be of a daily or
periodical character only, would be required to justify the contractor ceas-
ing work on a mere failure to pay on demand in such a case.22 But if a
contract is severable in this sense, then it is obvious that the rules of entire
performance do not apply to the contract as a whole (even if it be such) but
only as to the severable parts.
20
Barrie Gas Co. v.Sul/ivan(lSBO) 5A.R.110and Wyettv.Smith(1906)28N.Z. 79,seesupra,
paras. 4·015 and 4·016.
21
See, for this type of contract, ante, Chap. 3, Section 3(4), paras. 3·073-3·074.
22 See also infra, Section 3, paras. 4·221 et seq. on this subject.
 496 PERFORMANCE [CHAP.4
(b) Extent of work included in obligation to complete: the "inclusive price
principle"
4-036 The amount and character of the work which a contractor must do to
earn his price depends upon the description of the work in the particular
contract, and consideration of the problems of entire completion and sub-
stantial performance cannot be of much assistance unless the exact extent
of the work required by the contract and covered by the price is
understood.
In most construction contracts the description of the work to be carried
out will be found in the technical documents, namely the drawings and
specification or other descriptions, possibly supplemented by information
in any bills of quantities or schedules of rates, depending on whether mea-
sured or lump sum contracts are being used. 23 In the case of measured
contracts, the English RIBA/JCT forms of contract have for many years
adopted a uniquely artificial and puzzling scheme of draftsmanship,
expressly denying contractual force to specifications or descriptive sched-
ules of the work,24 and provide that the quality and quantity of the work
included in the contract price is to be found in the bills; of quantities
alone. 25 This effectively ensures that the verbal descriptions of the work
must, to be contractually effective in terms of price, be found in the bills;
and it also heavily subordinates the r6le of the drawings for pricing and
descriptive purposes, although they are given a contractual r6le in the
assessment of variations.26 Disregarding this unique and tortuous drafts-
manship, which is wholly exceptional (and which can produce serious
anomalies),21 ordinary construction contracts will be interpreted using the
contract documents as a whole in order to ascertain the exact work
required in return for the contract price,28 and well-drafted contracts
should expressly so provide. 29
4·037 Exact definition of the work to be carried out can produce two classes of
problem. In the first place, the contract may omit to mention specifically
work which nevertheless will inevitably and invariably be necessary in
order to carry out the described work properly. In the smaller ancillary
work processes this factor, given practical documentary limitations, will
be present in a greater or lesser degree in virtually every construction con-
tract. But more important items of such indispensable work may also, per-
haps but not necessarily inadvertently, be omitted which more general
descriptions elsewhere in the documentation may nevertheless indicate
must have been included in the contract intention.
n For these various documents described in detail, see ante, Chap. 3, Section 1(3).
14 1963 forms, Clause 3(3); 1980 forms, Clause 5.3.2.
25 1963 forms, Clause 12(1); 1980 forms, Clause 14.1.
26 1963 forms, Clause 11(2); 1980 forms, Clause 13.1.1.
21 See, e.g. ante, Chap. l, Section 9(2)(d)(ii), "Priority of Documents".
2s See ante, Chap. 1, Section 9. ,· ('
29 See, e.g. Clause 5 of the ICE contracts, and the more precise Art. 7 of the Sitigapore SIA
contract reproduced in C.C.P.P., pp. 550--1.
SECT. l] OBLIGATIONS OF THE CONTRACTOR 497
Secondly, possible but not certain items of expenditure, often connec-
ted with temporary works or the replacement of damage to the works by
external causes or the encountering of site or subsoil difficulties, may or
may not turn out to be necessary during the construction period in order to
achieve completion of the described permanent work.
It is proposed to consider those cases where whole items of work not 4-038
shown in the technical documents may be necessary either:
(a) by implication or as a matter of interpretation of the contract as a
whole in order that the final work should comply with the express
requirements or descriptions in the contract documents; or
(b) to achieve completion of the described work in the face of practical
difficulties or eventualities or of damage to the works during con-
struction, or for other technical reasons.
These two types of undescribed work are conveniently described as, on
the one hand, "indispensably necessary" and, on the other, "contingently
necessary" work.
The determination of the exact extent of the builder's obligation in
these cases is, of course, not only relevant to questions of completion but
also, in the vast majority of cases where there is power to vary the work, to
the question whether or not work in these two categories can be regarded
as a variation so as to justify additional payment. 30
It will be seen that both "indispensably necessary" and "contingently
necessary" work.will, in the absence of express provision, be regarded as
included in a contractor's prices under what is called in this book "the
inclusive price principle".31
(i) Indispensably necessary work expressty·or impliedly included
More sophisticated coiistruction contracts usually deal fairly explicitly 4·039
with the contractual effect of drawings, specifications or bills and their
interaction on questions of price. 32 But it does not necessarily follow,
merely because the parties to a building contract use drawings, specifi-
cations or bills as part of the contract documents to describe the work, that
this technical documentation will automatically prevail over other terms
or provisions in the contract. Thus, notwithstanding an omission to
describe or refer to some part of the work in the technical documents,
more generalised descriptions or obligations of the builder contained in
the contract documentation as a whole may be interpreted as requiring
additional work to be done for the contract price or prices as well as the
30
See, for a detailed discussion of this.post, Chap. 7.
31
So far as the editor is aware, the expression was first used during argument and later by the
judges in the Court of Appeal in A. E. Farr Ltd. v. Ministry of Transport, unreported, C.A.
1965. That case in the House of Lords is now fully reported in (1965) 5 BLR 97 and illus-
trated in the context of variations post, Chap. 7.
n Cf Clauses 55 and 56 of the ICE 1973 fifth edition and Clauses 2.1 and2.2 of the RIBAJJCT
1980 contract.
 498 PERFORMANCE [CHAP. 4
specifically described work. 33 Furthermore, no description, however
meticulous, can be expected to descend to every last detail of building
processes. It is a cardinal principle of construction, therefore, that, in the
absence of an expressed contrary intention, an obligation to do described
work for a price imports an obligation to do any essential and inevitable
ancillary work or processes, whether described or not, which are needed
to produce the described work. Thus, to take a simple example, an obli-
gation to construct fair-faced concrete implies an obligation to construct
the necessary formwork to achieve that result, if that has not been separ-
ately described. Again, a simple jobbing contract to supply and fit a new
door may or may not include an obligation to supply hinges or other door
furniture, and a carpentry or joinery contract will usually imply the pro-
vision of nails and screws.
In addition to the cases cited below, which are primarily concerned with
rather substantial elements of work not specifically described in the tech-
nical documents, the cases under (b)(ii) below, and in particular the Thorn
and Tharsis cases there illustrated, should also be considered, and refer-
ence should also be made for more modern examples to the further dis-
cussion and cases, post, Chapter 7, "Variations", Section 1(2), where in
particular the pricing effect of English-style measurement contracts using
bills of quantities and incorporating standard methods of measurement is
considered.
ILLUSTRATIONS
4·040 (1) A contractor agreed "to execute work connected with the new pond at
H. conformably to specification drawn for the execution of the work" by a
civil engineer for the sum of £23 14s. Od. The specification contemplated that
sufficient materials would be excavated from the site, but in fact additional
materials had to be brought from elsewhere. Held, that the contractor could
not claim more than the contract price, and could recover nothing extra for
these additional materials: Weatherstone v. Robertson (1852). 34
(2) The plaintiff, a joiner, undertook to build a house in accordance with
the defendant's plans. The plaintiff35 prepared a specification which described
the timber to be used in the house, specified the floor joists in detail, but made
no mention of the flooring itself. A memorandum at the foot read as follows:
"The whole of the materials mentioned or otherwise in the foregoing must be
provided by the contractor". The plaintiff further agreed: "to do and perform
all the works of every kind mentioned and contained in the foregoing specifi-
cation, according in every respect to the drawings furnished or to be fur-
nished ... for the sum of £1,100. The house to be completed and dry and fit for
occupation by August 1, 1858". The plaintiff prepared flooring for some of the
rooms and left it on the premises, and placed other floor boards in an adjoining
D In addition to the cases illustrated here, see the cases of Bryant and Son v. Birmingham
Hospital Saturday Fund [1938] 1 All E.R. 503 and Farr v. Ministry of Transport (1965), 5
BLR 97 illustrated post, Chap. 7, Section 1(2)(c).
l4 I. Stuart Milne & Peddie (Sc.) 333.
35 Not the defendant, as stated in the headnote of this case.
SECT.!] OBLIGATIONS OF THE CONTRACTOR 499
field. He then refused to do further work unless paid extra for the floors, on
the ground that they were not part of his contract, and four days later quit the
premises. Held, by the Court of Exchequer, that it was by inadvertence that
no mention was made of flooring in the specification and it was the intention
of the contract that the plaintiff was to supply it. Per Pollock C.B.36: "I had
some doubt whether the specification was not to be regarded as the contract
between the parties; but upon the whole facts being disclosed it appears to me
that no person can entertain any reasonable doubt that it was intended that
the plaintiff should provide the flooring as well as the other materials requi-
site for the building and that it was merely by inadvertence that no mention of
flooring was made in the specification ... it is clearly to be inferred from the
language of the specification that the plaintiff was to do the flooring for he was
to ·provide the whole of the materials necessary for the completion of the
work; and unless it can be supposed that a house is habitable without any
flooring it must be inferred that the flooring was to be supplied by him". Per
Channell B.37 : "The contract was that the house should be completed and fit
for occupation by the 1st August 1958, not that the works thereinbefore men-
tioned should be completed by that day. I think that, looking at the terms of
the contract, it would not be reasonable to read it as if it excluded all work not
specifically mentioned".: Williams v. Fitzmaurice (1858). 38
(3) The plaintiffs, having tendered upon a specification prepared by the 4·041
defendant's engineer, undertook to perform all the works necessary for the
perfect execution and completion of a railway in Brazil for the defendants for
a lump sum. When the railway was partially completed it was discovered that
the proposed mode of conveying the traffic up and down a mountain was
wholly inadequate. The engineer prepared new plans and required the plain-
tiffs to construct the railway according to those plans, which they did, so that
excavation of earthworks exceeding the quantity specified by two million
cubic yards was necessary. Held, by James and Mellish L.JJ. the plaintiffs
could not recover the excess as an extra. Per James L.J .: "What they had con-
tracted to do for a lump sum was to make the line from terminus to terminus
complete, and both these items seem to me on the face of them entirely
included in the contract. They are not in any sense of the word extra works".:
Sharpe v. San Paulo Ry. (1873). 39
[Note: Even in a measured contract using bills of quantities, recovery in
such a situation would depend on how the work had been broken down for
pricing purposes. During this period railway contracts were frequently priced
on a lineal and lump sum basis.]
(4) Verbal descriptions in a contract for the construction of a cast-iron out-
let pipe by the sea described the work in several places in the contract as
extending to low water. The plan of the work also showed the pipe extending
to the low water-mark, but a sectional drawing showed it as extending 279feet
further into the sea. The contractor was required to insert prices in a bill of
quantities and there were provisions for measurement of the work at the rates
in the bills. The quantities in the bills corresponded with the additional length
of pipe shown in the sectional drawing, but the contractor's rates were uni-
form throughout. The engineer required the pipe to be carried out for the full
length below low water. Held, by Channell J., that the prices in the bills were
on a true construction of the contract only for work above low-water mark,
36 3 H. & N. 844, at p. 851.
37 Atp. 852.
3l!3H.&N.844.
J L.R. 8 Ch.App. 597. See also Re Nuttall and Lynton and Barnstaple Ry. (1899) and the
9
Thom and Tharsis cases, all illustrated infra.
 500 PERFORMANCE [CHAP. 4
and the contractor was entitled to a reasonable price for the work below low
water, since there was no price in the contract for it: Re Walton-on-the-Naze
Urban District Council and Moran (1905). 40
[Note: In this case it will be seen that the various verbal descriptions pre-
vailed over a sectional drawing and the quantities taken off that drawing.]
(5) DemolitiOn contractors in Ontario undertook to demolish a building
and slab and place all brick and rubble in a basement on the site. The contract-
ors, who had previously submitted a different higher quotation for removal of
all materials from site, were unable to fit the quantities of resulting brick and
concrete into the basement, and sued for the cost of transporting the excess
off the site. Held, by the Divisional Court, approving Hudson tenth edition, 4°"
and following Jones v. St John's College, that it was the contractor who had
miscalculated the quantities, that the risk of the quantities being incorrect was
with him, and that the cost of transporting the excess quantities from the site
was included in his original quoted price; A-Jae Demolition (London) Lim-
ited v. Urlin Rent-A-Car Inc. (1990). 40b
4·042 In modern English-style contracts using bills and incorporating stan-
dard methods of measurements it is sometimes possible for a contractor to
base a claim for extra payment, notwithstanding that there has been no
variation of the work, on the ground that, contrary to the requirements of
the standard method, certain items of work have not been separately
described or set out in the bills. These are highly technical and legalistic
claims, unique to English systems of measurement using bills of quanti-
ties, and are dependent for such validity as they may possess on the par-
ticular wording of incorporation of the bills and standard methods into the
construction contracts. This wording appears to have evolved primarily as
a result of institutional quantity surveyor influences, supported by the
contracting side, in the bodies responsible for the standard forms with
little or no regard it would seem, for the owner's reasonable in.terest. 41
Whether the description of the work in some other part of the contract
overrides or supplements any technical document may well, it is submit-
ted, depend on the identity of the party preparing the technical document.
A contractor who prepares such a document and omits expressly to
describe obviously necessary work will do so at his peril. On the other
hand an owner, particularly one employing a professional adviser, cannot
complain unduly if his own technical documents are taken at their face
value or, in a case of genuine doubt or conflict, construed against him un-
der the contra proferentem rule. Many English construction contracts,
however, contain express "discrepancy and divergence" or other pro-
visions designed to deal with these difficulties, usually not at all
successfully.42
40 Hudson, Building Contracts (4th ed.), Vol. 2, p. 376.
40.. Seep. 349, now para. 4·245 infra.
•rn, (1990) 74 0.R. 2nd 474, D.C. See also Carman Construction Ltd. v. C.P.R. (1982) 136
D.L.R. 3d 1983, illustrated ante, para. 1·167. , _.,
• 1 See ante, Chap. 2, para. 2·161 and post, Chap. 7, Section 1(2)(c) for this type:of claim.
42 See ante, Chap. 1, Section 9(2)(d)(ii) and 9(3).
SECT. 1] OBLIGATIONS OF THE CONTRACTOR 501
(ii) Work contingently necessary to achieve completion
It frequently ocx_;urs in_ practice, particularly in engineering contracts, 4-043
that unexpected difficulties are encountered during construction which
may_ not only necessitate a change from the expected method of working,
but m extreme cases may mean that completion of the work at least in
strict accordance with the original design, is impossible. In addition dam-
age to the works while under construction may occur as the result of some
~nforeseen e:ent or act of a third party for which the owner is not respon-
sible, and which needs to be made good if the works are to be brought to
completion.
Many contracts contain express provisions making such risks or con-
tingencie~ the _responsibility of the contractor, in the form of, for example,
express disclanners as to the state of the site and physical conditions or
dangers generally, and also of provisions for the protection of the work
?uring co~tr~cti.on, but modern contracts under producer influences may
invade this prmciple at a number of points. For example, under the stan-
dard I.~E fo?11 of contr~c!, the contractor only undertakes to complete the
work save 1n so far as 1t IS legally or physically impossible'',43 is not liable
to ~>ro,;eit the works against damage due "solely to the engineer's
des1~ , and furthermore under that contract is entitled to be paid for
additional work due to physical conditions which could not have been
r~aso~ablyforeseen by an experienced contractor.45But the cardinal prin-
ciple, In the absence of an express disclaimer, is that an owner who uses a
pro~essional adviser does not warrant that completion according to his
adVIser's plans or design in practicable,46 and that, even in the absence of
express provisions for the protection of the works, the risk in regard to the
safety of the works remains with the contractor until they have been re-
occupied by the owner.
Effectively, the~efor~, a contractor who (as is almost invariably the 4·044
case) e~ressly or impliedly u~dertakes to complete the work or project
a~cor~~g to the contract. drawings and design, thereby impliedly warrants
his ability to do so, and tf he cannot will be liable in damages. In conse-
quence, any ~dditio~al work necessary to achieve completion must be ear-
ned out by him at ~s own expense if he is to discharge his liability under
the ~ntract, and will not qualify for additional payment as a variation
even 1f he has ?een formally instructed to do the work in question. So too
any work of remstatement or repair if the works have been damaged prior
to completion by some external cause.
Since this principle, which is founded on firm commercial realities is
frequently criticised or attacked by contractors' advisers in the course' of
43
Clause 13 of the 1955 ICE standard form.
•• Clause 20(2) of the 1973 fifth edition ICE conditions.
:: Ibid ..Clause 12. For .this latter pr?vision see post, Chap. 8, Section 1(2)(d).
Nor, mdeed, that.he 1s competent many way, e.g. in qiaking decisions as to the contractor's
method of working; see the case of Neodox Ltd. v. Swinton and Pendlebury Borough
Counci~ (1958), illustrated post, Chap. 7, para. 7·039. For the unlikely liability to the con-
tractor m tort of the owner's A/E himself, see ante, Chap. 1, Section 12(2)(d).
 502 PERFORMANCE [CHAP. 4
advancing claims for difficulties encountered during construction and
which it is sought to attribute to the A/E's design, it may assist to repeat
the very clear statement of this rule made at a comparatively early date in
the second edition of Halsbury's Laws of England, as follows:
"386. It is no excuse for non-performance of a contract to build a house or to
construct works upon a particular site that the soil thereof has either a latent
or patent defect, rendering the building or constructing impossible. It is the
duty of the contractor before tendering to ascertain that it is practicable to
execute the work on the site. The builder or contractor on discovering such
defects in the soil as will render the construction of the contemplated works
difficult or impossible is not entitled to throw up or abandon the contract and
thus, if part of the work falls down in consequence of any such defects, the
builder or contractor will have to reinstate it or lose his right to recover pay-
ment, and be liable in damages for not completing his contract" .47
4·045 The only possible qualification is the extent to which these liabilities
should (if at all) be modified in the case, not of original contract work, but
of variations in the work called for by the owner under a power in the
contract, since the contractor obviously has not, at the time of contracting,
any possibility of assessing the practicability of such then unknown work.
Usually no immediate financial difficulty arises in such cases where diffi-
culties are encountered and surmounted, because the cost of doing so will
normally be recovered under the provisions for valuation of the variation
itself. But the question is whether an unqualified obligation to complete
exists in the case of work which the contractor could not foresee at the
time of contracting and which proves difficult and impractical from this
point of view. It is submitted that the obligation will extend to variations,
such as extra work, which can be shown to be similar in general character
to the contract work, but may not extend to unforseeable variations which
are different in character or location. 48 However, a builder undertaking
such work without protest will it is submitted, be regarded as accepting the
liabilities and estopped from subsequently seeking to repudiate them. 49
The liability to complete needs to be carefully distinguished from quest-
ions as to the contractor's responsibility for the suitability of the work or
the adequacy of its design once it as been completed. Those questions are
dealt with later in this chapter50 and raise quite different considerations.
Not only does an owner not impliedly warrant the practicability of his or
his adviser's design, but it is extremely rare to find that an owner or his A!E
will give any express warranty as to the physical state of the site or of the
subsoil, on which the success of a civil engineering design may depend.
On the contrary, most construction contracts contain express
41 (2nd ed.) Vol. 3, para. 386.
""See, e.g. Slowey v. Lodder (1900) 20 N.Z.L.R. 321, illustrated infra, para. 4·{)49.
49 Ibid., and the Thorn case itself, and subsequent cases following it. ·,:.
5u See infra, Subsection (2), "Obligations as to Design".
SEcr.1] OBLIGATIONS OF THE CONTRACTOR 503
exclusions of liability for any reports or information which may have been
made available to the contractor, whether in the contract documents or
otherwise. The possible effects of the Misrepresentation Act 1967, of the
new Hedley Byrne principle in tort, and of the English Unfair Contract
Terms legislation in these situations has already been considered.51
In addition to the cases cited below, reference should also be made to
Section 3, infra, "Impossibility and Frustration", and the cases there cited.
ILLUSTRATIONS
(1) Contractors undertook to demolish the old London Bridge and build its 4-046
replacement. Instead of traditional cofferdams, the engineer's specification
required pier foundations to be put in using wrought iron caissons, the lower
parts of which were to remain permanently in the work, with their internal
girders and the upper part of the caissons removed as work proceeded. The
ironwork itself was separately specified in detail. The risks and responsib-
ilities in sinking the caissons were to rest with the contractor. The caissons
were successfully sunk, but the upper part of the caissons proved to be
incapable of withstanding the tidal pressures, and had to be abandoned, so
that the re:o:iaining work had to be done as the tides permitted at low water,
and at considerable extra expense. The contractors alleged an implied term
that the bridge could be built comparatively inexpensively according to the
plans and specifications without tide work, and that the caissons shown on the
drawings would sufficiently resist the pressure of the water, and claimed extra
payme_nt as damages. Held, by the House of Lords, no such warranty could be
implied. Per Lord Cairns: "That raises ... a very serious and alarming quest-
ion ... The proposition ... would go to nearly every kind of work in which a
contractor is employed and in which ... specifications ... are issued by the
person who desires to employ the contractor ... In the contracts latitude is
always given by provisions for extra additional and expected work; but if it
was held that there is in regard to the specification itself an implied warranty
that the work can be done in the way and under the conditions mentioned, so
that he is to be liable in damages if it is found it cannot be so done, the conse-
quences would be most alarming [and] ... would go to every person who,
having employed an architect to prepare a plan, afterwards enters into a con-
tract to have the house built according to that plan". Per Lord Hatherley:
" ... if there can be found any warranty in such a contract as this ... it would
scarcely be possible for any person whatever to enter upon any new work of
any description ... ": Thorn v. London County Council (1876).sz
[Note: Some remarks of Lord Cairns (at p.127) which are mentioned in the
headnote to the case (to the effect that, if the work was so peculiar and unex-
pected that it was not within the contract at all, the contractor might refuse to
continue with the contract or alternatively claim on a quantum meruit) have
occasionally been used by contractors' advocates to suggest that claims for a
quantum meruit, as opposed to damages for breach, might succeed in such
circumstances. It is clear from a similar passage in Lord Hatherly's speech (at
p. 133-4) and from the passages already quoted above, it is submitted, that
what these judges had in mind was some situation having the effect of frustrat-
si See ~nte, Chap. 1, paras. 3·077-3·078 et seq.; Chap. 3, paras. 1·137-1 ·139 and l ·165; and post,
Section 2, paras. 4·143 and 4·203. See also Trade Indemnity v. Workington [1937] A.C. 1.
52
l App. Cas. 120, at pp. 128, 135.
 504 PERFORMANCE [CHAP. 4
ing the contract. The Tharsis and subsequent cases illustrated, infra, show
plainly, however, that errors rendering completion in accordance with the
exact contract design impossible will not frustrate a construction contract,
since a contractor by tendering effectively warrants the practicability of the
design.}
4-047 (2) Contractors agreed with a company to furnish and erect all the iron and
general work required for a building for a lump sum price. The contract pro-
vided that the contractor should not make any alteration in the specified
works without a written order of the company's engineer. The contractors
found that they were unable to make certain girders owing to the thinness of
the metal specified and their liability to twist. With the oral consent of the
engineer, the contractors made the girders of thicker metal. Under the terms
of the contract, interim payment was to be on certificates of the engineer
applying a price per ton, and the engineer certified and the owner paid for the
increased tonnages at the contract rate. On final valuation of the contract, the
increased payments for the larger tonnages were disallowed, and the con-
tractors sued for their recovery. Held, by the House of Lords, that the con-
tractor took the risk of being able to make the girders of the specified
dimensions and, there being no order in writing by the engineers for the gir-
ders to be made of thicker metal, the contractors could not recover the extra
cost. Per Lord Blackburn: "When, as in this case, the contractors say 'We
cannot do the work as we have promised to do it unless you permit us to make
it thicker than we undertook to make it' and the engineer on behalf of the
company says 'I will not object to your making it thicker if you cannot do it
otherwise', I think there is nothing in that to imply that there was to be pay-
ment for that additional thickness". Per Lord Blackburn: "When the Tharsis
Company, through their engineer, said in the specification 'We want this
done', there can be no doubt that they thought and believed that a girder of
this length and thickness could be made and they proposed it should be made
... They put it distinctly to the contractors to look into it for themselves; they
called their attention to it in words, I think, in one part of the contract 'See if
you can do this, and tell us what price you can do it for'; 'satisfy yourselves'
(that is what it really amounts to) 'whether you can do it before you enter into
the contract'.": Tharsis Sulphur & Copper Company v. McElroy & Sons
(1878)."
(3) A contractor undertook to build a sea wall for a local board. The board
under a local Act was alSo empowered to construct and maintain groynes. Old
groynes were present at the site of the works. The design of the work was such
that the wall could clearly not be built unless it was protected against the tidal
scour of shingle by adequate groynes. By the terms of the contract the con-
tractor accepted the risk of accidents and damage by seas, winds, or any other
cause, and the tender was to include for completing and upholding the works
for six months after completion, no additional payment being made for work
fairly to be inferred from the specification or drawings or which might become
necessary in the execution of the Works. During the work the contractor
advised the board that the old groynes were inadequate and that they should
build new ones, and the board put new groynes out to tender, but delayed
placing any contract for them. As a result, the shingle on the beach was
washed away and a stonn destroyed the partly built wall, which the contractor
refused to repair without payment on being called on to do so. Held, by the
House of Lords, that in the absence of any provision that the board should
make groynes or maintain the existing groynes, the obligation of the con-
tractorwas, within the principle of Thorn's case, to do everything necessary to
'.'
ll 3 App. Cas. 1040, per Lord Blackburn, at pp. 1054 and 1052.
OBLIGATIONS OF THE CONTRACTOR 505
complete, and the contractor was accordingly liable in damages to the board:
Jackson v. Eastbourne Local Board (1886).54
. \4~ B. contrac!ed tO execute sewerage works for York Corporation in the 4-048
v1cm1ty of the River Ouse. He had planned to use poling boards for his exca-
vations, but the soil turned out to be of a muddy and spongy character necessi-
tating ~e driving oft~ber runners and the rendering of the entire excavation
"".atertight before bnckwork could be laid. No boreholes had been sunk by
either partr, but the corporation had had reports prior to signing the contract
that B. 's pnce was such that he was certain to lose money in the type of ground
to be expecte~. B. asked the engineer to authorise payment for the extra
works as a vanation, and on this being refused abandoned the work, and sued
for the value of work done. Held, by the Court of Appeal, that as there was no
ex~ress guarantee or representation as to the nature of the soil, B. was not
entitled to abandon the contract on discovering the nature of the soil or
becau~e the engineer refused to give written orders entitling him to extra pay-
ment in co~sequences of the unforeseen difficulties in executing the works,
and accordingly B. could recover nothing for the work done by him: Bottoms
v. York Corporation (1892). 55
(5) M. entered into a contract with Workington Corporation to construct a
sys!em of sewers. Part of the work, which involved tunnelling, turned out to
be impracticable without additional precautions because of water in the soil.
M. suggested certain modificatioi:is, which the engineer refused to pay for,
and then threw up the contract, suing the corporation for £7,000 alleged to be
due for work so far done. The engineer had not certified any part of this sum,
but M. contended that the corporation was in breach of contract in that the
specification amounted to a warranty that the ground was dry. Held, by the
Court of Appeal, that had there been any such statement, it would have only
amounted to a representation and not to a warranty 56 but there was in fact no
such representation and M. was not entitled to th~ow up the contract and
could not recover in the absence of a certificate: McDonald v. Workington
Corporation (1893). 57
_(6) N. contracted to build a railway, including "earthworks", for an ascer- 4-049
t~1_ned price. A bill of quantities was supplied to him which said: "These quan-
tities a~e not guaranteed as correct, and are furnished merely for the
convenience of contractors". The specification provided that the contractor
was to "satisfy himself of the nature of the soil ... of all probable contingences,
and generally of all matters which would in any way influence the tender for
the contract", and he was to take upon himself all the risk and responsibility of
the dU:e. and complet~ ex~cution of the works. N. claimed to be paid extra for
9-uantttles of excavation m excess of that set out in the quantities and draw-
~ngs, and for the cost of removing rock which could only be removed by blast-
ing. Held, by the c-;<:>urt of App~al, that N. was not entitled to recover anything
extra f?r the add1t1onal quantity of excavation or for the necessary blasting
operations: Re Nuttall and Lynton and Barnstaple Ry. (1899).ss
54
Hudson, Building Contracts (4th ed.), Vol 2, p. 81 (contrast U.S. v. Spearin 248 U.S. 132
(1918), infra.
ss Ibid. at p. 208.
56 For the distinction see ante, Chap. 1, para. 1-141.
57
9 T.L.R. 230.
58 82 L.T. 17 (contrast Maney v. City of Oklahoma 300 P.642 (1931), see infra, paras. 4·061-
4·062. See also the case of Bryant and Son v. Birmingham Hospital Saturday Fund f1938] 1
All_ E.R. 503, see post, Chap 8, para. 8-028, when additional payment for rock was obtained
by mvoking the provisions of the incorporated standard method of measurement. For the
cases on additional quantities, see post, Chap. 7, Section 1(2)(b).
 506 PERFORMANCE [CHAP. 4
(7) A contractor took over, in agreement with sureties, the remainder of a
tunnelling contract for the local council from which the previous contractor
had been dismissed. At the time the council's engineer informed him of the
likelihood of a variation increasing the thickness of the brick used in the tun-
nel, and this was subsequently formally instructed. The variation involved a
difficult and dangerous operation, which in the event resulted in a collapse
which caused the contractor loss and expense, but the contractor had com-
plied with the instruction without protest. The contract was later wrongly ter-
minated by the council, and when suing the sureties the contractor claimed
the reasonable cost of work done, together with a sum for the additional
expenditure caused by the collapse. It appeared that a previous slip in the
earth above the tunnel had left a cavity which had been packed by the pre-
vious \:Ontractor with brushwood and logs, about which the contractor had
not been informed. The contractor alleged an implied tenn by the owner war-
ranting against such latent defects. Held, by the New Zealand Court of
Appeal, affinning the trial judge and following Thorn, that there was no
implied warranty. If the instructions had been outside the contract altogether,
the contractor might have been entitled to refuse to carry them out, but by
going on with the work the contractor was precluded from claiming the loss
caused by the collapse: Slowerv. Loddey (1900). 59
4-050 (8) A building under construction collapsed due to entry of water into the
foundations and sinking and sliding inwards of its walls. The contractors
argued that this was due to the inadequacy of the architect's design, and
refused to continue and restore the work unless extras were allowed. The
owners then completed by other contractors and sued for the additional cost.
The contract contained the usual provisions for protecting the work during
construction, but the contractor relied on a provision that he was to be
responsible for all loss or damage to the work in progress until completion
"unless due to the negligence or lack of judgment of the architect or caused by
other trades". Held, by the Manitoba Court of Appeal, that the damages had
in fact been caused by the contractor's negligence; but even if the architect's
design had been inadequate, the words relied upon should be taken to refer to
acts or negligence of the architects in doing their part after the contract was
entered into, and not to the original plan, specification and design of the work,
so that in the absence of any guarantee as to the feasibility of the work in
accordance with the plans, the contractor had, following the Thorn and Bot-
toms cases, assumed the risk of being able to perfonn it: Grace v. Osler
(1911). 00
4·050A (9) In a Canadian contract for the supply and driving of interlocking steel
piles, the Specification provided that the soundings and borings had been
carefully taken, but the contractors were to take their own soundings levels
and borings before tender as they deemed necessary to satisfy themselves as
to the accuracy of the information conveyed by the plans and Specification.
The soil was described as "sand, gravel, few stones, loose clay, stiff and sticky
clay, tough clay". Driving was described as being unusually severe. By the
Tender and General Conditions, no claim was to be entertained for unfore-
seen difficulties in carrying out the work and the contractor was to visit the site
and make his own estimates of difficulties attending the execution of the
work. By Clause 56 the contractor was to investigate and satisfy himself of
everything and every condition affecting the works to be executed, and their
execution was to be founded and based on his own examination, knowledge
information and judgment and not on any statement representation or ~nfor-
59 20 N.Z.L.R. 321.
60
19 W.L.R. 109.
Seer. 1] OBLIGATIONS OF THE CONTRACTOR 507
mation made or given or derived from any specification plans maps or pro-
files, all of which were given merely for general information and not
warranted or guaranteed. No claim was to be made for loss or damage sus-
tained in consequence of such statements representation or information
being incorrect or inaccurate, or for unforeseen difficulties of any kind. The
contractor alleged that the soil was in fact a material called "hard pan" with
many large boulders embedded in it, necessitating unforeseen work including
the use of explosives, which it was alleged was entirely outside the contract,
and claimed compensation on a quantum meruit basis. In the Exchequer
Court of Canada the contractors succeeded, subject to a deduction of one
third for delays attributable to themselves. Held, by the Supreme Court of
Canada, that the contractors had tendered to drive piles in soil which they had
agreed to investigate, and which the appellant did not guarantee. The obli-
gation of the contractors was not to drive piles in a specified soil, but in a
specified place. The risk was on the contractors and must be borne by them if
they misjudged the works to be performed and miscalculated the cost. Per
Taschereau J.: Expenses incurred for unforeseen difficulties must be con-
sidered as being included in the amount of the tender, and the respondent has
the legal obligation to execute the contract for the price agreed upon, in the
same way as would have been its indisputable right to benefit, if the soil had
been more favourable and easier than foreseen: R. v. Paradis and Farley Inc.
(1942).~
(10) A contractor was required to construct a sewer in heading underneath
a road crossing under the terms of the 1955 ICE conditions. The "approxi-
mate position" of an ancient sewer was shown on the plans, which traversed
the road at an angle diagonal to and crossing the contractor's line. Its depth
was not known. The contractor's heading collapsed and was flooded when it
passed under the old sewer, which was about 10 feet from its plotted position,
due to the fact that at the time weather conditions were extremely bad, the old
sewer was carrying a considerable quantity of water, and the plaintiff's work-
ings had either disturbed or actually breached the underside of the old sewer.
The contractor was obliged, on receipt of agreed instructions from the engin-
eer, to "stank off" the old sewer at a point some distance from the site of his
own works, sink a shaft at the far side of the road, and work back in open cut
with traffic being diverted, before being able to complete the crossing. Held,
by Paull J., in the absence of a claim under Clause 12 of the ICE conditions
(which on the facts would not have succeeded), the contractor could not
recover. Clause 20 of the ICE conditions could not assist the contractor, since
the damage was not due to the engineer's design of the works within the terms
of that clause: Pearce v. Hereford Corporation (1968). 61
(11) A drainage contract in New Zealand included a substantial item for 4·051
the construction and sinking below ground level of a tank and pump chamber.
The contractor alleged that the ground in which the tank was to·be sunk con-
tained a heavy clay pan which made it impossible to excavate by machine, and
that the water and ground conditions were such as to require a change in the
original design of the tank before its floor could be constructed, since the
contract had provided that dewatering could be done by way of a 44-gallon
sump which in the light of the conditions actually encountered would not be
adequate, and by agreement the floor was constructed us_ing pre-cast rings of
concrete lowered into position underwater with the aid of a diver instead of in
the dry. The contractor alleged frustration, and alternatively claimed quan-
tum meruit for work done outside the contract or, if the work was within the
contract, as an alteration or addition authorised by the owner's engineers.
w. [1942] S.C.R. 10.
61
66 L.G.R. 647.
 508 PERFORMANCE [CHAP. 4
Alternatively, he alleged breach of an implied term as to the conditions to be
expected during the execution of the work and claimed damages. Held, by
Henry J ., (a) that the matter was not so fundamental as to justify any finding of
repudiation; (b) that the work was necessary to enable the contractor to carry
out and complete the contract and so was a part of his contract obligation, and
agreement by the engineers to the change of design did not, following Tharsis,
entitle the contractor to claim for a variation; and ( c), following Thorn, that
no warranty as to the expected water and ground conditions could be implied:
Wilkins & Davies v. Geraldine Borough (1958). 62
(12) A contract for the conversion of a shop and living accommodation for
£4,000 contained the words "provide everything necessary for the proper
execution and completion of the works in accordance with the specification"
and "allow for covering up and protecting the works during frosty and inclem-
ent weather or from damage fl"om any other cause and reinstating any work so
damaged". A day before completion and occupation of the shop, which was
virtually finished (though the living accommodation was not finished), and at
a time when £3,250 out of £4,000 had been paid, vandals broke into the shop
and did damage to the extent of £450. The owner's surveyors instructed the
contractors to make good the damage at the earliest possible moment. Held,
by Nield J ., the contract was entire and must be completed before payment
was due. The work in the present case had to be done before full payment was
due, and the contractors could not recover: Charon (Finchley) Ltd. v. Singer
Sewing Machine Ltd. (1968). 63
4-052 (13) Contractors undertook to construct a crossing under a river in frac-
tured sandstone, which involved sinking two shafts on each side, one by
means of a concrete caisson, with further drilling below the caisson to the
required invert level in accordance with the engineer's drawings. The con-
tractors were experienced tunnellers, but not in sinking caissons, and by
agreement with the engineer they sub-contracted that part of the work. The
contract required the engineer's approval of all working proposals and meth-
ods, but there were the usual disclaimers as to the effect of approval, as also
the geological information in the contract. After an initial accident when
commencing drilling without grouting after sinking the caisson, the contract-
ors obtained approval of proposals to grout at the base of the caisson shaft
before recommencing drilling, although they later alleged that the use of
compressed air would be necessary and that the grouting method would not
prove successful. The engineer replied that if they wished for approval of any
alternative method which they proposed to employ they should ask for it, but
refused to give any instruction. The Contractors recommended the grouting
work, but when additional payments were subsequently refused they ceased
work, and the owner ultimately terminated the contract on the certificate of
the engineers, under the terms of a forfeiture clause for failure to proceed
with the work, and completed using other contractors. When sued for the
additional cost, the contractors alleged negligence in preparing the geological
reports and information in the contract, improper approval of the plugging
and grouting of the shaft, permitting work without grouting, stopping the
work for investigations, and ordering an expensive grouting solution at vari-
ance with the o:r;:iginal contract terms. Held, by the Court of Appeal of New
Brunswick, following Thorn and O'Brien v. The Queen,64 there was no
implied warranty that the work could be successfully executed according to
the plans and specifications; that even if a contractor had a right to and wished
62
[1958) N.Z.L.R. 985.
03 207 E.G. 140.
64
(1880) 4 S.C.R. 529.
SECT. 1] OBLIGATIONS OF THE CONTRACTOR 509
to resci?-d, he must do so immediately on becoming aware of any conditions
complained of; and that the contract had been lawfully terminated: City of
Moncton v. Aprile (1980).6>
(14) A specification gave a technical description of fire detector heads
required in a cons_truction project, but also required their approval by the
regul~to_ry authonty. The contractor supplied heads complying with the
descnptlon, and also approved by the authority, but following a fire during
construcJion the approval was withdrawn, and the contractor was obliged to
supply different and more expensive heads, which were approved in order to
complete theprojec_t.1:he arbitrator (Mr. R. Smellie Q.C., author~f Buifding
Contracts and Practice tn New Zealand, and later Smellie J. ), following Thorn,
h~d awarded_ t~at the contractor must provide the additional approved heads
without additional payment. Held, by Davison C.J., that the arbitrator's
award must be upheld: Atkinson & Forbes Ltd. v. Nelson Hospital Board
(1982).~
(15) A roadwo:ks contract required material for compacting into embank-
ments to b~ obtai°:ed as to one third from immediately adjacent excavation
al~n~ the hne _of highway, and as to twp thirds from borrow-pits elsewhere.
Sods I.?forma.tion ~as supplied giving the locations and describing the type of
~ater~al and its m~isture content. The contractors were expressly required to
~vestigate and satisfy themselves of everything and of every condition affect-
ing the wor~s to be performed.66a Additionally, at a number of points in the
documents 1t was expressly stated that no responsibility would be assumed by
the Department for the correctness and completeness of the information and
data which had been compiled for it, and should such data be found to be
incorrect or incomplete the contractor was to have no claim on that account.
The contractor was also to have no claim for compensation or damages for
any delay from any cause whatsoever. The contractor alleged and the trial
judge found that the moisture content of the material had been understated
that sand which had been indicated and which would have made drying th~
material before compaction easier was not in fact present, and that the design
ha~ ~ot taken acco1:1nt of a number of matters such as poor compaction of the
existing road matenal, orof the area rainfall, in fixing the time for completion.
On the_ other hand the_contract?~had also failed to provide drainage so as to
deal wi~h soft underlying conditions, and had chosen a poor location for its
camp site. The Judge held that there had been an implied term that the
Department would provide soils information of reasonable accuracy or at
least not ~rron~ou_s or mi~leading, and that the design would be reasonably
constructible within the time specified. After deducting of 50 per cent. for
contributory negligence by the contractor, the Judge allowed some
$1,300,000 against some $3,700,000 claimed. Held, by the Appellate Division
of Alberta, following Thorn v. L.C.C.66b and distinguishing Cardinal Con-
structio'! v. City of B_rockvill~ (where there was no exclusionary language
~nd a m1srepre_sent~tion as to the nature of an expected underground obstruc-
tion) that the imphed terms found by the Judge were inconsistent with the
express contractual disclaimers, and that the contractor had taken the risk of
being unable to complete within the specified time: Catre Industries Ltd. v.
Alberta (1990).61\d
M 66 A.P.R. 631.
(,<, Unreported, High Court of New Zealand, Nelson Registry N32--80, October 11, 1982.
1,1,a Probably the same provision as in the Paradis case supra.
6(\~ Illustrated supra, para. 4·043.
1,1,e [1984] 4 C.L.R. 149.
66d {1990) 63 D.L.R. 4th 74.
 510 PERFORMANCE [CHAP. 4
4-053 It is not, perhaps, sufficiently understo_od ~hat the ~rinciple underlyin,g
the Thorn and Tharsis cases is as essent:Ial, 1n assessmg the contractors
obligation in a priced contract to carry ?ut and c?mple_te w:ork to the
design and specification of the owner or his AJE, as 1s the IIDplied term of
suitability, independent of fault, in a contract for the sale of goo.ds where
there is reliance on the seller. It is fundamental to an understanding of the
English and Commonwealth cases on the exten~ of the owne:'s responsi-
bility for his NE designer in a construction proJect to appreciate that the
A/E's expertise is regarded as lying in the design of the final pe~ma7:ent
work in place, so as best to meet the amenity and other needs?~ his clie~t.
Those needs may involve greater or lesser elements of durab1hty, qu~1ty
and post-contract performance, or of ease of maintenance and amemty,
for example. In designing to meet those needs, the ~lement of ease of con-
struction or "buildability" is of purely secondary 1n1portance (although
naturally in his client's interest the designer should ~now enou_gh about
construction methods and problems to avoid producing a too difficul~ or
impracticable design, and so increasing the tendered cost of :he I_>ro1ect
unnecessarily). Even if the difficulty or exp~nse of ~onsn:ucuon is very
great, the client's interest may entirely overnde cons1dera?ons of easy or
economical construction. On the other hand, the expertise of the con-
tractor and his success in business competition against his rivals depends
on his skill in the quite different area of "build~bility", t~~t is, on the
"how", not the "what", of construction. It is submitted, add1t1onally, t~at
the formulation of an implied term precisely defining proposed restric-
tions on the A/E's duty to his client, and a countervailing duty ~o the con-
tractor, would be impossible, since there is an inescapable ~onflict present.
4-054 On this view of the law, every invitation to tender a pnce for the co~-
struction of a project to a design provided for or on behalf of the owner IS
in essence, therefore, a double question by owners to contractors: "Can
you build to this design, and if so at what price?"67 • •
The position could not be more clearly expressed than In the following
Canadian judgment:
"Had it been in the minds of the parties to vary the ~~neral law, Wf: should
surely have found somewhere in the contract a prov1s1on whereby it would
appear clearly and beyond peradventure that the owners covenanted and
agreed that the plans, prepared by the architects, would be absolutely suf-
ficient for the purposes for which they purport~d t? be ~rawn.. . construction skills in their public relations or dealings with their clients,
To state the effect of the plaintiff's contention 10 this way 1s to show its
untenability. In point of fact owners would not sign such a covenant. They
would naturally say: 'You are as well able as (or you .are better ab~~ than) we
are to judge whether the architect's plans can be earned out or not, if you rf:lY
upon them, well and good; if you do not, you an have them tested by ei:gm-
eers and experts of your own, or need not underta~e the ':"ark; ?th~rs will do
it'. The plans are before the contractors for their con~1derat10';1-, and the.y
must rely upon their own knowledge, experience and 1nformat1on at thetr
' .
01 See the quotation from Lord Blackbum in the Tharsis case, illustrated supra.
SECT.!] OBLIGATIONS OF THE CONTRACTOR 511
disposal, before they unequivocally bind themselves by contract to complete
the work on the basis of those plans; and this is, no doubt, exactly what
happened. "611
As a result (although contractors frequently contend to the contrary 4·055
when seeking to support claims based upon alleged errors of the design, or
its inappropriateness to site conditions) the expertise of the contractor in
this particular area is rightly held to be as great as that of the owner's
designer. Moreover, in modem contracts this corresponds to the realities
even more than was perhaps the case in the nineteenth century at the time
when these landmark cases were decided. This explains why the obli-
gation of the contractor who decides to offer a price on these terms is
judged to be to complete the work, whatever the difficulties may be, for
that price. That unconditional obligation to complete even includes
rebuilding free of charge work which has been damaged or destroyed
before completion by storms, earthquake, fire, acts of vandals, riots,
etc., and it is for this reason that express provisions are so often found in
construction contracts requiring contractor insurance against the more
catastrophic of these risks which, while undoubtedly the contractor's con-
tractual responsibility, might nevertheless easily break the contractor
financially, with damaging commercial effect on the project should that
occur. It is also why express "changed conditions" or "unfavourable con-
ditions" clauses are contractually necessary if the contractor is to be com-
pensated financially for difficulties encountered during construction, and
also why a construction contract will not be considered frustrated if the
original design tllms out to be impossible to execute,69 unless the impossi-
bility is caused by some supervening event, such as the destruction of the
site, which makes completion of the project itself impossible. As to the
contract design itself, the contractor is regarded as having warranted its
possibility. It may be added that, at the present day in most developed
countries, not only will the contractor's practical experience of the tech-
niques of construction usually exceed that of the A/E but, in any but very
modest projects, the formal qualifications of his senior staff will be fully
equal to those of the A/E himself. Such an implied warranty on the part of
the contractor is therefore a reasonable one, as well as commercially
essential from a budgetary point of view.
Some A/Es and their professional institutions have in recent years been 4·056
unwise enough to imply a superior expertise to that of the contractor in
for example, by expressly including, in their offered services under their
co~ditions of engagement, guidance and advice to contractors, or even
control over contractors' working methods when difficulties arise. 69a In
Canada this has resulted in at least two anomalous cases imposing a duty
61! Per Cameron I.A. in Gracev. Osler (1911) 19 W.L.R.109, at p. 129, Manitoba C.A., illus-
69
trated supra.
Compare the Geraldine Borough case, illustrated supra, and see infra, Section 3(3) .
6'la See ante, paras. 2·191-2·192.
 512 PERFORMANCE [CHAP. 4
of care owed by the NE to the contractor in tort when difficulties are
encountered during construction. 70 Most professional institutions today,
belatedly recognising the consequences of such wording (which in any
case has not corresponded with realities) have re-drafted their conditions
of engagement so as to make this clearer, and distance their members
from this area of potential tortious and contractual liability.7 1
This is not to say, of course, that carefully defined powers of inter-
vention by the A/E in the contractor's methods of working and temporary
works may not, subject to appropriate provisions governing the financial
implications, be highly desirable from the owners' point of view in the
interests of safety, good progress, or properly constructed permanent
work.72 In addition it is, of course, a commonplace of specifications that,
again in the interest of the quality of the permanent work, they may con-
descend to considerable express detail in describing required working
methods, for example, in regard to concrete curing times and tempera-
tures, numbers of passes of rollers to achieve compaction , and so on.
4·057 Another factor, of perhaps older origin, contributing to this common
judicial misunderstanding of the A/E's true role in relation to working
methods and temporary works (again sedulously fostered by contractors'
arguments when failures or difficulties occur during construction) lies in
the century-long traditional language of construction contract conditions,
with their frequent references to the A/E in his certifying role, and to his
directions, opinion or satisfaction, when defining the contractor's various
construction obligations. The reasons for and origin of these provisions
have been explained in detail in C.C.P.P.,73 and, properly understood,
carry no implication of some superior A/E expertise which might justify
any modification of the implied terms in regard to the contractor's com-
pletion obligation, it is submitted-indeed, the comparative expertise of
the contractor in regard to matters of "buildability" relative to that of the
A/E can be said, as already stated, to have if anything increased since the
date of these older contracts, and of the Thorn and Tharsis cases them-
selves. It is submitted that the principle of these two cases remains the
commercial backbone of priced construction contracts, without which
their budgeting certainty would disappear ,74 and there can be no doubt of
their authority in England and the Commonwealth at the present day,
notwithstanding the decisions being more than a century old. Thus in
10 See ante, Chap.1, Section 12(2)(d), Chap. 2, Section 6(2)(k), and C.C.P.P., par~s. 5-17 to
5-27, and the cases of Demers v. Dufresne Engineering [1979] S.C.R.146 and Tndent ~on·
srruction v. Wardrop (1979) 6 W.W.R. 481, there referred to. See also the case of Cuy of
Prince Albert v. Underwood McLellan (1969) 3 D.L.R. (3d) 385, illustrated ante, paras.
2·138-2·140.
11 See, e.g. in the U.S. Clauses 2.2.3, 2.2.4, 2.2.13 and 4.12.6 of the 1976 Alt\ general con·
ditions and in the case of architects in the U.K., ante, Chap. 2, paras. 2·183 et seq.
n Comp~re th~ SIA Singapore contract, Clauses 1, 1(3), and (2), set out in C.C.P.P., pp. 554,
556 and 625-626. ,· '
1J C.C.P.P., paras. 5-19, 17---06 to 17---08.
74 See the quotations in the Thorn case, illustrated supra.
SECT. l] OBLIGATIONS OF THE CONTRACTOR 513
1966, in Steel Canada Ltd. v. Willand Management Ltd. 75 ( where the Onta-
rio Court of Appeal, in arriving at a restricted interpetation of an express
term in which a roofing contractor had guaranteed roofing work carried
out to the owner's specification, had followed an early New York case in
190076 and, purporting to distinguish and disapprove Thom, had found for
the contractor), the Supreme Court of Canada allowed the appeal, disap-
proved the New York case, and approved and followed Thorn in holding
the contractor liable. The later cases in New Zealand reinforce this view.
Only unambiguous express provisions, if owners decide to concede
them, should be allowed to justify any modification or departure from
these principles. Thus, in the case of the "changed conditions" or
"unfavourable conditions" types of clause, the traditional and generalised
wording of these clauses has, from the point of view of owners (and indeed
of enlightened and efficient contractors) serious and almost certainly
unintended disadvantages.77 More precise drafting, not open to the abuses
of the traditional wording, involving the use of provisional sums or pro-
visional quantity items, is in fact available to compensate contractors in
such situations, if that is thought desirable.78
No doubt the reason for these traditional if unwise compensatory
clauses lies in the undoubted fact that, in many civil engineering projects
in particular, the opportunity and time for investigation by tendering con-
tractors is often, in practice, extremely limited, and the only thorough pre-
contract investigations and studies, through no fault of the contractors,
will have been carried out by the owner's advisers over a perhaps very long
period, so that well-drafted compensatory provisions for difficult site con-
ditions might be expected to reduce the tendering contractors' pricing risk
and so result in lowered tendered prices, which is the sole justification for
competent owners' advisers to recommend such clauses, but which the
traditional clauses unfortunately do not achieve.
Apart altogether from questions of "buildability" and difficulties dur- 4·058
ing construction, the unqualified liability of the contractor to complete
without additional payment will render him liable, as already stated, for
reinstating damage to the works during construction due, for example, to
fire or other external factors. Here, the contractor's unqualified contrac-
tual liability is habitually modified in modern contracts by provisions
obliging tendering contractors to take out insurance of the works, the
compulsory element of which it is accepted must increase the contract
price by the premium cost of the insurance, and so by that means transfer
the ultimate financial responsiblity to the owner, unless for some reason
the insurance should fail. Here the liability of the main contractor, in the
absence of any provision to the contrary, results from his possession
75
Illustrated infra, para. 4· 113.
16
MacKnight v. Flintic Stone, discussed and illustrated infra, paras. 4·061-4·062 llnd 4· 113.
11
See post, Chap. 8, Section 1(2)(d), and see C.C.P.P., passim as there indexed under "Con-
struction Difficulties".
1
ssee as to this C.C.P.P., paras. 23-26 to 23-27, 27-36 to 27-37.
 ·"·
514 PERFORMANCE [CHAP.4
and control over the site, or of his own off-site yards and premises, which is
an essential part of the usual construction project.
4-059 It is important to realise that in most, but not all, 79 building_ and engin-
eering contracts, any obligation of the contractor aft~r ?r~chcal or sub-
stantial completion to put right defects free of charge 1s brruted to defects
due to the contractor's breaches of contract. In the majority of cases,
therefore, the obligations to do contingent work for the contract p~ce
discussed in this subsection are limited to matters arising before practical
or substantial completion prior to the owner entering into occupation.
Having brought the works to practical completion, the implied obligations
here referred to will have been discharged, and the risk will have passed to
the owner. Consistently with this, any contractor's obligation to insure the
works is, under the majority of contracts, terminates at prac~ical. com-
pletion.so A class of contracts where the liability after completion is of a
"maintenance and upholding" character independent of faul~, 81 I?ay, ho~-
ever, have the effect of continuing the contingent work obligations until
the expiry of the relevant period, depending on its wording. In such a ~ase
the obligation to complete will continue until the end of the later penod,
and the start of the limitation period for defective work correspondingly
postponed as a consequence.82 • •
4·060 Before leaving this subject, it may be desirable to consider th~ main
contractor's obligation to complete in relation to the work of nominated
specialist sub-contractors. While there is little difficulty in construi~g the
main contractor's express undertaking to complete in accordance with t~e
owner's or architect's design as an unqualified one, can the same b~ said
for the highly specialist work of nominated sub-contractors, the de.sign of
which may often either not be specified at all or known to the ~a1~ con-
tractor at the time of signature of the main contract,83 and which in any
case is probably in a specialised field outside the main contractor's
competence?
This does not, it is submitted, pose a serious prOblem. In the first place,
the Thorn and Tharsis principles mean that the nominated sub-contractor
impliedly warrants to the main contractor his own ability to complete the
sub-contract work, whatever the source of the design, and a fortiori if the
sub-contractor is himself the designer. The owner will clearly be in breach
of the main contract if he seeks to nominate a sub-contractor unwilling to
give an unqualified warranty of this kind,.~ the event of objection taken
by the main contractor.84 Moreover, pnc1~g arr~n~e~ents und~r the
schemes for nominating sub-contractors which are invariably used 1n the
7'l See post, Chap. 5, Section 2(4). . . .
,.., Clause 20A, post-1963 RIBA forms; Clause 20(1) (not explicit bu~ clear by 1mphcat10n)
1955 ICE conditions.
Nt See post, Chap. 5, Section 2(4).
~2 See infra, paras. 4·292-4·293, and see supra, para. 4·030.
~J Cf the comment supra, paras. 4·044-4·046, in relation to work ordered under a power to
.. i:i.~er Romer L.J. in Leslie v. Metropolitan Asylums District (1903) 1 L.G:R. 862, at P·
868, quoted infra, Section 2, para. 4· 185.
SECT.!] OBLIGATIONS OF THE CONTRACTOR 515
United Kingdom result in nominated work constituting much the most
profitable and commercially risk-free element (apart from the insolvency
risk present in all sub-contracting) of a United Kingdom main contractor's
turnover, and since the types of firm or product likely to be nominated will
usually be substantial and of national status, the insolvency risk will be no
higher, and in general less, than in the case of "domestic" (that is, not
nominated) sub-contractors or suppliers. While some standard forms of
contract in the United Kingdom have either been interpreted by the
courts or expressly drafted so as to compensate main contractors for
nominated sub-contractor default,85 others have provided most expressly
to the contrary. 86-ss Whether or not this is so, virtually all forms of contract
confer on the main contractor an express right of reasonable objection to a
particular nomination for good cause. There would therefore appear to be
no grounds for departing from the overriding principle in regard to all
sub-contracting, nominated or otherwise, consistently with the overriding
essential function for which a main or prime contractor is employed,
namely to stand at the apex of the pyramid of both price entitlement and
of responsibility to the owner for due discharge of all the various direct or
indirect sub-contract obligations, whether to employees or for work or
materials, which collectively contribute to the work which he has himself
priced and undertaken to carry out for the owner. A fortiori, this must be
the case if an express right of objection to a nomination is present, or if the
nomination is acceded to by the main contractor. without demur, in the
latter case on grounds of estoppel or waiver.
Nominated sub-contracting is further discussed infra, Subsection 2(4),
and Section 2(5) and more fully post, Chapter 13.
(iii) Contractor's unqualified obligation to complete: the United States
position
Since a relatively early date the law in a number of jurisdictions in the 4-061
United States appears to have been less "strict" than that exemplified by
the Thorn and Tharsis cases, for example where impossiblity or physical
difficulties during construction can be shown to be caused exclusively by
the A/E's design and not in any way contributed to by the contractor,89
though in some jurisdictions the English view has prevailed.90
Moreover, cases of unexpected site difficulties calling for later design
changes have frequently been treated in the same way in the United
115
Contrast the earlier contracts, but see the later Bickenon interpretation of the ambiguous
wording of the pre-1980 RIBA/JCT contracts, and the clearly expressed terms of the
post-1980 forms, and see also the criticisms of both in CC.P.P., Chaps. 21, 22 and para.
30-26. See Clause 59 of the ICE Fifth Edition. See also further post, Chap. 8.
- See, e.g. the pre-1989 GC/Wks/1 government contract, Clauses 31(3) and 38(5), and see
also the ACA (Association of Consulting Architects) form of contract.
119
See, e.g. Bentley v. The State 41 N.W. 338 (1889), Wisconsin; Penn Bridge v. City of New
Orleans222F. 733 (1915), 5th Circuit, Court of Appeals; and U.S. v. Spearin 248 U.S. 132
(1918).
<JO Lonergan v. San Antonio Loan & Trust 104 S.W. 1061 (1917), Texas.
 PERFORMANCE [CHAP. 4
516
States, even where only additional expense or delay, rather than total im-
practicability or change of design, results. 91 Some of the United States
decisions even appear to override express contractual provisions or
disclaimers. 92
It is difficult to discern any coherent rationale for the United States
decisions, or which could avoid the serious budgetary consequences for
owners to which the speeches of Lord Cairns and Lord Hatherly in Thorn
drew attention.93 Moreover, the special erstwhile jurisdiction of the
United States Supreme Court on appeal from the United States Court of
Claims does not appear, historically, to have made for a cohesive body of
construction contract interpretation. Perhaps the best attempt to ration-
alise the United States federal decisions is to be found inl.D. Hedin Con-
struction v. United States. 94 In practice, Court of Claims decisions do not
appear to carry great weight in State jurisdictions, particularly in construc-
95
tion contracts where the owners are private persons orcorporations. The
United States position on owners' liability to contractors for the state of
the site and for the practicality of the AfE 's design, and a comparison with
other common law jurisdictions as at 1986, is conveniently summarised in
C.C.P.P."'
4-062 Some of the above cases are no doubt to be explained in the light of a
special doctrine evolved in the United States Court of Claims whereby the
United States government is held to warrant the practicability of its own
plans and specifications to tendering contractors. The United States cases
on this are examined in some detail in C.C.P.P., and have no counterpart
in English or Commonwealth law. 96 This particular United States rule is
effectively, it would seem, a producer-based doctrine of administrative
law and practice, and could not, it is submitted, be consensually justified
between ordinary contracting parties. This is one of the areas where there
has been substantial divergence between United States and English and
Commonwealth construction law, and on consensual and policy grounds
it is suggested that the English and Commonwealth view, and of those
State and other United States jurisdictions supporting it, are soundly
based, notwithstanding that, in the context of government procurement, a
~· See Christie v. U.S. 237 U.S. 234 (1915), but contrast the apparently entirely contrary
decision in Day v. U.S. 245 U.S. 159 (1917), and for a later case see Montrose Contracting
Company v. City of Westchester 80 F. (2d) 841 (1936), 2nd Circuit, Court of Appeals.
n See,e.g. Hollenbach v. U.S. 233 U.S.165 (1914); U.S. v.AtUlnticDredging253 U.S.1 (1928)
(appeal from U.S. Court of Claims); Maney v. City of Oklahoma 300 P. 642 (1931, Okla-
homa); Young & Fehlhaber Pile. Co. Inc. v. State of New York l'J7 Misc. 204 (1941); the
Montrose case, supra; and Fehlhaber Corporation v. U.S. 151 Fed. Supp. 817 (1957).
9) Quoted supra, paras. 4·046-4·048. · and ?e measured by the suitability of the work and materials for their
04 347 F. (2d) 235, at p. 241 (1965).
'I> For the practice of State courts in following Court of Claims cases in the absence of auth-
ority, see New Pueblo Construction v. State of Arizona 696 P. (2d) 185, at p. 191 (1985).
Given the mass of reported State case law, such authority is unlikely to be lacking,
however.
9-~· C.C.P.P., paras. 27-32 to 27-33, and see also C.C.P.P., paras. 8-56 to 8-60. See also the
special U.S. doctrine of disclosure by the State discussed ante, Chap. 1, p~i-·a. 1·157.
% See C.C.P.P., paras. 8-56 to 8-60.
SEcr. l] OBLIGATIONS OF THE CONTRACTOR 517
more producer-orientated interpretation may for policy reasons have
prove~ ac~p:a~le.to the United States Federal Government in its Court
of Claims JUnsd1ction.
(iv) Very recent cases in Canada
. The ~oregoing discussion in this Subsection may need reconsideration
in the hg~t of the two controversial decisions in Canada of Edgeworth
Constructzon Ltd. v. F Lea & Associates%a in the Supreme Court and
:1uto Concre~e Curb Ltd. v. South Nation River Conservation Autho;ity96b
in the Ontano Court of Appeal. These are illustrated and critically dis-
cussed ante, Chapter 1. %c
(2) Obligations as to Design and Quality of Materials and Work
So far, th: contractor's obligation to bring the work to completion has 4·063
been considered, and it has been seen that an owner does not in any way
war:rant the practicability, for purposes of construction, of his A!E's
des1~, and that the contractor's obligation to bring the works to com-
pletion by whatever means may be necessary will, in the absence of
ex~ress terms, be unaff~cted by t~e NE's production of the initial design.
It ts .now proposed to ~1scuss obligations which may continue after com-
plet1on, as well as dunng construction, in regard to the quality and per-
formance of the completed work done and materials supplied by the
contractor.
. ·In so far as there is a clear breach of an express term describing the work
t~ b~ done, no problem will arise (other than that created by the possible
b1nd1ng effect of a final certificate, or some other provision which ma
prev~nt .recovery by the owner) since the work will not comply with it!
descnption, and so be a breach of contract by the contractor for that rea-
son_ alone. The. present S~bsection is thus concerned with implied obli-
gations, or the mterpretatlon of express warranties, as to the quality and
:rformance of the work, and it is proposed to consider the subject under
. e~ heads, namely design, materials and workmanship. It will be seen
.that 1~ some senses these expressions may overlap, and not be mutually
exclusive.
. In a ~onstruc:ion context, 1:he essential element of the function of design 4·064
ts cho~ce, that is, the selection of the appropriate work processes and
matenals t.o meet the indicated or presumed requirements of the own
The due discharge of the design obligation, therefore, .will depend up::
required P_urpose once completed and in place. In more sophisticated con-
~racts, whichever party may be contractually responsible for the design,
96, [1993] 3 S.C.R. 206.
'161,(1992) 89 D.L.R. (4th) 393.
.\lo<.See paras. 1·296 and 1·306A.
 518 PERFORMANCE [CHAP. 4
these requirements can be expected to be covered by detailed descriptions
in the specifications and drawing, both in regard to materials and to work
processes, and it is self-evident that the work will have to comply exactly
with those descriptions if breach of contract is to be avoided.
On analysis, therefore, the design obligation becomes relevant in two
situations; first, in those cases where the work complies exactly in all
respects with the contract descriptions and has been carefully and skilfully
carried out using good materials, but is nevertheless unsuitable, for exam-
ple in regard to safety, durability, ease of maintenance or amenity or any
other indicated requirement, however idiosyncractic, of the owner; or,
secondly, in the perhaps surprising number of cases where close examin-
ation will show that the contract descriptions are silent, so that the choice
of suitable materials or working methods is effectively left to the con-
tractor. fu the context of this discussion "design" is wide enough to include
not merely structural calculations and the dimensions, shape and location
of the work shown on drawings or plans, but also the choice of particular
materials for particular functions and, similarly, the choice of particular
work processes, usually stipulated in specifications or similar documents.
4-065 Thus the workmanship obligation, as it is usually called, will in its pri-
mary sense mean care and skill in the physical execution of any specified
or described work processes. But it may also mean design in one of the
senses indicated above, as when a carpenter decides to use non-corrosive
rather than ordinary steel nails or screws in an exposed position or where
long life is required of his work, or a mortise and tenon rather than butt
joint, or where a plasterer is left to decide the number of coats needed on a
particular surface to give an even finish, or a tiler will lay tiles to unspeci-
fied falls to take storm water off a balcony, or a bricklayer chooses the
particular mix for his mortar, or the builder chooses the type or location of
reinforcement in a reinforced concrete lintel not otherwise described in
detail. Again, materials may be said to be of poor quality when what is
really involved, on analysis, is that they have been chosen for the wrong
purpose, as common bricks for facing bricks in an exposed situation, or
iron cramps for zinc. All these are, on close analysis, cases of design,
because they involve the element of freedom of choice as between differ-
ent materials, but are frequently not so referred to because the finer
details of construction, even in sophisticated contracts, and in less formal
contracts a great deal of more important design, is in practice left to the
"good building practice" of the tradesman or contractor concerned, for
which the word "workmanship" is commonly used by lawyers and indus-
try alike.
So, too, the obligation in regard to supply "good" materials may in
reality imply a design obligation, in the absence of express description, to
choose suitable materials, as in some of the examples already given above,
though the strict extent of the materials obligation will, in the absence of
reliance on the contractor, be the lesser one to supply mat~.tjals good of
their described kind and without defects. · 9
In this Subsection the word "design" is used in the sense of the suit-
ability for its intended purpose of the final permanent work, in so far as
SECT. 1] OBLIGATIONS OF THE CONTRACTOR 519
that may :esult fr?m the choices of those conceiving and planning the
work a1;Ld i~s co~stituent parts, whoever they may be.
Beanng m 1?1nd the possible overlapping areas of design responsibility
4-066
alrea~y ~ent.J.?ned, a contractor undertaking to do work and supply
matenals rmphedly undertakes:
(a) to do the ':ork undertaken with care and skill or, as sometimes
expressed, 1n a workmanlike manner
(b) to use mate~ials_ of good quality. In the case of materials described
expressly this will mean good of their expressed kind and free from
defec~s. (In th~ case of goods not described, or not described in
sufficient detrul, there will be reliance on the contractor to that
extent, and the warranty in (c) below will apply);
(c) that both the workmanship and materials will be reasonably fit for
the purpose for which they are required, unless the circumstances
of ~e ~n~ract ~~ such as to exclude any such obligation97 ( this
obhgationis add1t~onal to that i? (a) and (b), and will only become
relevant, for practical purposes m any dispute if the contractor has
fulfilled his obligations under (a) and (b)). '
The fi!~t two obligations ( a) and (b) correspond to the warranty of mer-
c?antabihty, and that under (c) to the warranty of suitability, under sec-
t10n 14 of,'.he Sal~ of Goods Act 1893. The obligation under (c) is here
called_ the design obhgation and extends, it is submitted, to all defects of
planning or conception of the building or project in question including as
sta!ed, the selection of all materials and work processes. The purpose for
~h1ch t~e wor~ or materials are required must, it is submitted, be con-
o!
sidered in the hght t~e reasonable life of the building or project, or of
the rele~ant part of 1t, 1f the· part can reasonably be expected to have a
shorter life than that of the main structure.
Th~ law w~s already clear that the obligations of a contractor in a con- 4-067
st~ct~on proJect (that is, a contract for work and materials) were to be
assnrulated as closely as possible to those of the seller under the law of sale
of goods,9~ when later codifying legislation in England supplemented the
1893 Act, m the case ofaale of goods by the Sale of Goods (Implied Terms)
Act 1973, itself _embodied m the still later codifying Sale of Goods Act
1979.. C?nstruction contracts, which will involve a "transfer of property"
(that is, in the materials and completed work) but are not contracts for sale
of goods, for th~se reasons fall within the defined ambit of the Supply of
Goods and Services Act 1982. That Act closely follows the wording of the
Sal~ ~f ~oods Act 1979, and so completes a formal statutory process of
ass~~hon o.f the two types of contract. Thus, the merchantability obli-
gation in relation to goods or materials "transferred" under the 1982 Act is
97
Myersv.BrentCross Garage [1934] 1 K.B. 46, at p.55 perduParqLJ · y: & .,
McManus Childs [1969] 1 A.C 454. ' · ·, oung ,nartenv.
s .Y.Aollung & Marten Ltd. v. McManus Childs [1969) 1 A.C. 454; Cehave N. V. v. Bremer [1975) 3
E.R. 739, at p. 756,per Roskill L.J.
 520 PERFORMANCE [CHAP. 4
defined by section 4(9) as being "as fit for the purpose or purposes for
which goods of that kind are commonly supplied as it is reasonable to
expect having regard to any description applied to them, the
price (if rel-
evant) and all other relevant circumstances". This latter definition was
originally formulated by the Sale of Goods Act 1973 as a re-statement of
sale of goods case law (and may, if anything, effect a very slight and prob-
ably unintended relaxation of the previously undefined "merchantability"
obligation); In the case of the higher suitability requirement, this is
defined by section 4(6) of the 1982 Act in identical terms to the 1979 Sale
of Goods Act, and again would appear to be concerned merely to codify
and restate the preceding law and cases under and since the 1893 Act,
except thilt it is expressly provided by the 1982 Act that there is to be no
suitability obligation if reliance by the tra_nsferee (owner) on the trans-
feror (contractor) is unreasonable. The particular purpose for which the
work or materials is required need not be communicated to the transferor
(contractor) if it is one of the usual purposes for which such work would
normally be required, again as under the pre-existing case law. Similarly,
the ordering of goods by their trade name will not, in appropriate circum-
stances, prevent the suitability obligation arising.
4·068 As a generalisation, the 1982 legislation is concerned to codify and re-
state, and not to alter or improve, the law, but does formally bring con-
tracts for work and materials under which property passes (for this pur-
pose construction contracts) into line with contracts for the sale of goods.
Such chinges from the preceding statutory wording in earlier Acts as are
to be found appear to be of minimal practical importance in the field of
construction contracts, and do not appear to affect the application of ear-
lier case law.
Reverting to the warranties as classified above, while in construction
contracts there may frequently be circumstances which will negative
reliance on the contractor, and so the suitability warranty (c) above, there
may also be circumstances which will negative the lesser "merchantabil-
ity" warranties in (a) and (b), but this will be exceptional. 99 These lesser
warranties will be satisfied if the defendant can show that a market exists
for the work or materials in the state in which they have been supplied
under the contract description in question. Thus under a contract require-
ment for "bricks", bricks of the lowest marketable quality which can be
sold for at least one purpose against that description (that is, fletton, or
perhaps common or stock bricks) will satisfy the merchantability require-
ment.1 If a higher quality, such as facing bricks or, higher still, engineering
bricks are required, they must be so described. In that event, the question
will be whether the bricks as supplied, with all defects known, would be
merchantable under that higher description. On the·other hand, if the pur-
99 Myers v. Brent Cross Service Company [1934] K.B. 46; Gloucestershire County Councilv.
Richardson {1961] 1 A.C. 480, illustrated infra, paras. 4·120 and 4·122. ~- :·'
1 Hardwick Game Farm v.SuffolkAgriculturaland Poultry Producers' Association {1969J 2
A.C. 31.
SEcr. l] OBLIGATIONS OF THE CONTRACTOR 521
pose for which the bricks are required is made known to the supplier or
contractor (as, for example, if he knows or ought to know of their particu-
lar intended location and use from the plans or specifications, or is told of
them), then under the suitability warranty (c) facing or engineering bricks
may well be required to meet his obligations, notwithstanding only a sim-
ple "bricks" description in _the contract.
The distinction between the "minimum" character of the first two war- 4·069
ranties (a) and (b), and the "higher" suitability warranty (c), can some-
times be a fine one.2 As will be seen, the distinction between the two
obligations appears to have been lost sight of in some of the leading cases,
but it remains, it is submitted, a vitally important one, and though it might
be thought that in practice the onus would be on the plaintiff in the con-
struction field to show circumstances of reliance on the contractor necess-
ary to support the higher suitability warranty, the case law, on the
contrary, places the onus on the defendant to show circumstances dispel-
ling the warranty, such as a real lack of reliance even where there is a
contractual obligation to carry out the work in accordance with a third
person's plans and specifications.
The cases illustrated in Subsections (2)(a), (b) and (c), infra, are almost
all concerned with this particular issue, since there are a variety of import-
antly differing circumstances in construction projects in which it can be at
least plausibly argued by a contractor that the reliance factor is absent, as,
for example, in the strongest case where an owner employs his own A/E
both to design and supervise the project, or the weaker case where an
owner, without employing an A/E to supervise, nevertheless supplies the
contractor with drawings or a specification obtained by the owner from
some other source3 or where the design emanates from a "sourced" or
nominated sub-contractor or supplier.4 In all these cases, the question will
be whether, on the facts, there are sufficient circumstances present to
negative the higher design or suitability obligation which will prima facie
be present in all contracts to supply goods and services in the course of
business, rather than the minimum ones of compliance with description
and merchantability.
There will also be the problem, in the same context, of the proper 4·070
interpretation and reconciliation of express performance or other obli-
gations in the contract, or of apparently exclusionary terms in the con-
tract, in the light of the implications otherwise to be derived from the
degree of reliance on the contractor indicated by the factual background
between the parties. 5
Apart from these situations, it has been seen that the higher implied
design or suitability obligation can also arise, notwithstanding compliance
~th such express descriptions of materials or workmanship as exist in the
2
It is perhaps most usefully discussed in the seminal judgment of Lord Reid in the Hardwick
Game Farm case, see supra.
1
See, e.g. the "duty to warn" cases infra, paras. 4·100 et seq.
4
See numerous examples illustrated under (a), (b) and (c).
5
See the cases illustrated infra, paras. 4· 111-4· 114.
 522 PERFORMANCE [CHAP. 4
contract, due to undescribed areas of choice within those descriptions. 6
Additionally, it is now clear that a practical near equivalent to the higher
suitability obligation may be achieved by the different route of an implied
obligation of the contractor, in appropriate circumstances, to warn the
owner (or his A/E if one is being employed) of inadequacies in the design
of which he should be aware. This has been independently attributed by
courts in a number of different jurisdictions, including the United States,
to breach of the implied workmanship obligation.7 This last obligation can
also arise from facts occurring after the contract has been entered into,
unlike the usual suitability obligation, and the measure of damage for this
reason may sometimes be different.8
4·071 The obligation to use materials of merchantable quality is absolute and
independent of fault. 9 Defects in a large number of the "materials" used
by contractors may in fact be due to the careless work of a sub-contractor,
but of one working off the site rather than upon it, for example, in the
manufacture of items such as windows, doors and joinery, or of pre-cast
concrete units, and even bricks; so to that extent the contractor's implied
obligation in this case is, on close analysis, only a warranty that someone
else's work, whether or not in contractual relations with him, has also been
carefully and skilfully done. 10 But in the last resort, the warranty is iri.deed
absolute in every sense, as in the case of a material which contains a latent
defect which no-one could have detected or avoided before making use of
it, whether for sub-manufacturing purposes or in the building itself. It fol-
lows also from what has been said that it will not avail the contractor that
he obtained the material from a reputable source, that its production was
outside his own expertise,' or that he took all possible steps to test and
examine it. 11
Until comparatively recently, it was an open question whether the suit-
ability liability under (c) was absolute or qualified by a concept of care and
skill. It is now clear, contrary to what was suggested in the ninth edition of
this work, that this obligation is, in the light of the reasoning of the House
of Lords in Young & Marten Ltd. v. McManus Childs, 12 absolute also. 13
This is of crucial importance in design-and-build or tum~ey contracts. 14
4-072 The extremely important English cases of Hancock and Young & Mar-
ten have resolved many difficulties, but for the purpose of building con-
tracts the vital problem, as previously stated, which still requires the most
~ See, e.g. Cammell Laird v. Manganese Bronze & Brass [1934] A.C. 402, illustrated infra,
para. 4·084.
1
See infra, Subsection (2)(a)(ii).
~ Ibid.
• Hancockv.Brazier(Anerley) Ltd. [1966} 1 W.L.R.1317,perDiplockL.J.; Young&Marten
v. McManus Childs Ltd. [1969] 1 A.C. 454.
"' Compare the facts in the case of Gloucestershire County Council v. Richardson [1969] 1
A.C. 480, see infra, para. 4·122.
"See Hancock's case and the Young & Marten case, infra, paras. 4·120 and 4·121.
12 [1969] 1 A.C. 454. See also, per Diplock L.J. in Hancock's case, infra.
nseeinfra,paras.4.106-4·107. ,··,
ii For these contracts, see ante, Chap. 3, Section 1(4). See alsoC.C.P.P., paras.-,23-05 to23-ll,
24-04 to 24-14, and Chap. 25.
SEcr. l] OBLIGATIONS OF THE CONTRACTOR 523
careful attention in every case, is to define the cicumstances which are
sufficient to exclude the design/suitability warranty in (c), or the work and
materials warranties in (a) and· (b). The Young & Marten case, which
related to a possible exclusion of the materials obligation (b), shows that,
in the case of that obligation (and, therefore it is submitted, the workman-
ship obligation in (a) as well), even if the owner relies exclusively on his
own judgment in selecting a material or source of supply by its trade or
brand description, that by itself will not prevent that obligation from being
implied. Something more will be needed to do so in the case of these two
"minimum" obligations.
On the other hand, it is reasonably clear that, if the owner relies upon
his architect or engineer for the design of the project, then, in a case where
the defect in the work complained of is due to compliance with the archi-
tect's or engineer's specific design requirements, and the owner cannot be
said to be relying on the contractor's skill and judgment, the suitability
warranty in (c) above will be excluded (subject only to a possible duty of
the contractor to warn the owner or A!E of a design deficiency of which he
knows or ought to know). 15 But, as already stated, the architect's or engin-
eer's design requirements, even in sophisticated contracts, may be silent
on a large number of detailed matters, and, if so, there will usually be no
circumstances requiring the exclusion of the suitability warranty if the
complaint relates to such a matter. 16-17
On the other hand, in turnkey and design-and-build contracts, where
the work is designed by the contractor, 18 it is submitted that, notwithstand-
ing that the owner may employ architects or engineers to check and make
recommendations on the contractor's designs, and whatever nomencla-
ture may be used in the contracts to describe the status or function of such
architects or engineers, the realities of the relationship and the practical
impossibility of the owner's advisers making a thorough check of a con-
tractor's designs mean that in such cases the implied terms enumerated
above will all obtain without exclusion or modification. 19
One area of particular difficulty which has troubled the courts arises 4·073
where the owner has nominated or selected a sub-contractor or supplier
for work or materials, often but by no means always of a specialist charac-
ter, usually under the well-known provisions for nomination of sub-con-
tractors or suppliers to be found in building and engineering contracts. Do
such nominations show that the owner is not relying on the skill and judg-
ment of the main contractor, and so avoid the suitability warranty (c), or
are they inconsistent with the lesser work and materials warranties ( a) and
(b )? It is submitted that, in spite of difficulties created by the reasoning
15 See infra, paras. 4· 100-4· 104.
See, e.g. Cammell Laird v. Manganese Bronze and Brass [1934) A.C. 402 illustrated infra,
ir,..11
para. 4·084.
1~ See ante, Chap. 3, Section 1(4). See also C.C.P.P., paras. 23-05 to 23-11, 24-04 to 24-14,
24-18 and Chap. 25.
19 Butsee,fora difficult early borderline case, Cable (1956) Ltd. v. Hutcherson Ltd. (1969) 43
A.L.J.R. 321, Australia, infra, para. 4·090.
 ~-·
524 PERFORMANCE [CHAP. 4
in two of the judgments in the House of Lords in the case of Gloucester-
shire County Council v. Richardson, the mere fact of selection of a source
of work or materials, however specialist in character, either in the original
contract documents 20 or by virtue of the exercise of a power of nomi-
nation are not circumstances sufficient to exclude the warranties in (a) or
(b) (in'the case of nominations this is particularly indicated by the express
provisions in most nomination clauses stating that the nominees are
declared to be sub-contractors or suppliers of the contractor).21 On the
other hand, if the design element of the sub-contract work is within the
A/E's normal area of expertise,22 and there is no indication of reliance by
the A/Eon the sub-contractor, then, if the matter complained of is due to
the specific requirements of the sub-contract and the inherent unsuit-
ability of the product or work process involved, or of a part of the design
specifically provided for in the sub-contract drawings or specification, the
suitability warranty in (c) may be excluded; aliter if, as in the case of the
main contractor's own work, the sub-contract leaves some matter gener-
ally undescribed and therefore to the skill and judgment of the sub-
contractor, and hence of the main contractor. It will also be otherwise, it is
submitted, if the sub-contract work or materials are obviously outside the
A/E's expertise so that reliance on the nominated sub-contractor can be
inferred; a fortiori, in cases where an express design or performance obli-
23
gation is present in the sub-contract itself or a main contract obligation.
4·074 The dividing line in such cases may not always be easy to establish, but
the principle is, it is submitted, clear. Thus if, for example, the nominated
sub-contractor for the reinforced concrete frame of a building were to
choose a mix of concrete with inadequate compressive strength for the
loads to be expected, but the sub-contract specification was silent on the
composition of the mix, the implication of a term of suitability would not
be avoided by the fact (a) that the architect was responsible for the overall
design of the project or (b) that the work was being carried out by a nomi-
nated sub-contractor. If the mix was expressly stated in the sub-contract
specification, there would be no such implication, since this would be in
the A/E's own area of expertise and delegation only, but not reliance,
could be inferred.
On the other hand, the obvious specialist character of sub-contract
work will not prevent an implied term of suitability binding the main con-
tractor, notwithstanding that he has not the skill himself, since by placing
the order with a nominated specialist on terms that the specialist is to
become his own sub-contractor, the contractor thereby himself adopts
and assumes, it is submitted, the same implied obligations in the main con-
W/bid.
21See the discerning judgment of Lord Pearson in Gloucestershire County Council v.
Richardson [1969] 1 A.C. 480, at p. 512.
22See the case of Moreskv. Hicks [1966] 2 Lloyd's Rep. 338,ante, Chap. 2, partls, 2· 116-2·118.
!;
n See Independent Broadcasting Autlwrity v. EM/ (1980) 14 BLR but see t~elrish Court of
Appeal case of Norta v. Sisk [1978] I.R. 114; 14 BLR49, both illustrated infra.
SEcr. l] OBLIGATIONS OF THE CONTRACTOR 525
tract as the specialist owes in the sub-contract, arising from the reliance of
~he o~ner and of himself on the sub-contractor. 24 This will be specially so
1f, as 1s often the case, a sub-contract specification in fact emanates from
the specialist and not from the architect or engineer.25 It will be seen, how-
ever, that the House of Lords has held that a nomination of a supplier on
terms expressly limiting the supplier's liability, and conferring no express
?ght_ to reject the nomination in the main contract, may displace the
rmphed terms, but this was a very special case.26
In the light of the above discussion it is now proposed to examine the
cases under the three heads referred to, but in reverse order.
(a) Design and suitability
(i) Where there is reliance on the contractor
~s will be appreciated from the foregoing discussion, the cases on this 4·075
subject are, in the majority of instances, apart from the nomination cases
lik~ly to arise where an A/E is not engaged by the owner or, if he is, is not
relied on as the source of the design. 27 Apart from the relatively new devel-
opment ~f the "design-and-build" or "turnkey" contract, the principal
class of widely used contracts in modern times which reached the courts of
En~land and the ~ommonwealth for consideration of their design obli-
gations, even earlier than turnkey and design-and-build, arose from the
common_practice of private developers or developer/builders in selling to
prospective purch~sers, where the design was effectively provided by the
contractor/developer and not by the owner/purchaser, and the. house was
still to be erected or was in the course of erection at the time of the sale.
The full implications of the contractor's design obligations in construction
contracts, therefore, originally evolved, whe'rever the rule of caveat emp-
tor in the case of sales of already completed houses could be avoided by
the courts on the facts, from cases where the subject-matter was almost
invariably a dwelling-house, or from earlier nineteenth century cases in
the manufacturing field. Making allowance for the special situation of the
contract before him (namely the provision of the design by a builder
developer), therefore, the following statement of Lord Denning M.R.
may be taken as authoritative and of general application:
"It is clear from Lawrence v. Cassell and Miller v. Cannon Hill Estates that
where a purchaser buys a house from a builder who contracts to build it there
24
Compare Laminated Structures v. Eastern Woodworkers (1962) 32 D.L.R. (2d) 1, but see
the No~ta case, supra. See also the IBA, Viking Grain Storage, and Basildon cases illus-
trated mfra, paras. 4·094, 4·096 and 4·097.
D There are undoubtedly inconsistent cases, however.
; Gloucestershire Coun;ty Council v. Richardson [1969J 1 A.C. 480, infra, para. 4-122.
Or cases where, despite !he A/E's prese~ce and overall control over the design, it has not
co~desce~ded to deal with some matter m detail, which has been to that extent left to the
skill and Judgment of the contractor or sub-contractor.
 526 PERFORMANCE [CHAP.4
is a threefold implication: that the builder will do the work in a good and
workmanlike manner, that he will supply good and proper materials, and that
the house will be reasonably fit for human habitation. " 28
Further, the following statement of du Parcq L.J. in a car repair ca~e was
later accepted as correct by all the judges in the House of Lords 1n the
Young & Marten case:
"A person contracting to do work and su~ply materials warrants that the
materials which he uses will be of good quality and reasonably fit for the pur~
pose for which he is using them, unless the circumstances of the contract are
such as to exclude any such warranty". 29
4·076 As already stated, a liability for design on the part of the contractor may
arise, notwithstanding the presence of an architect or engineer in charge
of the design of the work, by reason of his implied obligation to carry out
the work with sound workmanship and materials. This means that, wher-
ever the contract is silent on these matters (usually, of course, in the rela-
tively small and less important processes of building), a design
responsibility of the contractor will arise to choose suitable materials or
working methods. Thus, if a contract, while requiring reinforced con~rete,
does not specify the mix of concrete to be used, the contractor ':111 be
expected to select and provide a mix suitable for the intended func~on of
the concrete in question. If the reinforcement is not, or not sufficiently,
detailed, adequate reinforcement must be provided. Again, if the carpen-
try details of a roof are not shown, the design, for instance, of the roof
trusses, or the methods of nailing, must be reasonably skilful. However,
although the more important matters of design and selection of mater.ials
are likely to be expressly stipulated for in the contract documents, particu-
larly in more sophisticated contracts, the effect of the warranty is th~t the
builder who carries out the described work with the described qualtty of
materials and workmanship warrants, to the extent that he and not some
agent of the owner has provided a part of the design, or has made a choice,
that the result will itself prove satisfactory.
The limited effect of the Supply of Goods and Services Act 1982 has
been discussed and explained supra, and in particular the continuing rel-
evance of the earlier case law regulating the quality and suitability of work
and materials supplied by contractors and suppliers in construction
projects.30
4.077 In one of the earliest cases relating to the design obligations of the con-
tractor in a contract for work and materials, and one still frequently cited
at the present day, it has been said:
"Where a person is employed in a work of skill the employer bu:Ys. both his
labour and his judgment; he ought not to undertake the work tf 1t cannot
ia Hancock v. Brazier (Anerley) Ltd. [1966) l W.L.R. 1317; see infra.
29 Myers v. Brent Cross Service Co. [1934} 1 K.B. 46, at p. 55.
30 See, for the 1982 legislation, supra, paras. 4·067---4·068.
SECT. 1] OBLIGATIONS OF THE CONTRACTOR 527
succeed and he should know whether it will or not; of course it is otherwise if
the party employi1,1.g him choose to supersede the workman's judgment by his
own".31 ,
The following Australian dictum similarly states the principle:
"Unlike a warranty of good ·workmanship, a warranty that the work will
answer the purpose for which itis intended is not implied in every contract for
work. The essential element for the implication of such a term is that the
employer should be relying, to the knowledge of the contractor, upon the
contractor's skill and judgment and not upon his own or those of his agents" .32
It follows that, for any such term to be implied in a building or engineer- 4·078
ing contract, the owner must be relying, to the actual or presumed know-
ledge of the contractor, upon the latter's skill and judgment and not upon
his own or those of his agent. This reliance need not, however, be exclus-
ive, provided it is substantial.33 This latter proposition can be most import-
ant in building contracts, because it not infrequently happens that the
owner or architect consults a contractor or specialist sub-contractor
before drawing up some part of the specification or design for incorpor-
ation in the documents, and in many cases may be wholly or almost wholly
relying on the contractor or sub-contractor when doing so.34 Whether or
not this will avail the owner as against the main contractor, if he has relied
on a specialist sub-contractor in drawing up the sub-contract specifi-
cations, or has had it prepared by the specialist sub-contractor himself
(both of which occur frequently in practice) will depend on the exact facts;
and has given rise to conflicting decisions.
As already stated, in the case of dwelling-houses sold to purchasers
while in the course of or prior to erection, the courts have applied the
concept of fitness for its purpose to a dwelling-house, and have emerged
with a ready-made obligation to provide a house "fit for human habita-
tion".35 As legal shorthand this may be perfectly satisfactory, but it may
tend to over-simplify the exact nature of the term to be implied in every
case, and may not always be a reliable guide as to when the term should be
implied. Thus, errors of design or in choice of materials may produce
unsightly or unwanted defects or results which may not affect the fitness of
the house for habitation, viewed strictly, although they may affect its value
or amenities. There is no reason why such defects should be outside the
responsibility of the seller or the builder. 36
JI Per Bayley J. in Duncan v. Blundell (1820) 3 Stark. 6.
n Corben v. Hayes, unreported April 27, 1964, Full Court of New South Wales, cited by
Sugerman J.A. in McKone v.lohnson [1966] 2 N.S.W.R. 471, illustrated infra.
JJ See Cammell Laird Ltd. v. Manganese, Bronze & Brass Co. Ltd. [1934} A.C.402 and Alt.-
Gen. of Canada v. Laminated Structures (1961) 28 D.L.R. (2d) 92, ihfra.
J4 See, for a discussion of the potential uncertainties and abuses of this practice, ante, Chap. 2,
paras. 2·035-2·036 and 2· 116-2· 118.
J5 Miller v. Cannon Hill Estates [1931] 2 K.B. 113; Perry v. Sharon Development Co. Ltd.
[1937] 4 All E.R. 390; Jennings v. Tavener [1955] 1 W.L.R. 932.
36
See per Diplock L.J. in Hancock v. Brazier (Anerley) Ltd., infra, para. 4·120:
 528 PERFORMANCE [CHAP. 4
4-079 In the case of much specialist work, often carried out by nominated
sub-contractors, the cases show, it is submitted, that there is no reason
why, depending on the facts, the specialist should not be presumed to war-
rant the suitability of his product to the owner and in tum to the main
contractor, despite· the presence of an architect or engineer of the owner
while the design is discussed and prepared, and despite the approval of
plans or details by the adviser concerned, in those frequent cases where
only the specialist is likely to have the knowledge or experience to be able
to know with exactitude its suitability for the intended requirements of the
owner. This must particularly be the case where manufactured goods are
supplied by "sourced" or nominated suppliers for incorporation in the
works, such as, for instance, the pipes, valves or specials required for a
waterworks contract, or the elevators to be used in a building. The quest-
ion is whether the owner is to lose all rights if the machinery or goods in
question are unsuitable, because of the accident of the contractual inter-
position of the main contractor, and of the owner's failure to obtain a
separate direct warranty from the sub-contractors outside the main con-
struction contract itself. There are many less specialist cases, such as roof-
ing work and structural steel where a design responsibility by the
sub-contractor ( and hence of the main contractor under the terms of most
modern main contracts) may need to be implied to give the whole arrange-
ment between the parties business efficacy. 37 So too, cases where, for ex-
ample, specialist heating contractors are engaged without a heating
consultant being called in to advise the owner or his NE. The answer to
this question may in some cases turn at least partly .upon the effect to be
given to the express nomination provisions, when they state that the
specialist concerned is to be, or deemed to be, a sub-contractor of the main
contractor. Thus of nomination provisions identical with the 1963 RIBA
forms (which distinguish between nominated sub-contractors and nomi-
nated suppliers) it has been said:
"If that form of words used in clause 21 has the effect (as I think it must) of
imposing on the contractor responsibility for the quality of work done by
nominated sub-contractors, the very similar form of words used in Clause 22
would naturally have the similar effect of imposing on the contractor
responsibility for the quality of materials supplied by nominated suppliers". 38
4·080 There are many possible situations in the modern building and engin-
eering industries, therefore, where a design responsibility can be implied
on the part of the person carrying out the work. But every case will depend
upon its special facts. As a broad generalisation, if plans and specifications
are supplied to a builder to work to, a fortiori if the building owner
employs an NE for this purpose, the contractor will not normally have to
do more than carry out the work according to the plans and specification in
-17Independent Broadcasting Authority v. EM/ illustrated infra, but see also the Norta case,
infra. See also the further discussion, post, Chap. 13, Section 2(2). ~~:'.
~K Per Lord Pearson in Gloucestershire County Council v. Richardson [1969] f A.C. 480, at p.
512.
SECT.1] OBLIGATIONS OF THE CONTRACTOR 529
! a workmanlike manner and using ~roper materials, though he may well be
lI f~ly aware of the purpose for which the work is required, and the owner
will be unable to complain if the unsuitability of the final result is due
solely to ':'act compliance with that design, subject, in cases of very obvious
prospective unsuitability, to a duty of the contractor to warn the owner or
his AJE,39
!I In earlier times Lord &her said in Hallv. Burke4o:
:There were two well-known ~nds of co~tract-~st, a customer might ask a
anufact~rer to make a machI~e according to a given plan, or according to a
I plan supplied by th_e custome7; In that case the manufacturer would only have
to make the machine ac~ord1ng to the plan, and in a workmanlike manner.
! Sec~ndly, a customer might ask the manufacturer to make a machine for a
I!' pamcularp~ose, not supplying any plan, but leaving it to him to make it for
that purpose; In that case, unless the contrary was expressly stated in the
contract, the manufacturer would have to make a machine fit for that pur-
~
pose. There. ~ight be a third kind of contract, where both parties said that
they would Jointly endeavour to make a machine that would do its business
p.,, when there would be no warranty that it would effect its purpose".41 '
This dictu~ whil~ of ~onsidera~le ~~~ue, inevitably could not envisage
the m:my possible situations and hab1lities of parties under modern con-
structio~ contracts where many specialised techniques .or products are
necessanly _bey~nd the technical capacities of the owner's advisers, and
~h:re the situation may further be :omplicated by nomination or "sourc-
ing procedures, and also where main contractor's skills and expertise can
be very great.
Again, as ~ broad generalis~tion, if the contractor himself designs or 4·081
s~lects matenals for the work, either_bec_ause he provides the whole design
himself or because a part of the design 1s left to his judgment and choice
the~e will be an implied term that the work or materials will be suitable fo;
their purpo~e. There have, however, been some aberrant decisions in the
courts_, a~d ~n ~he case, doubted and criticised below and not followed in
other JUnsdicti~ns, of Lynch v. Thorne, the Court of Appeal appeared to
hold that, _even 1n a case where the specification and plans were supplied
by the b~Ilder, the_re w~s no room for any implication of fitness for its
purpose, if the specification was clear and explicit as to the pai'ticular work
the subject of complaint, and the work had been carried out in accordance
with the specification. On the other hand, the "duty to warn" cases rep-
resent a new and, it is submitted, well-founded development in this field of
the law.42
J
9
See the important Canadian case of Brunswick Construction v. Nowlan (1975) 49 DLR
I
(3d) 93, and the other cases illustrated infra, paras. 4·100-4·104. · · ·
40
(1886) 3 T.L.R.165. See also,per Lord Wright in Cammell Laird Ltd. v. Manganese Bronze
& B;ass Ltd. {~934) 50 T.L.R. 350, at p. 357, and.per Lord Fraser in Independent Broad-
casting Authority v. EM! (1980) 14 BLR 1, at pp. 45-46.
41
See, for a startlingly similar situation, perhaps, the Cable (1956) Ltd. case illustrated · ,,
para. 4·090. · in1ra,
4
i See infra, paras. 4-100-4· 104.
 530 PERFORMANCE [CHAP.4
Between the two extremes there exists, therefore, a wide range of possi-
bilities of divided or shared responsibility. The cases below are concerned
with what appear to be design or suitability failures. A~ it happen_s, th:ee
vitally important modern cases on the possible exclusion of the rmphed
terms, and a number of older ones, have involved questions of ~e lower
merchantability obligation of good quality in respect of m~tenals, and
these cases, under paragraph (b) below,43 may be of considerable rel-
evance in considering questions of design and suitability, as are the work-
manship and "duty to warn" cases under paragraphs (c)43a and (a)(ii).43b
Moreover it should be remembered that some cases can be equally well
described 'as either materials or workmanship cases when what is really
involved is the design element of choice.
ILLUSTRATIONS
(1) Toe plaintiff undertook to erect a stove"in a shop and laid a tube un_der
4-082
the floor for the purpose of carrying off the smoke. The scheme failed
entirely, and the stove could not be used. Held, the plaintiff could not recover:
Duncan v. Blundell (1820). 44
(2) The plaintiff employed the defendant as a workman to put up a new
kitchen range with an old boiler behind. Hot water ~ould not be got from the
boiler the flues not being efficient. The defendant said the sp~ce was not large
enough to make the flues effective. The plaintiff replied that 1f he had known
this he would not have had the work done at all. Held, by Erle C.J., that the
defendant was under a duty to advise the plaintiff th~t t~e work_ could not_ be
done, and the plaintiff was entitled to recover ~om him in an action for ~~~ng
up the range in an improper and unworkmanhke manner. Per Erle C.J.. If .a
plaintiff had been told that it was impossible to do it, he might not have had 1t
done, and if he had, he could not have sustained the action. But non co~t~~
that he knew it, whereas the defendant must be taken to have known it. ·
Pearce v. Tucker (1862). 45 "
[Note: This may be regarded as an early ~orerunner of the modern duty to
warn" cases, illustrated infra, paragraph (n).]
4-083 (3) The plaintiffs contracted w.ith the ~efen~ants to c~nstruct a w~t~rworks
for a lump sum in accordance wit~ spec1ficat1_ons and bills of qua~tit1e~;.The
water was to be raised by a windmdl, as to which the contract provided. The
contractors will be required to obtain the windmill tower and l;'ump fro~
Messrs. x, windmill engineers, for which a sum of £127 has been included in
the quantities. This sum does not inc!ude profit to the contractors, and they
must add to it any charges they may think proper. They m0:st be care~ullyfixed
and their continuous satisfactory working during the p~nod of 1!1amtena!1ce
must be guaranteed by the contrac.tors": Item ~6 ~~the bd!s conta1n~d ~ pr!me
cost sum of £127 lOs. for a (described 1n detatl) Canadian Impenal ~1nd-
mill. The windmill supplied proved useless for_its_purpo~e the mome~t 1t was
installed, and the defendants called on the pla!ntlffs _dun~g construct10!1 ~nd
before work was completed to supply an efficient w1ndmtll b~t the plai~t~ffs
refused to do so and the defendants thereupon gave them notice determ1n1ng
O See infra, paras. 4·117-4·118. <J, See paras. 4· 124-4·125. Ob See paras.. 4·100 et seq.
·,>
« 3 Stark. 6.
4s 3 F. & F. 136.
SECT.1] 0BLIGATIO NS OF THE CONTRACTOR 531
the contract, and completed themselves using an entirely different type of
windmill. The plaintiffs sued the defendants for the work done and materials
supplied. Held, by Lawrance J ., that since the defendants had insisted upon a
specified windmill being supplied by a specified firm, the plaintiffs were not
responsible for the defects which made it inefficient and were entitled to
recover on a quantum meruit. Per Lawrance J .: "Was the plaintiffs' contract to
make the mill answer its purpose; or was it a contract to do the work in accord-
ance with the specification and plans? ... It was no part of their contract to
guarantee in any way that it would be efficient". Held, also, that the mainten-
ance clause never applied, since the maintenance period had not started, but
even if this were not so, it would not apply if the mill was incapable of doing its
work properly: Bowers Bros. v. Chapel-en-le-Frith Rural District Council
(1911)."
[Note: Due to some misunderstanding, a new trial was subsequently
ordered by the Court of Appeal, however. The case may also require recon-
sideration in the light of the later cases on nominated sub-contractors: see
infra, paras. 4·093-4·098.J
(4) The specification of a contract required all bricks used to be sound, 4·084
hard, square, well-burnt bricks free from lime or other impurities or other
extraneous matter, fine cracks or other defects, and from an approved yard. It
was also provided that the whole of the work was to be done in a thoroughly
workmanlike manner with the best materials. Toe architect ordered certain
named stock bricks to be usedforunderground manholes, and approved sam-
ples of the bricks. Bricks equal to the sample were used, but owing to under-
ground water and the inherent nature of the bricks, the manholes were not
watertight and were condemned by the engineer. Held, by Phillimore J., as
the bricks confonned to the specification, no complaint could be made against
the contractor who was entitled to be paid for his work: Adcock's Trustee v.
Bridge Rural District Council (1911). 47
[Note: This is a case of the merchantability warranty, (b) above, being satis-
fied, and no higher suitability obligation being owed by the contractor.]
(5) Specialist manufacturers of ships' propellers undertook to make them
in accordance with drawings of the shipbuilder for use in two particular ships.
The drawings specified the thicknesses of the blades along their medial lines,
but as to the rest of the dimensions provided merely that the edges "were to be
brought up to fine lines". In one of the two ships, the propeller, though it
complied with the dimensions shown on the drawings within the permitted
tolerances, made a noise when in use which resulted in the ship failing to
receive the required Lloyd's classification. Held, by the House of Lords, that
on the facts the shipbuilders relied on the manufacturers' skill and judgment
in relation to the final finishing and shaping of the propellers; that the source
of the trouble lay in the region of the matters left to the manufacturers' skill
and judgment, and that there was, therefore, a breach of the implied condition
of reasonable fitness for its purpose under section 14 of the Sale of Goods Act
1893: Cammell Laird v. Manganese, Bronze & Brass Ltd. (1934). 48
[Note: This is a case of the contract being silent and of the higher suitability
warranty overriding the lesser workmanship warranty, (a), although it will be
seen the dividing line is a fine one.]
(6) A builder prepared plans and a specification for a house in New Zea- 4-085
land to be built on known doubtful ground, on land belonging to the owner,
6
' 9 L.G.R. 339, at p. 663; 75 J.P. 122, at p. 321.
47
75 J.P. 241 Cf. C.C.H. v. Mollenhauer (1974) 51 D.L.R. (3d) 638, Sup. Ct., Canada.
4
s [1934] A.C. 402.
 532 PERFORMANCE
using a concrete raft. No architect was employed by the owner. After the
[CHAP. 4
house had been built and occupied, the raft cracked, and th~ ?nly re?1edy was
1
I
to use a pier-and-beam system costing more than the onginal pnce of the
house The jury found that the owner had not undertaken to be~r the cost. of
move~ent of the ground, although that possibility had been d1sc~ssed wit~
the contractor. Held, by Stanton J., following Miller v. Cannon Hill Estates+
and Lawrence v. Cassezso that there was an implied warranty t~at the house
should be reasonably fit for the purpose for which it was requ1red, a~1d the
builder was liable for the full cost of the work: C,oo~'! !<owe
v. (195~).,,
[Note: This is an early example of a "turnkey'. or design-and-build con-
tract, although not, of course, expressly so descnbed.]
4-086 (7) A building owner was inform~d by the builde~ that the specified r~,ofin~
would not be obtainable for some time, and the builder recommended C?r
nish Tiles", a type of concrete tile. The owner told him !O_ "go ahead w!th
Cornish tiles". Held, by the Queensland Full Court, followmg Cammell Latrd
v.Manganese,Bronze &Brass Co. Ltd.52 and ~.H. Myers & Co.~· Brent Cross
Service Co.,~ that there was an implied cond1t1on as to the quality ~nd fitness
of the roofing and since the evidence showed that the owner rehed on the
builder's skill ;nd judgment, it was immaterial that the goods were ordered by
54
their trade name: Martin v. McNamara (1951).
(8) A car owner took his car to motor repair~rs for repairs ~o ~is brakes. He
suggested that the relining of the drums, which was a spec1ahst part of the
work which he knew was not undertaken by t~e repaire~s themselve~, should
be done by a named firm, from wh.om the .repauers obtrun~d a quotation. Th~
owner and the repairers thought 1t too high, and the. repau~rs sugge~ted an
other firm who normally did work for them. This .firms q°:otat1on was
accepted but the type of liner which was fitted was not, 1n fact, s1..utable for the
car in qu;stion, and, as a result, the owner had an accident. Held, by Sellers J.,
following G.H. Myersv. Brent Cross Service Co. 55 tha! an ~bso.lute warranty of
fitness for the intended purpose of the work can ~e nnph~d 1n a .contract for
work done and materials supplied, if the work 1s of a kind which the con-
tractor holds himself out to perform either by himself or his. sub-contractors.
The contractor is liable for defective work on the part of his sub-cont~actor
even if the customer consents to the work bei1?-g do~e by that part!cular
sub-contractor, unless the customer, without plactngrehance on the skill and
judgment of the repairer, selects a particular sub-con:!~ctor by whom the
work is to be done: Stewart v. Reavell's Garage (1952).
[Note: The language and reasoning of this ca~e should 1;1ot be treated ~s
necessarily suggesting that a main contractor wtll n~t ~e liable for a no~-
nated sub-contractor's lack of skill. This was not a budding case. Most b01ld-
ing and engineering contracts provide that nominated sub-c~ntractors are
"d ed to be" or "declared to be" sub-contractors of the main contractor,
an~e;ve a main contractor the right to object to the a.ppointment ?f a s1;1b-
contractor on any reasonable ground. Sellers J. was 1n fact t~e d1s~enttng
judge in the Court of Appeal in Gloucestershire County Council v. Richard-
49 [1931] 2 K.B.113. . · )
50 [1930] 2 K.B. 83. (These were early cases of sale of houses m the course of erection.
51 [1950] N.Z. 410, New Zealand.
52 See supra.
si [1934} 1 K.B. 46, illustrated infra, para. 4·120.
54 [1951] Q.S.R. 225, Queensland.
s.s [1934] 1 K.B. 46, illustrated infra, para. 4· 120.
sf>.57 [1952] 2 Q.B. 545.
SEcr. l] OBLIGATIONS OF THE CONTRACTOR
son, and there considered a main contractor liable for a nominated supplier's
bad workmanship notwithstanding the absence of any express right of objec-
533
tion. It is submitted that the main contractor's responsibility for such work
should, under the "chain of liability" principle subsequently enunciated in the
Young & Marten case, illustrated infra, as well as a matter of business efficacy,
be identical with that for his own work.]
·(9) A house was purchased from a builder when certain matters still needed 4-087
to be attended to, but these were all later completed satisfactorily. The agree-
ment of sale contained the words "the purchaser acknowledges that he has
inspected the property and that he purchases the same solely in reliance on his
own judgment and not on any representation or warranty made by the ven-
dor". Held, by the New Zealand Court of Appeal, (i) that the implied term
was twofold, namely (a) that the work remaining to be performed would be
carried out in a proper and workmanlike manner and with proper materials
(if no materials were specified) and (b) that the dwelling-house, when com-
pleted, must, as a whole, be fit for human habitation; but (ii) that the clause
quoted was sufficient to exclude any implied tenn: McKeyv. Rorison (1953). 58
(lO)A house was sold which was still not complete. The house was built in
close proximity to an elm tree, the roots of which removed moisture from the
subsoil, causing subsidence which subsequently damaged the foundations
and structure of the house. Held, by Jones J ., following Miller v. Cannon Hill
Estates,59 that the vendor was liable: Jennings v. Tavener (1955).60
(11) A builder sold a house in the course of erection, undertaking to com- 4-088
plete it in accordance with plans and specifications annexed to the agreement
of sale. After the purchaser had taken possession, it appeared that a specifed
nine-inch brick wall would not keep out driving rain, and the evidence was
that a wall of this thickness in that position would be unlikely to keep out the
weather. The County Court judge found as a fact that the purchaser had
throughout relied on the builder's skill and judgment, and found for the pur-
chaser. Held, by the Court of Appeal, the express term of the contract speci-
fying the type of wall was inconsistent with the condition usually to be implied
of fitness for human habitation, and as the defendant had exactly complied
with the specification using sound materials and good workmanship, he was
not liable: Lynch v. Thorne (1956). 61
[Note: It is submitted that this decision of the Court of Appeal cannot, with
the greatest respect, be right. Its effect is to avoid the responsibility of the
builder, provided he takes steps to see that the proposed work is accurately
described in sufficient detail in the specification or drawings he prepares or
puts forward. Moreover, it is hard to see, by analogy with contracts for the sale
of goods, why a description of what an expert might know to be defective or
unsuitable should remove liability in a situation in which, by definition, the
buyer or owner is relying on the seller's or builder's skill and judgment. Is a
chemist, asked to make up a prescription for a particular complaint, to escape
liability if he provides a prescription useless for this purpose but affixes a label
to the bottle accurately describing the ingredients? Nor, it is suggested, is an
implied term that a nine-inch brick wall will be fit for habitation inconsistent
with the express obligation to build a nine-inch brick wall. The Court of
Appeal appears to have disregarded the provenance of the specification
1s [1953] N.Z.L.R. 498. See also Kent v. Saltdean Estate Co. (1964) 114 L.J. 555, illustrated
post, Chap. 5, for another case where the express terms prevailed over the implied terms in
the case of a house in the course of erection.
~ [1931] 2 K.B. 113.
9
w [1935] 1 W.L.R. 932.
61
[1956] 1 W.L.R. 303. See also the criticism supra, paras. 4·080-4·081.
 [CHAP. 4
534 PERFORMANCE
and drawings implicit in the County Court judge's finding of fact, a vital fac-
tor, it is submitted. For a case of an express term where the Supreme Court of
Canada, has, it is submitted, approached the matter in the correct way, see
Steel Co. of Canada v. Willand Management Ltd.61]
(12) An owner changed a roof specification so as to require the use of a
4·089
laminated wood structure. Specialist suppliers then immediately approached
the main contractor with a proposed design conforming to the altered specifi-
cation. The owner's officers then discussed and determined the final design
together with the contractor and the suppliers, and the contractor then placed
an order. The structure proved unsuitable, and the contractor sued the sup·
plier for damages. It was objected that there had been no reliance on the
supplier by the contractor. Held, by the Supreme Court of Canada, following
Myers v. Brent Cross Garage, it was not necessary to show exclusive reliance
by one person, and it was sufficient that the reliance by the contractor had
acted as a substantial and effective inducement to purchase from the supplier:
Laminated Structures v. Eastern Woodworkers Ltd. (1962). 63
(13) A contractor quoted £320 for labour and materials to the owner of a
block of flats, describing in his quotation the work necessary to provide a
three·inch vermiculite concrete roof upon and above an existing flat roof sur-
rounded by a low parapet wall. The contractor knew that the existing roof was
leaking, and that that was the reason for his own work. The additional thick-
ness of the superimposed roof had the effect of reducing the depth to which
water could accumulate on the roof during heavy rain before it rose above the
level of the flashing along the parapet wall. The flashings ought accordingly to
have been raised or the capacity of the available outlets increased. Water
flooded into the building during heavy rain. There were also other factors of
the design which resulted in minor leaks or staining, apart from the flooding.
Held, by the Court of Appeal of New South Wales, upholding the trial judge,
that the roof should have provided for the chance of the rain which occurred,
which though heavy was not abnormal, and the contractor was liable for the
cost of eliminating by the most reasonable method the two deficiencies in the
roof. Duncan v. Blundell and Corben v. Hayes 64 applied, Lynch v. Thorne
distinguished: McKone v. Johnson (1966). 65
(14) Specialists in burglar-proof protection contracted to supply a steel
door to suit an existing soft.wood door frame in a brick wall, together with
locking bars engaging into the brick work. Thieves broke in by prising out the
soft-wood jambs. Held, by the High Court of Australia (the minority dissent-
ing only on the facts), and overruling the Court of Appeal of New South
Wales (which had held that the door as supplied complied exactly with its
description in the quotation "to suit opening" and that no term could be
implied to supply protection over the wider area of the existing wooden door
frame), and applying Myers v. Brent Cross Garage, that there was an implied
term to supply and fit a door which, by whatever means, would provide
reasonable protection against persons seeking to break in: Reg. Glass v. Riv-
ers Locking Systems (1968). 66
62 {1966] S.C.R. 746, Canada, (58) D.L.R. (2d) 595 illustrated infra, paras. 4·111-4·1:14.
63 32 D.L.R. (2d) 1. See also, for a case where the engineer acquiesced in working method
changes proposed by specialist pre-cast concrete pipe suppliers, Hayes (Trustee of Pre-
load of Canada) v. City of Regina [1959} S.C.R. 801.
M Unreported, April 27, 1964, Full Court of New South Wales. See supra, paril~i;".4·076-4·077.
~ [1966] 2 N.S.W.R. 471.
6fi 120 C.L.R. 516.
SEcr. l] OBLIGATIONS OF THE CONTRACTOR 535
(15) A contractor tendered for the design, supply and erection of a storage 4·090
hopper, on the basis of a specification and drawings prepared by the owner's
engineer, although this document was held not to have been incorporated.
Non~ of the engineer's drawings related to the foundations. The specification
required the contractor to supply and install concrete foundations, and actu-
ally used the words "on a turnkey basis". It further provided that tenderers,
irrespec!i~~ of the information on the specification and drawings, should take
~espons1bility for the supply and erection and efficient operation of the pro-
ject for 12 months after acceptance of the work. The contractor supplied
drawings of foundations, to which the engineer required amendments to be
made; the tender was accepted, and a final set of drawings, supplied by the
c?ntractor but amended and approved by the engineer, emerged, including a
nng-beam type of foundation. A formal agreement, in a form very similar to
the RIBA forms, was then entered into whereby the contractor undertook to
"exe~ute and complete the work shown upon the contract drawings and
described by or referred to in the said specification and conditions". Near the
end of the ~ark it tra?spired that the foundations would be adequate for the
hopper until completion, but that once filled there would be subsidence due
to the nature of the subsoil, and that a piled foundation was necessary. The
contractor refused to do the piling work without additional payment, and was
dismissed. Held, by the High Court of Australia, that although the contractor
had supI?lied ~he design in the first place, and notwithstanding the wording of
the specification, the contractor had promised no more than to carry out the
specified work in a workmanlike manner: Cable (1956) Ltd. v. Hutcherson
Ltd. (1969)."
[Note: This seems a doubtful case, with preliminary drawings, and an out-
line specification only, supplied originally by the owner. As so often has been
the case, however, an inappropriate traditional form of contract was ulti-
m~tely used by the parties; and this clearly weighed with the Court, together
wit~ the degree of control or interest in the drawings in fact shown by the
engineer, and the then unknown in Australia "turnkey" expression.68]
(16) A specialist contractor undertook to build the structural steel frame 4·091
and roof-deck of~ shoppi~g mall i~ accordance with the architect's drawings
and to supply design drawings of hts own work for approval by the architect.
The contractor submitted his drawings, with the roof loadings expressly indi-
cated, aft~r discussions with the owner's project manager, who had agreed
them subject to the approval of the architect and their compliance with the
Building Code. They were approved by the architect, but the described load-
ings did not at certain points comply with the Code, and the building was
overstressed and deflected excessively in certain snow conditions, though not
actually unsafe. Held, by the Appellate Division of New Brunswick, that the
archi~ect was engaged to design the architectural envelope of the, building,
and his duty was to see that the contractor-designed part of the structure com-
plied with his own specified dimensions. Nothing in these facts relieved the
contractor from his responsibility for properly designing the steel structure:
Acme Investments Ltd. v. York Structural Steel Ltd. (1974). 69
[Note: This case illustrates (entirely correctly, it is submitted) the often
limited scope of required contractual approvals where the matter concerned
lies outside the expertise of the person giving approval. It ·also shows how
design responsibilities can often be divided between the contractor and the
67
43 A.L.J.R. 321, Australia. Contrast the Steel Co. of Canada case, illustrated infra.
68
The case is further illustrated and its interpretation of the contract doubted ante, Chap. 3,
Sections 1(4) and 2, paras. 3·027 and 3·050.
6'J 9 N.B.R. 699.
 536 PERFORMANCE [CHAP. 4
owner's AJE or consultant, and serves to underline the doubts expressed
above as to the Cable decision in Australia, where the facts were not only
extremely close to the present case, but the language of the contract in fact
was considerably more favorable to the contractor.}
(17) A contractor constructed a building using bricks which complied with
their description in the architect's specification, and which contained no
defects, but they proved unsuitable for external use. Held, by the Supreme
Court of Canada, distinguishing the Willand Steel case, supra, that there was
no implied term of suitability, and the contractor was entitled to be paid: CCR
v. Mollenhauer (1975). 70
(18) A building owner without any professional adviser supplied a builder
with plans for a building, asking only that the roof should be tiled, and not iron
as shown on the plans. The builder carried out the amended work in exact
accordance with the plans but without altering the inner construction of the
roof, which as a consequence was too weak to carry the weight of the tiles.
Held, by Van Rhyn J., that there appeared to be no difference on this point
between the law of England and South Africa and ( expressly not following
Lynch v. Thorne) that there was an implied term that the tiled roof should be
properly constructed throughout: Colin v. De Guisti (1975). 71
4-092 (19) One week after a main contractor had tendered, the owner obtained a
final quotation from specialist sub-contractors for a system-built superstruc-
ture for a factory. The sub-contractors had previously supplied their drawings
to the owner's structural engineers, who had approved them and used them to
obtain planning permission, but there was no indication to the main contract-
ors of the design source of the work at the time of acceptance of their tender,
though subsequently before entering into the formal contract they were sent
copies of the specialists' drawings by the structural engineers. The work was
billed as a PC sum of £50,000 for "supply, delivery and erection complete" of
the superstructure by nominated sub-contractors. The work was described in
the nominated sub-contract as being for "supply, delivery and erection com-
plete of the superstructure ... as per [the sub-contractor's] [final] quotation
and specification". Later the roof failed, due in small part to poor workman-
ship and in the larger part to a failure of design in failing to provide for 6"
upstands at the sills of roof-lights. Held, by the Irish Court of Appeal, that the
main contractor was liable, following the Young & Marten case,11 • for the part
due to poor workmanship, but that since the main contractor had not been
consulted and was precluded from exercising any skill or judgment as to the
fitness of purpose of the superstructure, it was little more than the ordering
agent for a roof which had already been vetted and passed by the owner's
structural engineers. In the absence of evidence that the main contractor was
being relied on to check and discover flaws in the design, he could not be liable
for the part of the expense due to faulty design: Norta Wallpapers v. Sisk Ltd.
(1977)."
[Note: This case was distinguished, though not disapproved, by Lord Fraser
in the House of Lords in the Independent Broadcasting Authority case, illus-
trated infra, but, as indicated in the Note to that case, infra, the distinction
there made between cases of sub-contract quotations accepted before entry
into the main contract and the very many cases of nomination and
1051 D.L.R. (3d) 638.
73
n [1975] 4 S.A.L.R. 223, South Africa. 110
~llustrated infra, para. 4· 121. \::'. .
74
12[1978} I.R. 114; (1978) 14 BLR 49. Discussed tn the Independent Broadcasting Authority
7
case, infra. ·'
SECT. 1] 0BLIGATIONS OF TI-IE CONTRACTOR 537
acceptance which take place after entry into the main contract seems difficult
t? justify on any logical ground, partly because the "chain of liability" prin·
CIJ?le of the Young & Marten case would seem to apply equally in both situ-
ations, and partly because the rights of objection to a nomination afforded to
the main contract.or under most E:nglish systems of nomination would appear
to be equally avail.able to the main ~on tractor in either situation. Finally the
facts as reported 1n Norta do not 10 any case suggest a pre-main contract
sub-contract.]
(20) A ~ontractor w~o had been previously employed by an owner was 4·093
ask~d to install a heating system in an existing building. The contractor
advised that a consultant should be used to prepare the design, and re-
commended a consultant for that purpose, who duly designed the system for
the owner. The system did not work satisfactorily, and proved to be unsuit-
able. ,!leld, by the Ontari.o Divisional Court, distinguishing the Willand Steel
case, in the ab~enc~ of eviden~ th~t the contractor had failed to carry out the
work as descnbed 1n the specification, the contractor was not liable: Fronte-
nac Air Systems Ltd. v. Parmac Constructio'! Ltd. (1978).73
(21) An archit.ect, having doubts about the nature of the ground, consulted
a structural ~ngmeer who confirmed that the original foundation's design
would be satisfactory and would conform with the byelaws. The contractor
constr~cted the ~oundations in exact accordance with the plans with due care
and sk!ll :3-nd using proper materials. Subsequently there was subsidence of
the.butl~1ng. Held, by the British Columbia Court of Appeal, that there was
no implied warranty by the builder that the foundations would be suitable
~or was ~~e builder lia?~e to the owne~ o~ ~n express undertaking to remed;
defects under a trad1ttonal defects hab1hty clause (in which the contractor
u~dertook to remedy defects unless caused by the negligence of the owner or
his servants or agents), since, on its proper interpretation, the clause applied
only to defects caused by the contractor's defective work or materials: District
of Surrey v. Carroll-Hatch and Associates (1979).74
(22) The specification for the supply and erection of a television mast 4·094
tog~ther with associated electronic services, provided by clause 2.1: "th~
aenal suppo~t structure shall be designed and supplied by B .... " E, the main
contractors, 1n due course obtained a quotation from B, who were experts in
the ~eld of very tall hollow stressed-skin metal masts, before themselves
quoting to the ~wner, and E's quotation, which became part of the contract,
was ''for the deslgn, ~upply. and delivery" of the mast. E. were specialist manu-
facturers of electronic equipment but had no experience of masts of the speci-
fied typ~, which were in a new technology field. The mast collapsed after
comple~on, ~~e to the i~adequacy of its design, when the stays were exposed
to combined 1c1ng and winds. The owner sued the main contractor who con-
tended that there was no obligation on him at all in regard to the de~ign of the
mast or, alternatively, that if there was he should be under no greater duty
than a professional man, na~ely a duty of reas~nable care and skill. Held, by
t~e C_ourt of Appeal (Rosktll L.J .), that, applymg the chain of liability prin-
ciple 1n the Young & Marten 75 and Hardwick Game Farm cases there was an
implied term in the _main contract that the mast should be reaso~ably fit for its
purpose. Per Rosktll L.J.: "In the case of successive construction contracts
the ultimate liability if something should go wrong should rest where it prop:
870.L.R. (3d) 277.
101 D.L.R. (3d) 218.
Illustrated infra, para. 4· 121.
 538 PERFORMANCE (CHAP. 4
erly belongs ... " Held, by the House of Lords, there had been negligence i!1
tort by the sub-contractor .75• Per Lord Fraser: "I think that in a contract of this
nature a condition would have been implied to the effect that [the contractor]
had accepted some responsibility for the quality of the mast, in~lud~ng its
design, and possibly also for its fitness for the purpose for which. 1t was
intended. The extent of the responsibility ... does not require to be dec1d~d. It
is now well recognised that in a building contract ~or work and ma~e~als a
term is normally implied that the main contractor will accept respons1b1hty to
his employer for materials provided by nominated sub-contractors. The rea-
son for the presumption is the practical convenience of having a chain of CO?-
tractual liability from the employer to the main contractor and from the mrun
contractor to the sub-contractor: see Young & Marten v. McManus Childs
Ltd.. .. Accordillgly, the principle that was applied in Young & Marten Ltd. in
respect of materials, ought in my opinion to be applied here in respect to the
complete structure, including its design. Although [the main contractor~] had
no specialist knowledge of mast design, an~ although IB:'- knew and did n?t
rely on their skill to any extent for the design, I see nothing unreasonable 1n
holding that [the main contractors] are responsible to [the owner] for t~e
design seeing that they can in turn recover from [the sub-contractor] who did
the actual designing". Independent Broadcasting Authority v. EMI (1980). 76
[Note: Unfortunately this case cannot, it is submitted, be regarded as finally
conclusive in regard to an implied liability of main cont~actors to owners f~r
the designs of nominated sub-contractors, however desu::a?le that may be 1n
terms of the chain of liability principle. In the first place, 1t ts to be noted that
the main contractor quoted expressly for the design of the mast. Secondly, the
reasons given by Lord Fraser for distinguishing the earlier Norta case (namely
that there the owner had already approved the sub-contractor's design and
specification before the mail~ contract?r te~dered, S? that the latter had no
opportunity to check or require alterations 10 the design, as would have be~n
the case had the design been submitted by the sub-co11:tractor ~fter t~e main
contract had been entered into), rather than expressing outright disagree-
ment with the Norta case, do not seem satisfactory, since it seems strange to
require a design responsibility in relation to f1_1ture unknown. designs while
rejecting it in relation to a present known design accepted without protest.
Nevertheless, the judgment does undoubtedly on its face. approve of an
implied term for design responsibility in the many nominati~n cases where
the design in question is quoted for and approved after the main con!ract h~s
been entered into, subject always to the presence of the express design ~bli-
gation in the Independent Broadcasting Autho~ity case, which cou~d be said to
distinguish it from a large number of typically careless mam contract
documentations.]
4·095 (23) Main contractors were instructed to place ~rders with ~p.eciali~t sub-
contractors ("Crittalls") for the supply and installation of alum1n1um. win do':"'
assemblies. The sub-contract did not itself contain an express design obli-
gation, though the windows were as a fact designed by Critt~s, which m1;1st
have been known to the main contractors, and the only drawmgs of the win-
dows supplied to the main contractors were Crittalls dra~ngs. No m~ntio~ of
the sealant compounds to be used was made in the dra':"'1n~ or spec1ficati~n.
During construction, it became clear tha~ t~e assemblies di~ not ~eep rain-
water out, which the Court found was pnncipally due to the1r design_ and to
the choice of sealant and, to a much lesser extent, bad workmanship. The
architects condemned the windows as defective under Clause 6(4) of the
pre-1980 RIBA/JCT main contract f~rm, though ther did not order their re-
moval under that clause, but instead urged the main contractor to accept
' .
753 i.e. making it unnecessary to decide the case in contract. 76 14 BLR 1, at pp. 44-45.
SECT. I] OBLIGATIONS OF THE CONTRACTOR 539
responsibility for remedial works proposed to be carried out by Crittalls,
asserting that this was the main contractor's contractual responsibility. When
requested by the main contractor to do so, they refused to issue a variation
instruction for the same reason, and the main contractor brought an action for
an extension of time and for loss and expense under Clause 24 of the con-
ditions. Held, by Judge Newey Q.C., that the architects had been obliged to
issue a variation instruction either as being "necessary" for the completion of
the work under the terms of Clause 3(4) of the main contract conditions
(which were concerned with the obligation of the architects to supply necess-
ary information and working drawings) or alternatively under an implied
term to do all things necessary to enable the main contractor to carry out the
work77, so that the main contractors were entitled to recover; but the owners
were in turn entitled to recover from the sub-contractors under an express
direct warranty given by them to the owners in relation both to the design and
their performance of the sub-contract: Holland and Hannen v. Welsh Health
Technical Services Organisation (1981). 78
[Note: While the final liability of Crittalls was clearly fully justified, and
meant that the owners escaped ultimate liability, the details of the circuitous
route adopted to achieve this result seem doubtful, and the case is addition-
ally an example of the difficulties and confusion which can so easily arise from
direct warranties given by nominated sub-contractors to owners. If there had
been no such warranty available to the owners, it may be inferred that a far
more careful analysis of the precise obligations of the main contractor to the
owner might have been made. On the facts, it had apparently been necessary
to cease other work after the rainwater penetration was encountered in order
to obtain satisfactory completion of internal finishings. It is submitted that if
the result of the design defects had simply been that the windows would prove
unsuitable in use after completion, the contractor could simply have con-
tinued working and recovered his price by completion of the unsatisfactory
windows, in the absence of a variation instruction. If, on the other hand, the
rainwater penetration was indeed such as to prevent satisfactory Completion
of the remaining work, as found by the judge, it is submitted that the main
contractor would have had no alternative but to do whatever might be necess-
ary without additional payment in order to meet his completion obligation, in
accordance with the well~established Thorn and Tharsis line of cases.79 More-
over, the express obligation in Clause 3(4) could not, it is submitted, be prop-
erly interpreted as requiring instructions from the owner in a situation where
the contractor was in breach of his completion ( or any other) obligation, as
Judge Newey himself held in the case of certain breaches due to bad work-
manship. In addition, the sealant deficiencies would appear to have been a
breach of the main contractor's overriding implied obligation to use suitable
materials where not specifically described in the contract. 80 Nor is there any
discussion in the judgment of the cases on main contractor responsibility for
sub-contractor design 81, no doubt for the same reason. However, the case was
mentioned without disapproval although distinguished and not followed, by
Judge Forbes Q.C. in Davy Offshore Ltd. v. Emerald Field Contract Ltd.82
where he held that there was no implied duty of co-operation or to order a
11
As to this implied term, see ante, Chap. 1, Section 6(2).
78
18BLR80. Contrast the later decision of Judge Fox-Andrews Q.C., where there was, how-
ever, an express tenn for the supply of shop drawings, in Failweatherv. Wandsworth Lon-
don Borough (1987) 39 BLR 112.
79
Illustrated supra, paras. 4·046 and 4·047.
50
See infra, Section (2)(b).
81
82
See also the discussion infra, paragraph iv.
(1991) 55 BLR 1. See also,per VinelottJ. in London Borough ofMerton v. Leach (1985) 32
BLR 51, at p. 81.
 PERFORMANCE
[CHAP.4 SEcr. l] 0BLIGATIO NS OF THE CONTRACTOR 541
540
that, but for a small contribution, the design of the dwellings was the exclusive
variation, on the ground that in that case the contract was of a lump sum and
work of the contractors, who knew that the council were relying upon them as
"design-and-build" character.} experts in their system notwithstanding arranging for an appraisal by the

4·096 (24) Toou~h nothing had ~een sa~

fact been designed by th~ buil?er, 0
;~~1: ~~:!:~::~!·aar~f~~~fh~a:u~d~
1
uirements but the sub-soil sub-
er's foundations ~omphed with~-1a~ ~eqthe Weste~ Australian Court of
sided. Held, by P1d_geon J, !1~ a ui:n the Cable case, supra, and following
3
Appeal, not follo~~g and dt~~~276 83 ~he builder was liable to produce a
Hudson, tenth ed1uon, PP· d.1 was not sufficient merely to prove
result, that is, a stable structure, : t t th builder had not been negligent:
Co mpliance with the by-laws, or a e (27) Main contractors were required to apply white ceramic tiles as exter-
MansalPty. !-,t~. v. Brokensh'ire (1982)"' · (undescribed) turnkey or "design-
[Note: This 1s a further examp1e O1 an
and-build" contract.]
d t · storage installation was
(25) A foi:naI contr:ict to supply. an er:c 1:tri:1~f the work. A first quo-
not in fact signed until after practi:~~;throwner's consultant's design, and
tation.by the ~ontractor ~?d been tJdin warranties of suitability of materjals
contained pnnted conditions exc. t ~ s of the suppliers. That quotation,
or liability for any plans or spec1fica t~n for a "package deal" contract based
however, als? ~ade alt.ernativ~ fr~~:~:~ons. These latter in fact formed th~
on the supplier. s drawings an Pd . and the owners employed no arch1-
basis of the ultimate contra:.:fdo~~:;nts did not mention design expressl?,
tects or consul!ants, but the d rtook to execute and complete the works in
and the supplier merely un e . ald cumentstothesatisfactionoftheown-
accordance with (his o~) techn~c °.t ble the suppliers contended that the
ers. When the installation prove. un: :raditional wording of the completion
absenceofanyreferencestodef{gn; e ct· comparison with the obligation as
obligatio_n in the contra~t fin'~d!s:1~~:0d-build" contracts; and the o.rigin~l
defined m allegedly typ1~al r b ·ft 11 had the effect of limiting th err obh-
printed conditions excluding ia ~ j
1
~ e John Davies, there was nothing in
gation to one of.du~ care. !feldf. );thua-! implied term of suitability indepen-
the documentation mcons1sten W1 T.H Wh.t (1985) ss
dent of fault: Viking Grain Storage v. . . t e . their report by the editors of BLR seem fully justified. There appears to be no
b 'ld bmitteddesigndrawingsfor
4-097 (26) Contractors, who were system u~ere;~t~~ed into a standard form tra-
site works and sub-~ubstructures, and la e construction of the dwellings. The
ditional contract with the owner~ fo\ !ferred expressly to design drawings,
recitals to the standard form con racd ''under the direction of the owner's
sta~ng that ther ha~ be~n P~:fe~: developed in the buildings necessi~ating
engu.1eer or architect · W enended that the owners had made an appraisal of
repairs, the contractors cont National Building Agency before con-
the contractor's system through th~t ct's department' and that the express
tracting, and also by their ~wn ar~ t :t with an obligation of fitness for pur-
term~ of the contract were l~C:~f;~ fnconsistent with any term requiring the
pose independent o! fault, ~ t the design on the part of the contractor. Held,
exerciseofduecare1nre~ar o k Brazier and the Young & Martens6
by Judge Newey, following .Har:ot~ ~~y81 cases' that since the express term
and Independent Brhoadcash~~t h~d ;signed the work, and the reality was
did not state that t e arc 1
National Building Agency before contracting, there was an implied term that
the buildings designed by the contractors would be fit for habitation on com-
pletion. In relation to garages and civil engineering works, which had been
designed by the council's own officers, there would be no comparable implied
term. Failing such an implied term, there was certainly a lesser term requiring
due skill and care by the contractors: Basildon District Council v. Lesser Ltd.
(1985)."'
4-098
nal cladding to the reinforced concrete frame of a building. The specified
method using a bedding layer of mortar and a render to the frame, which was
a popular method at the time, was later found after completion to be unsatis-
factory and to have caused shrinkages, creep and deformation and deterio-
ration of the render, which had not been previously appreciated. The owners
then requested the contractors to perform remedial works using a process and
materials recommended by specialist sub-contractors (formally they were
"domestic" and not "nominated" sub-contractors). The remedial work itself
proved unsatisfactory and failed, and the judge found that the resin injection
materials used for the repairs were unsuitable, in that they were capable of
absorbing water. The owner then sued the main contractor and sub-contract-
ors alleging breach of an implied term of suitability, while accepting that the
workmanship had been satisfactory, so that the lesser obligation had been
discharged. Held, by Garland J., while recognising that the main contractor
had in fact obtained an express indemnity from the sub-contractor whereas
the owner had not, but noting that the main contractor had expressed some
doubts to the owner as to the efficacy of the proposed process, the issue was
finely balanced but, on the basis that the owner had not, to the knowledge of
the main contractor, relied upon him, but instead upon the sub-contractor,
the main contractor was not liable to the owner: University ofWarwickv. Sir
Robert MacAlpine (1988).8 ~
[Note: The obvious doubts as to this case expressed in the commentary to
factor present before Gardland J. to distinguish it from the Young & Marten
case (save that that case was one of merchantability and not design, and that
in this case the main contractor had expressed some doubt as to the success of
the proposed work, although neither factor is mentioned in the crucial part of
the judgment). All the authorities, including the Norta, Independent Broad-
asting Authority, and Young & Marten cases, are examined, but the final part
of the judgment giving reasons for the decision refers only to absence of
reliance on the main contractor, which is an unavoidable feature of all cases
involving a specialised product and sub-contracting. On "chain of liability"
principles, therefore, and bearing in mind the main contractor's having taken
pains in this particular case to obtain an indemnity from the specialist sub-
contractors, the case seems inconsistent with Lord Fraser's statements in the
Independent Broadcasting Authority case, 00 as well as the Young & Marten
reasoning, and, if correct, would mean, of course, that the owner's loss would
not be recoverable from anyone.]

83 (1985] 1 All E.R. 20.

-4 of the present edition.
s.JNow paras. 4·071 ·072, supra, A tr lia December 3 1982. M42 BLR 1. This case proceeded to appeal, where the judge's findings of fact were over-
$4 Unreported, Supreme Court of Western us a ' ' turned and the sub-contractors held not to have been negligent, so that the main con-
85 33 BLR 10. tractor's liability did not arise.
86 Illustrated infra, para. 4· 120. 00
Quoted supra, para. 4·094.
87 See supra.
 PERFORMANCE [CHAP. 4
542
4-099 It is submitted that the above cases, dealing with many differing reliance
situations, show that in the absence of s\).fficiently express wording the
courts will pay regard to the real extent of reliance on the contractor (or
the sub-contractor) disclosed by the pre-contract matrix or factual setting,
rather than the formal wording of the contract itself, in deciding whether
or not to imply the higher term of suitability. Straightforward cases of
building on an owner's land to a contractor-supplied design where no AfE
has been engaged will invariably import the higher obligation. Whether or
not actually so described, these latter are cases of "design-and-build" or
"turnkey" contracts.91 The cases also show that, even where an A/E
becomes involved, the obligation will nevertheless be implied if the facts
indicate that a relevant part of the design which has proved unsuitable was
provided by the contractor or by a sub-contractor rather than by the
owner or his A/E.
It should be noted that the Myers and other cases have formulated the
obligation in terms which expressly place the onus on the defendant in a
contract for work and materials to show facts which will displace the
higher suitability obligation.91 a It is not on the plaintiff to show reliance, for
example. The term, it is suggested, is a term implied by law in contracts of
this kind, if in the course of business, and not a term implied in fact from
the particular transaction,92 so that considerations of policy may require
the term to be implied notwithstanding a subjective absence of reliance on
the defendant, as in the nominated sub-contractor cases, for example.
(ii) "Duty to warn" cases
4-100 Even where there is no reliance on the contractor for the design in the
pre-contract stages of the parties' relationship, what may effectively
become a design or suitability obligation (although discharged in a differ-
ent manner and if breached giving rise to a possibly somewhat different
measure of damages) may arise if, in the light of present or subsequent
events, a reasonably competent contractor should then have realised that
the original design was likely to prove unsuitable, but failed to warn the
owner or, in suitable circumstances, his A/E. Thus it has been held quite
independently, in a number of jurisdictions, that the contractor will be in
breach of contract if he does not warn the owner or his NE of the inad-
equacy, or the likely inadequacy, of the design. This appears to have been
recognised much earlier in the United States than in England or in the
Commonwealth:
"It has been repeatedly held that, even though he i~ bound to follow fixed
plans and specifications, the contractor owes the duty to examine such plans
•1 See infra, subparagraph (iii), and ante, Chap. 3, Section 1(4)(a).
~ 1• See supra, para. 4·075.
ei See ante, Chap. 1, Section 6(1).
SEcr. l] OBLIGATIONS OF TIIE CONTRACTOR 543
and judge of .their sufficiency; that he is bound to discover defects that are
rea~onably discoverable or patent; and, where he knows or had reason to
believe that the plans are defectiv:, and follows them without pointing out
su~h ?efects to !he o~er or archit~ct, he is not entitled to recover if the
building proves msuffic1ent because of such defects. "93
~ot surprisingly, the majority of these cases have occurred in a foun-
dations context, where th~ contractor from his knowledge of the ground,
?nee opened up, may ?e m a special position to appreciate the possible
madequacy of _the design. Clearly, this duty will be more easily invoked
where n~ NE 1s engaged, ?ut
in appropriate circumstances the duty may
also be discharged by warning the A/E himself. Failure to give warning has
~ene~ally been rati?nalis~d ?Y the courts as breach of the express or
implied workm_ansh!p obligation, though it perhaps can also be explained
as breach of an 1mphed duty of co-operation.94 In civil law countries, a duty
to warn on the part of the contractor is commonly founded on the anal-
og~us g?od faith obligations, as well as frequently enjoined expressly by
articles 1n the relevant codes. 9S
ILLUSTRATIONS
(.1) An owner employed an architect to produce drawings and a specifi- 4·101
catlorl: only, but not to s~pervise the construction of a building. During con-
struction, the own~r de~de? to change the architect's flooring specification,
and have asph~lt tiles laid 10 place of the previously specified material. He
arranged meetings between a specialist tiling contractor and his flooring con-
t~~ctor, and asked what surface was required on which to lay the tiles. Toe
tlhng sub-contr~ctor recom~ended three-ply sheeting on top of sanded lami-
n~ted w<;>od, whic~ !he floonng contractor was accordingly requested to pro-
vide. Neither the tthng contractor nor the flooring contractor told the owner
though both knew or should have known it, that waterproofing was necessary'
and wherl: ~he flooring proved defective for that reason, the owner refused t~
pay th~ tiling contractor. Held, by the British Columbia Court of Appeal,
follo~gDuncan v. Blundell, Thom, andPearcev. Tucker,96itwas the duty of
the ~g contrac~or to advise the defendant as to the proper surface to be
provided for ~e tiles, and not to attempt the work unless a proper installation
had been provided: Sanson Floor Company v. Forst's Ltd. (1942).91
(2) A developer who had been his own contractor and had himself exca-
vated out some streets, although with unsuccessful results, decided to obtain
!enders to re-surfac~ three of the streets and construct four more. In the exist-
ing streets_ he had hunself excavated and placed glacial fill as a sub-base. He
ask~d paving contractors for quotations for applying a hot mix asphalt "so as
to _g1~e a good paving job". The successful tenderer priced the work on the
existing roads on a square yard basis, stating "the sub-grade will be prepared
by us", together with a brief specification. There was an express term for the
: Per Geis?Jar J., Rubin v. Coles 253 N.Y.S. 808-811 (1931).
As to which, see ante, Chap. 1, Section 6(2). See, however Pearce v. Tucker (1862) supra
para. 4·082 for an early English case. ' ' '
05
See, e.g. Art. 1667 of the Italian Civil Code.
w; Illustrated supra, para. 4·082.
'11 [1942] 1 W.W.R. 553.
 PERFORMANCE [CHAP. 4
544
work to be done in a workmanlike manner. After completion the paving on ~11
the roads deteriorated rapidly. The trial judge found that the cause was t e
unsuitability of glacial fill for the sub-base; that th~ developer ha:.a ~u~~~
inform the contractor of the nature of the fill which he ha~ use , t a .
hrase "sub- rade will be prepared by us" meant merely gradm~, compact1ng
~nd shaping fhe material in place, not replacing it; that the quah% o ~th~ P:;
in work itself had been good; and found for the contractor. e1 , . Y
sf preme Court of Alaska, following Rubin v. Coles,supra, that, acceptmf
t · al · dge's finding that all the promised contract work had been comp et
a~~ -~~r~~!~'!~:!~~ 1
;'; ::~eh;1~nn;n~1!s~!:~;e~:~~~~~irev~e1fo~~~J~=
!lla ~~nir uotation The dontractors were specialists on whom the developer
~ngd ~eJ and a failure by them to warn him that asuitabl~ result could not be
a ~e ' 1. the avin on the glacial fill used, 1f they should have
~~~~~eth~y !!~ ~!eing te m~terial, wo~ld be a breach ?f their ~xpress i~~
im lied duty to do the work in a workmanlike mann~r and 1n ac~r ~nee VI;
go~d practice, and a new trial was ordered to d ~ternune the last issue. Lewis v·
Anchorage Asphalt Paving Company (1975).
9
ote· Like all decisions of the Alaska Supr~me Court of recent years tn t e
[N
·ti fl Id this judgment is well-reasoned and well-researched, ~nd
~~~~~:~ u~~fufreferences to other U.S. authorities. It is ob~ous!y incons1st-
. 'dentally, wi'th the English Court of Appeal's
ent, 1nc1 ] dec1s1on 10 Lynch v.
Thorne, illustrated and doubted supra, para. 4·088.
4·102 er commissioned a firm of architects to prepare a plan for a
dw~{ti~nh~:~e. That firm was identified as the "Engineer" in the subsequent
buildin: contract, but they were not in fact enga&ed to
su ervise and the contractors were a very expenence rm.
J~ any!~~~:\1~~~;
. .
p ' 'd d that "the Contractor shall give efficient superv1s1on to t
contract prov1 e b ·fl tion had
work using his best skill and attention". P~all:s only, ut no speci ca
been provided by the architects for the budding contract. re ~lan; ;adroof
revision for ventilation of the roof space nor for the eta1 s o
fpaces such as the material to be used for insulation. There were a ~u:ui:if!
instan~es of oar workmanship on the part of _the co~tract~r assoc1a ~
the roof spa~ including selection of an unsuitable 1nsulat1on n:iate~1al, a~d
badly-sited dntlnage, but the trial judge fhounddas a f~~ ~~~~h;
thedeteriorationoftheroofstructure, w ere ryro a
fu:1: ,
:~!~~~~
of provision for ventilation, and that the basic caus~ of by ~R! ~: grt~~;[eo~f
tion of the damage was for that reason faulty design, an tn ~ a
evidence of the cost of repairing the contractor's workmanship_ b:eac}es,
found for the contractor. The Appellate Division of New Brunsw1c , no tng
barriers or proper insulation, reversed the tn~lJu. ~e, o ding d'
~!
the contractor's failure to install a proper dr~in.fo; th~rz~f sp::t ::~~~~
cumstances there was an implied term of su1tab1ht~ an a":'ar in_g p and
d H ld by the Supreme Court of Canada (Dixon J. d1ssent1ng),
ama~es. e A ellate Division, an experienced contractor should. have
:~~;~fs~J~tviJJs defects in the plans an~ his obligation tdo car1ou~su1ta~~~
work overrode the obligation tocomplywtt~ the pla~s an spec1 ca ans. _
Ritchie J .: "In my opinion a contr~ctor of this expenence sho: ~~;e r;;~:e
· d the defects in the plans which was so obvious ... and, o
~~~fa~ce w'::~h:~~:~~~t~ft~t 0 1
t~ Ia~g!/r~~~r!~ ~~;~ ~:J;a:h~nar~~t
O 3
1:c7s tans having :articular regard to the absence therein of any adequat~
· ~ 1'or venti'lati'on ·"·· Brunswick Construction Ltd. v. Nowlan (1975).
provision
VII 535 P. (2d) 1188, at pp. 1195 et seq.
99 (1973) 34 D.L.R. (3d) 422, at p. 435,per Bugold J.A.
1 49 D.L.R. (3d) 93, at pp. 97-98.
SECT.1] OBLIGATIONS OF 'IHE CON'IRACTOR 545
[Note: This seems to have been a somewhat borderline case on the facts,
and much would turn up how obvious the deficiency was in the architect's
plans. The interpretation placed by the majority judgment upon article 11 of
the building contract (which was a normal supervision obligation of the con-
tractor to be found in almost every AJE-administered standard form con-
struction contract) was not, with respect, justified as showing reliance on the
t!: contractor for the design, but the remaining facts were certainly consistent
with such an interpretation. The majority judgment also makes reference to a
passage in Hudson more appropriate to interpretation of contracts contain-
ing express performance undertakings. Nevertheless, whatever may be said
of its application to the facts, there is no reason to doubt the correctness of the
underlying principle in the majority judgment.]
(4) An owner had plans and a specification prepared by an architect, but 4-103
relied on the help of a friend to supervise, while herself contracting to provide
all necessary materials for the contractor, who was an experienced carpenter
used to working on his own, who had decided to take up contracting. The
. h specification prescribed a concrete screed on a concrete slab, resting on four
inches minimum of hardcore, for the main floor slab of the building. The sub-
soil was, however, largely organic silt, and after completion the floor slab
cracked and subsided. Held, by the Court of Appeal, that the contractor
should have realised the soil was unsuitable and required removal and
replacement before laying hardcore, and was liable in contract for not show-
ing the care to be expected from a reasonably competent contractor: Warlock
v. Saws (1982). 2
he
[Note: This appears to have been treated as a workmanship (design) case,
and a duty to warn is not expressly stated in the judgments.]
(5) Architects were employed to design and supervise a major building con-
,e no tract, under which sub-contractors were nominated to design and supply cur-
tain walling, the design of which later turned out be defective. The defects in
e the design might not have been reasonably apparent from the original draw-
ings, but difficulties on site in constructing the walls were subsequently
experienced, which drew the main contractor's attention to the problem.
Held, by Judge Newey, following Duncan v. Blundell and Brunswick Con-
struction v. Nowlan, that the main contractors were under an implied duty to
warn the architects of the design defect as soon as they became aware of it, as
well as in breach of an express duty under Clause 4 of the conditions relating
to breaches of the by-laws: Equitable Debenture Assets Corporation Ltd. v.
Moss (1984).'
artial
(6) A contractor undertook to supply and erect a pre-fabricated building on
a site where the soil was bog and unstable. The contractor advised the owner
to employ an independent contractor to remove the bog and replace it with
fill, which the owner did. When excavation started the contractor should have
known, by reason of rising water, that not all the bog had been removed. Held,
by the Newfoundland Court of Appeal, that the builder was in breach of con-
tract in failing to warn the owner that the soil was still unsuitable: Triple A
Investments v. Adams Bros. (1985). 4
g d
2
22BLR 72.
1 Const. L.J. 131. See also a further decision of the same judge in Victoria University of
Manchesterv. Hugh Wilron and Lewis Womersley (a firm) (1984) 1 Const. L.J. 162. For a
case where it was held, not surprisingly on the facts, that no reliance or duty to warn ex-
isted, see also University of Glasgow v. Whitfield (1988) 42 BLR 70,per Judge Bowsher.
See also Judge Newey's later decision holding a builder liable for not drawing attention to
an error in the owner's surveyor's plans, in Lindenberg v. Canning (1992) 62 BLR 147.
4
23 D.L.R. (4th) 587.
 '~
546 PERFORMANCE [CHAP. 4
(7) A developer constructing two flats in the basement of an existing build-
ing supplied a contractor with a plan prepared by the deve~oper's surveror.
This identified certain non-load-bearing walls by a broken hne and requtred
their removal. Held, by Judge Newey Q.C., that there was an implied term
that the builder should exercise the care to be expected of an ordinary com-
petent builder; ·that the builder should have had grave doub!s about the plan
since 9" walls would not have been erected for non-load beanng purposes and
a chimney breast wall was also indicated as non-load-bearing; and that the
builder should at least have raised doubts as to the plan with the surveyor,
and, even if given assurances, should have used temporary propping. The
builder was therefore liable to the developer for damage done to property
overhead subject to a reduction of 75 per cent. for contributory negligence by
the surve)'or as the developer's agent: Lindenberg v. Canning (1992). 4"
4-104 In the context of using the work of other contractors, the principle has
been well put as long ago as 1915 in Quebec:
"It is the duty of a contractor who undertakes to put his work up~n the.foun-
dation or other works previously built by other contractors to satisfy himself
that these works are sufficient to sustain the work which he himself builds
thereon. If he finds them not to be sufficient, it is his duty to protest the pro-
prietor to give him proper foundations upon which to build; otherwise, he
cannot justify going on with his contract".5
The contractor's duty to warn the owner is not limited, it would seem, to
warnings of defects in the design, and can extend to their own work. Thus,
ship repairers have recently been held liable for failure to warn after inad-
vertently using a different material from that specified when carrying out
repairs and which might give rise to difficulty in the futu:e_. 6 • • sale by someone engaged in the business of building and selling houses, on
Construction contracts not uncommonly address the d1v1s1on of design
responsibilities between owner and contractor expressly,? and it may b.e
suggested that such provisions are inconsistent with a duty to warn. It.is
submitted that the purpose of such provisions is merely to avoid any suit-
ability or other implied term operating automatically should the design
prove unsuitable, and not as excluding a duty of care or reasonable work-
manship which might give rise to a duty to warn of a design deficiency of
which a reasonably competent contractor should be aware.
Whether or not the duty is breached will be very much a question of fact,
it is submitted. Certainly a contractor will not be expected to vet the
details of an architect's or other expert's work or design, and it will only be
relatively glaring or obvious design deficiencies judged in the light of the
knowledge to be expected from a contractor of the type employed which
will give rise to the duty to warn. This in some cases may be satisfied by
warning the owner's A/E, but in others may require warning to the owner
"" (1992) 62 BLR 147, following the Brunswick and Equitable Debenture cases, and Victoria
University of Manchester v. Hugh Wilson (1984) 2 Const. L.R. 43.
> Chevalier v. Thompkins (1915) 48 Quebec L.R. (S.C.) 53, at p. 56. \::'.
6 Stag Line v. Tyle Shiprepair Group'[1984] 2 Lloyd's Rep. 211,perStaughton J.
1 See, e.g. Clause 8(2) of the ICE fifth edition.
SEcr. l] OBLIGATIONS OF TI-IE CONTRACTOR 547
himself, depending on the seriousness of the potential defect and the
A/E's response to the warning, it is submitted.
(iii) Houses in the course of erection
A word should perhaps be added on the subject of the obligation in sales 4, 105
of uncompleted houses, some examples of which are to be found in the
cases illustrated supra. The position here may seem somewhat unreal, in
t~at developers of property frequently complete dwellings for all practical
purposes, but deliberately leave certain minor matters such as decor-
ations, Or sanitary fittings, and sometimes floors, uncompleted to await the
purchaser's choice. 8 The courts, in their desire to escape from the rule of
caveat ~mp.tor, which prevented the implication of any warranty of fitness
for habitation upon purchase of a new house from a builder if the house
was completed at the time of the contract of sale,9 felt able to justify a
refusal to apply the rule of caveat emptor by finding that at the time of sale
~e house was "in the course of erection",10 and frequently applied the
1mplie~ term as to habitability to houses which were virtually completed
at the time of sale. 11 Furthermore, while it might at first sight seem logical
t~at the warran ~ o~ fitness should extend only to work uncompleted at the
time of sale, this difficulty was brushed aside, and, once a building had
been hel~ t~ be ~n the ~ourse of erection, the warranty was applied to the
whole bu1ld1ng including work already done. 12 It is submitted that this
strict view is in fact right in principle. The reason why the ''house in the
course of erection" test was applied, it may be surmised, was that this was
an almost invariably accurate way of identifying a commercial or business
whom the purchaser would for that reason rely, as opposed to an ordinary
owner-occupier selling his home. The analogy to sales by description un-
der the Sale of Goods legislation was obviously very close, and the precise
d.egree of lack of completion at the time of the sale irrelevant. The position
was finally established by later authority. 13 The definition of the implied
term as an absolute warranty of "habitability" as already been explained
in this chapter as being a convenient shorthand for design suitability in the
case of dwelling-houses, and has no special significance. 14
In the ninth edition of this book, it was suggested that the implied terms 4-106
as to materials and suitability might not, in the case of sales of houses in the
s See Perryv .Sharon Development Co. Ltd. [1937] 4 AIIE.R. 390, where a house with certain
d~corations incomplete, and without water-taps, baths or grates was held to be "in the
course of erection".
9
See, e.g. Hoskins v. Woodham [1938] 1 All E.R. 692.
10
. Mil/erv. Cannon Hill Estates Ltd. [1931] 2 K.B. 113; Perry v. Sharon Development Co. Ltd.
[1937] 4 All E.R. 390;Jennings v. Tavener [1955] 1 W.L.R. 932.
:: See the conflict of judicial opinion on the facts in McKey v. Rori.son [1953] 1 N.Z.L.R. 498.
Se_e: ~·K· Hende~son v. Raymond Massey (1963) 46 W.W.R. 100, Canada. See, however, the
cnttc1sms o~th1s by Scrutton L.J. in Lawrence v. Cassell [1930] 2 KB. 83, atp. 89, and by
; Romer L.J. m Pe:ry v. Sharon Development Co. Ltd. [1937] 4 All E.R. 390, at p. 395.
1
14
Hancock v. Brazier (Anerley) Ltd. [1966] 2 All E.R. 901, illustrated infra, para. 4·120.
See supra, para. 4·078. See also Hancock's case.
 548 PERFORMANCE [CHAP. 4
course of erection and in building and engineering contracts without pro-
fessional advisers, be absolute and independent of fault, unlike the case of
contracts for sale of goods. For example, it was suggested that a builder
might not absolutely guarantee the foundations of a house against differ-
ential settlement of the subsoil, but only undertake to design and con-
struct the foundations using all reasonable skill and care. Similar doubts
appear to have afflicted the courts in the United States, 15 but those views
have since changed. 16 So, too, in the United Kingdom, these views were
clearly wrong in the light of more recent authority. It is evident that the
liabilities must be absolute, since otherwise contractors could, by using
reputable sub-contractors or sources of supply, escape responsibility, and
in consequence over a wide area of the work in both the building and civil
engineering industries a virtual immunity for bad or unskilful work would
be conferred on the persons ultimately responsible.
It was further suggested in the ninth edition that the duty of a seller of a
house in the course of erection might be stricter than that of an ordinary
builder in a contract without an architect, but this too can, for the same
reasons, be seen to be wrong in the_light both of the case law and the later
statutory assimilation of construction contracts with contracts for sale of
goods:
4·107 "Under our principles of jurisprudence, apart from a so far scarcely charted
sea of the law of tort in this area,11 the practical business effect and just sol-
ution to this type of breach of contract is that each vendor or contractor of
labour and materials should warrant his supply of materials against patent
or latent defects so that by the well-known chain of third party procedures
the ultimate culprit, the manufacturer, may be made liable for this defective
manufacture". 18
''So I cannot see any logical distinction between the obligations which ought
in general to be implied with regard to quality and fitness between a sale of
goods and a contract for work and materials. Indeed, for my part I think, as a
matter of common sense and justice, one who contracts to do work and sup-
ply materials ought to be under at least as high, if not a higher, degree of
obligation with regard to the goods he supplies and the work that he does
than a seller who may be a mere middleman or wholesaler. Greer L.J. took
this view in the Court of Appeal in Cammell Laird v. Manganese Bronze and
Brass". 19
The importance of this in "design-and-build" or "turnkey" contracts is
considerable, since it means that the contractor will not be able to escape
1' See Wisconsin Red Pressed Brick v. Hood69 N.W.1091 (1897), followed in Flannery v. St.
Louis Architectural Iron 185 S.W. 760 (1916); Whaley v. Milton 241 S.W.(2d) 23 (1951) and
Wood-Hopkins v. Masonry Contractors 235 So.(2d) 548 (1970).
16 Aced v. Hobbs-Sesack 7 Cal. Rep. 391 (1961) and see Smith v. Old Warson Development
Company, 479 S.W.(2d)795 (1972), Sup. Ct. of Missouri: "We believe fault or negligence
by warrantor no longer required for recovery under implied warranty."
1 Now heavily charted by the advance and retreat of the Anns doctrine, see ante, Chap. 1.
7 BLR 1, where the main contractor had even obtained an indemnity from the
19
=
is Per Lord Upjohn in Young & Marten Ltd. v. Mc Manus Childs Ltd. [1969] 1:·{\:.C. 454, at p.
Jbid. at pp. 473-4.
M
SE=. I] OBLIGATIONS OF THE CONTRACTOR 549
liability by showing that he designed the project according to the best
acce~ted standards of architectural or engineering knowledge, or
obtained materials of work from reputable sources, if in fact his design
turns out to be unsuitable. However desirable on policy grounds in the
case of tort, the "state of the art" defence would be inconsistent with the
pricing certainty and deterrence against inferior quality commercially
necessary for owners in turnkey situations.20
(iv) Nominated sub-contractor design
As stated supra and in the Notes to the cases there illustrated 4·108
there does not yet appear to be final direct authority in England or th;
Commonwealth, and indeed there are cases to the contrary,21 imposing
an implied liability on main contractors for the design or suitability of
w?rk in fact designed by nominated sub-contractors or suppliers (so that it
will have been on them, rather than the main contractor that reliance will
be mainly placed by the owner). Where there is an ex;ress undertaking
to "des~gn", or a design or performance obligation expressly stated in
the marn contract documentation, there is no doubt that this will be
interpreted as imposing a full suitability responsibility on the main con-
tractor. 22 Equally, where an express design or performance obligation is to
be found in the sub-contract documentation, although the main contract
documentation is silent, it would be anomalous and obviously inconsistent
with th~ chain of liability principle if the acceptance of the nomination by
the main contractor was not to be regarded as importing an identical obli-
gation on his own part into his own contract with the owner.23 This leaves
for a more definitive ruling, however, cases where, to the knowledge of all
concerned, there is in fact reliance by the owner or his advisers ( and usu-
ally by the main contractor as well), on the nominated sub-contractor for
the design of the work in question ( as will almost invariably be the case, for
example, where there is a highly specialised product or work involved) but
both the main contract and nominated sub-contract are silent on the mat-
ter.24 Thus in the workmanship case of Rumbelows Limited v. AMK in
198025 ~t.is submitted that Judge Fay Q.C. applied the correct principles,
after citing and following passages in the judgments of Lord Pearce in
Young & Marten v. McManus Childs2-6 and of Denning L.J. in Morris v.
20
.For these contracts see ante, Chap. 3, Section 12(4)(a).
21
See the Norta and University of Warwick and Holland & Hannen cases, supra.
: Independent Broa~casting Au!hority v. EMI, quoted and illustrated supra, para. 4·094.
, It was held that this necessanly followed by Judge Fox-Andrews in Fairweather Ltd. v.
London Borough of Wandsworth (1987) 39 BLR 112, at p. 116. '
24
See t~e Independent Broadcastin? :4uthority case, but see contra the Norta Wallpaper case
supra, the perhaps doubtful dec1s10n of Judge Newey in Holland and Hannen v. Welsh
He~l~h Technical Services Organisation supra (1981) 18 BLR 89, at pp. 118-119; and the
dec1s1on of Garland J., d?ubted supra, in University of Warwick v. McAlpine (1988) 42
sub-contractor.
2:< (1980) 19 BLR 25, illustrated infra, para. 4·127.
2• [1969) 1 A.C. 454, at p. 471.
 PERFORMANCE [CHAP. 4
550
Marten,21 when holding a main contractor liable to the owner for a fail~e
of workmanship by the specially skilled sub-contractor whom the main
28
contractor had been instructed to employ.
4-109 In considering this problem it should be remembe~ed that the ~nd?-
mental basis of the· contractual service offered by a main contractor lies~
his offer to stand, vis-ll-vis the owner, at the apex of a co~tractual pyra~1?
of price and profit entitlement, which should be essentialy balanced, it 1s
submitted, by his overall responsibility to the owner not only for all th~
work undertaken by his own direct employees, but also by the comph-
cated network of sub- and sub-sub-contracts of service, or of supply of
materials, or of work, including those of nominated sub-contr~ctors,
which contribute to the total of the work in his own contract with the
owner. The chain of liability principle, perhaps most clearly stated by the
House of Lords in the Young & Marten case,29 and supported by the
29
speeches in the Independent Broadcasting Authority_ case, a ther~for.e
requires, it is submitted, an identical liability of the 1?a1n contracto~ m his
own contract with the building owner to that requrred from all ~1s s~b-
contractors and suppliers, and there is no sufficient reason why thi~ pnn-
ciple should not include the exceptio~~ll~ pro~tabl,7 field o~ ~om1nated
sub-contracting,3o as well as of other private or dome~hc s~b-con-
tractors or suppliers. Without unqualified and comprehensive ma.in. ~~n-
tractor liability to the owner, a defaulting sub-contractor's respon~ib1ht1es
for the quality and performance of his own work virtually d1sapp~ar
( other than those in respect of any purely"private:• d.amage ca:1sed him ?Y
to the main contractor by his default). If the chain 1s broken 1n this w~y,
and in the absence of some direct warranty to the owner, the defaulting
nominated sub-contractor will be able to ignore even his express obli-
gations with impunity, such as those in the s:1~-contract in r~g~rd to t~e
description and quality of his work, or requ1nng due expedition on his
part. .. f amending the work so that it will perform the stipulated duty. 31 Such
Moreover, if it became a recognised charactenshc of the s~heme o
4-110
nomination in main contracts that the nominated sub:.contractor sh~uld
invariably give direct warranties (that is, enter .into co~~ractual relations
with the owner), the main contractor would be 1n apos1hon to argue th~t,
by virtue of the availability of the owner's direct contractual re~ed1es
against the sub-contractor, the implic~tion of any term for main con-
tractor responsibility in respect of nonunated sub-contract.or work would
become unnecessary, and it would then even become possible to proceed
from that pqsition to contend for a reversed implied liability of the owner
to the main contractor in all cases of nominated sub-conn:actor default.-
It is submitted, therefore, that a sub-contract entered into by am~
contractor with the nominee without objection should render the main
n [1966] 1 Q.B. 716, at p. 729.
1s (1980) 19 BLR 25, at p. 43, 48. . of Canada in Steel Co. ofCanada v. Willand Management Ltd. [1966] S.C.R. 746, illustrated
2'l Illustrated infra, para. 4·121, and cited supra.
19, See, per Lord Fraser, supra, para. 4·094. . Construction Ltd. v. Nowlan: see the Note to that case, illustrated supra.
in See as to this supra, para. 4·060, and see C.C.P.P., 21-31, 29-12.
SECT, 1] 0BUGATIONS OF THE CONTRACTOR 551
contractor liable to the owner for whatever work or responsibilities have
been assumed by the sub-contractor in his sub-contract, including any
implied design responsibilities which will arise from owner or main con-
tractor reliance on the nominated sub-contractor, and whether or not
expressly so stated in the main or sub-contract. This will be the case a
fortiori, it is submitted in the many English-style standard forms of main
contract where nominated sub-contractors are expressly stated to be
actual or deemed sub-contractors of the main contractor, since in context
this wording can only be interpreted as an express requirement that the
main contractor is to accept the same responsibilities in such cases as those
which he necessarily assumes in the case of "private" or "domestic"
sub-contractors.30a
(v) Express terms as to design, perfonnance or suitability
Hitherto the subject of design and suitability has been considered solely 4-111
in the light of the possible implied obligations. There is, of course, nothing
to prevent express undertakings as to design or suitability being given, and
where this occurs they will usually prevail, notwithstanding compliance in
all other respects with the contract requirements.
So a contractor will sometimes expressly undertake to carry out work
which will perform a certain duty or function and in conformity with plans
and specifications, and it turns out that the works constructed in accord-
ance with the plans and specifications will not perform that duty or func-
tion. Generally the express obligation to construct a work capable of
carrying out the duty in question overrides the obligation to comply with
the plans and specifications, and the contractor will be liable for the failure
of the work notwithstanding that it is carried out in accordance with the
plans and specifications. Nor will he be entitled to extra payment for
undertakings will, however, be construed in cases of doubt in the light of a
sufficient degree of reliance being placed on the contractor's skill and
j_udgment, as in the case of the implied obligation.
ILLUSTRATIONS
(1) The defender asked the pursuer to quote prices at which he would sup- 4-112
ply tanks to certain specifications, each to stand a head pressure of 60 feet of
water. The pursuer quoted lump sums for each tank totalling £2512s. Od., but
faun~ that in order to make the tanks capable of standing the required pres-
sure tt was necessary to strengthen them by adding stays which were not con-
3 tb As more clearly expressed in Clause 31 of the G.C./Wks 1 Contract.
31 The preceding sentences, of this paragraph were cited and approved by the Supreme Court
infra, and also, in a perhaps inappropriate context, by the Supreme Court in Brunswick
 552 PERFORMANCE [CHAP. 4
tained in the specifications. The defender refused to pay the extra cost. Held,
by the Court of Session, that the pursuer could not recover: Wilson v. Wallace
(1859).n
(2) Merchants ordered from a shipbuilder a ship to be built according to a
specification which contained the stipulation "To carry 1800 tons dead
weight". Toe contract also provided that the shipbuilder was to make a model
for the merchants' approval. The shipbuilder made a model which the mer-
chants approved and subsequently built a ship according to the model. The
ship as built would not carry the weight. Held, by the Court of Session, the
shipbuilder had not fulfilled the contract and was liable in damages: Gillespie
& Co. v. Howden & Co. (1885).33
(3) The defendant contracted to cast cylinders according to a specification
and plans, the cylinders to stand a pressure of 25 cwt. to the square inch. It
turned out that if the cylinders were cast according to the specification there
would be an unavoidable defect. Held, by the Court of Appeal, that the
defendant had contracted to supply sound cylinders and that as he had not
done so, although he had adhered to the plans, he was liable in damages:
Hydraulic Co. v. Spencer (1886). 34
4-113 (4) A contractor undertook the waterproofing of the basement and cellar of
a building. The contract provided that the work should be "guaranteed absol-
utely water and damp proof for five years from the date of acceptance. Any
dampness or water breakage within that time must be made good by the Con-
tractor at his own expense". Held, by the New York City Court, the undertak-
ing should be interpreted as subject to the condition "so far as the plans and
specifications permit", and, in the absence of defective work or materials by
the contractor, he was not liable where the failure was due to the design:
MacKnight Flintic Stone v. City of New York (1899). 35
(5) A highly qualified roofing contractor was asked by the owner's rep-
resentatives for his advice as to the best method of constructing a particular
steel sheet roof. A substance called "Curadex", of which the contractor had
experience, was discussed as an adhesive to bond insulating material to the
steel sheet, and though the contractor expressed a preference for hot asphalt
for sloping roofs, he indicated that he was prepared to use it for the roof if the
owner wished. The owner then prepared contract documents specifying
"Curadex or approved equal" and the contractor duly obtained the contract.
The contract required the contractor to furnish a written five-year guarantee
"that all above work specified will remain weather-tight and that all material
and workmanship employed are first class and without defect", which the
contractor duly gave. The roof failed because in high winds the "Curadex",
which had been properly applied, was not capable of maintaining adhesion
between the materials in question. The Ontario Court of Appeal, following
the MacKnight case, supra, and not following and disapproving Thorn, found
for the contractor, holding that he was not guaranteeing the specification, but
merely the freedom of the materials and workmanship from defects in his
own work resulting in the roof not being watertight. Held, by the Supreme
Court of Canada, allowing the appeal, disapproving the MacKnight case, and
approving Thorn, that the words "work above specified" in the guarantee
included the "Curadex", notwithstanding that it had been finally selected by
i2 21 D. (Ct. of Sess.) 507.
"22 S.L.R. 527.
J4 2 T.L.R. 554. ~-.
l5 160 N.Y. 72,per Vann}. Disapproved by the Supreme Court of Canada in the Willand case,
next illustrated.
OBLIGATIONS OF THE CONTRACTOR 553
the owners, and further that the words "first class and without defect"
referred (inter alia) to the purposes or intended use of the work so that the
contractor was liable: Steel Company of Canada Ltd v. Willand Management
Ltd. (1966)."
1:he last of the above cases is of considerable interest and, with respect, 4-114
eminently right. The ninth edition of this book, commenting on the
decision in the Ontario Court of Appeal, stated that any such case must
turn on its particular facts and the degree of reliance in fact placed upon
the contractor's skill. If the roof specification was of a highly specialist
character, it was submitted that the decision might well have been the
other way, since it was not uncommon for architects or engineers to put up
preliminary designs of highly specialist work for approval by the special-
ist, requiring the latter to give a guarantee or to indicate his approval of the
design, ~r even req~ring him to provide working drawings for approval by
the architect or engineer, with an opportunity, if desired, to depart from
the original design on which the work was priced. 37 In such circumstances
it has already been submitted38 that a term warranting the design would
usually be implied-a fortiori, of course, an express term would not be cut
down in its application, as in the above case, where the guarantee was
expressed in terms approximating very closely, if not for all practical pur-
poses exactly, with the implied terms as to work, materials and suitability.
(vi) By-laws obligations of contractor
A desig~ obligation of the contractor, notwithstanding actual provision 4·115
of the design by the owner's A/E, can easily arise under many English-
style standard forms of main contract, in which the contractor expressly
undertakes to comply with all statutory provisions affecting the work,
including by-laws. 39 While under the RIBA forms (but not under the ICE
forms) such co~pliance may entitle the contractor to extra payment, fail-
~re to comply will be a breach of contract, notwithstanding the usual prac-
tice whereby the owner's architect assumes responsibility to his client for
by-law compliance.40 Many by-laws in fact lay down design requirements
for the work, usually from the point of view of structural safety or public
he~th, and tend to state the various by-law obligations in somewhat gen-
eralised terms of performance or suitability rather than in strict technical
terms of construction. 41 In consequence, an express provision similar to
36
(1966] S.C.R. 746; (1966) 58 D.L.R. (2d) 595. Contrast District of Surrey v. Carroll-Hatch,
illustrated supra, para. 4·093, where no reliance was present but not dissimilar defects
wording was differently construed.
37
The Su~reme Court of Canada appears to have arrived independently at the same
conclus1on.
38
See supra, paras. 4·097 et seq.
:w Cf. Clause 4 of the 1963 RIBA conditions, and Clause 26 of the 1955 ICE conditions.
40
See the case of T_ownst;nd's Ltd. v. Cinema News [1959] 1 W.L.R. 119, illustrated post, para.
4·281, and the discussion ante, Chap. 2, Section 6(2)( f).
41
For? more detailed discussion of the by-law system and legislation, see ante, Chap. 2,
Section 6(2)(f), paras. 2·146 et seq. See also the editor's Building and Civil Engineering
Standard Forms, p. 51.
 554 PERFORMANCE [CHAP.4
those used in the standard forms may well impose an express and perhaps
unintended design liability upon the contractor, notwithstanding that the
architect may also be liable to the owner if the works fail to comply with a
by-law requirement as to design or suitability. 42
(vii) Generally
4-116 In many building and engineering contracts the contractor's undertak-
. ing is to carry out and complete the work, not only in accordance with the
contract, but also to the satisfaction of the A/E. There seems no doubt
that, unless the circumstances are such as to impose an express or implied
contractual obligation on the contractor as to design or suitability, it
would not be a bona fide exercise of the power to express dissatisfaction if
this was done on grounds of suitability or design, and accordingly an NE
could not in such circumstances impose a design or suitability requirement
indirectly in this way.43
Finally, it has already been noted that difficult problems can arise in this
field where sub-contractors or suppliers are nominated or sources pre-
scribed by the contract documents. Architects and quantity surveyors who
are fully abreast of their subject would do well to include in the main con-
tract documents express provisions warranting the quality of all work and
materials in the contract, including (expressly) all nominated or
"approved source" work, 44 and in the case of important sub-contracts
where the owner's advisers have been obliged to leave the design element
to a specialist sub-contractor, an express suitability undertaking both in
the main contract documents and in the sub-contract docments. 45 There is
no hardship in this, since a sub-contractor who will not give it should never
be nominated, and the main contractor will have a comparable undertak-
ing against the sub-contractor to protect his own interest.46
(b) Materials
4,, 117 The cases in this paragraph of this Subsection, although concerned with
the lesser "merchantability" warranty in regard to materials have proved
to be of much wider importance, and should also be considered in relation
to the design and suitability obligation.
The essence of the quality obligation in regard to described materials is
that the quality of the goods delivered should be adequate for at least one
42 London Borough of Newham v. Taylor Woodrow-Anglian (1981) 19 BLR 99, C.A. (a
design and build case, but see the BLR commentary at pp. 108-109, referring top. 51 of
Building and Civil Engineering Standard Forms. See also the Acme Investments case,
supra, para. 4·091.
•J See the judgment of Lord Wright in Cammell Laird v. Manganese, Bronze & Brass [1934]
A.C. 402, the case of Panamena, etc. v. Leyland [1947] A.C. 428, and the discussion post,
Chap. 6, Sections 5(5) and (6).
44 See, e.g. the English government contract GOWks/1, Clause 31(2) and (3).
•s See, e.g. the Singapore SIA contract, Clauses3(1) and28(2),set out in C.C.P.p,, pp. 557 and
587.
46 See the discussion, ante, Chap. 2, Section 6(2)(e).
SECT. 1] OBLIGATIONS OF THE CONTRACTOR 555
of th~ purposes for which goods sold under that description are commonly
required and used. There must be no defect, therefore, which, if known,
~ould render th~ go?ds wimarketable for any purpose under that descrip-
tion. That question itself may often need to be decided in the light of the
state of the market's knowledge at the time of the sale. Thus in the Hard-
wick Game Farm case, the question was whether a particular ingredient in
poultry feed, only later known to be poisonous to poultry, would have
been accepted by _the market as satisfactory for poultry in the light of
know~ed~e at the time of the sale. Closely analogous examples in the con-
struction industry are provided by certain percentages of calcium chloride
additives, or the use of high alumina cement, which for many years were
r~garded as acceptable by the English codes of practice and by the indus-
trial market generally, against simple descriptions of "concrete" or "con-
crete units", for example. Description is accordingly an essential element
in determining merchantability.47
. Buildin~ and .engine~ring contracts usllally define with some precision
in the spec1:fi.cat1on or bills the materials to be used by the contractor. The
choice of particular materials for use on a building project, however, is one
element of the design of that project, and it has already been seen that
there will, in appropriate circumstances of reliance for this on the con-
~ractor, be an implied warranty on the part of the contractor, correspond-
ing to the sale of goods and now the Supply of Goods and Services
warranties of suitability, as to the suitability or effectiveness of the final
work _completed using the described materials, and of the described
matenals themselves. 48 It has been shown that this higher warranty of suit-
ability is absolute and independent of fault.49
The_ basic minimum warranty in regard to materials, however, corre- 4·118
spond1ng to the warranties of merchantability in the Sale of Goods and
Sup~ly of G?ods and Services legislation, is that they must be of good
quality, that 1s to say, good of their kind as described, and without defects,
and this warranty will not be displaced by the stipulation of a branded
product or of the source of supply in the Original contract documents5o or
it is s_ubmitted (if the views expressed supra are correct),s1 if the supplier i~
nominated under a provision in the contract. In the vast majority of cases
this lesser warranty will be independent of fault.s2 '
It has a.Isa be~n explained that the implied higher warranty of suitability
of matenals will not necessarily be displaced if an architect or other
adviser is engaged by the owner but their design requirements are
41
See, for these aspects of merchantability, Lord Reed's seminal analysis in Hardwick Game
Farm v. Suffolk Agricultural and Poultry Producers' Association [1969] 2 Ac 31 at pp
75-79. See also the comments supra, paras. 4·068 and 4·071. · · ' ·
48
The modern legislation is summarised supra, paras. 4·067-4·068.
49
See supra, paras. 4·071 et seq.
50
Se~ the_ Young & Marten case, infra; Martin v. McNamara, illustrated supra, and the new
leg1slatlon, supra, paras. 4·067-4·068.
51
At paras. 4·109 et seq.
n ~eeMeyers: case,supra; Hancock's case; Young & Marten's case. The Gloucestershire case,
illustrated mfra, should be regarded as wholly exceptional. See also supra, para. 4·071.
 556 PERFORMANCE [CHAP.4
silent as to the particular matter in question. On the other hand, the con-
53
tractor's obligation will not extend beyond supplying a material of good
quality conforming to the express description of it in the contract docu-
ments and without defects, if the description is precise and the choice of
that material is indeed the architect's or engineer's.54
Where, however, the contract is silent as to the materials to be used
(and, as already explained, this may mean partially silent), the cases show
that" the higher suitability warranty will also be implied:
"I think the true view is that a person contracting to do work and supply
materials warrants that the materials which he uses will be of good quality
and reasonably fit for the purpose for which he is using them, unless the cir-
cumstances of the contract are such as to exclude any such warranty" .55
"I do not hesitate to say that I am clearly of opinion, as a general proposition
of law, that where one man engages with another to supply him with a_par-
ticular article or thing, to be applied to a certain use or purpose, in consider-
ation of a pecuniary payment, he enters into an implied contract that the
article or thing shall be reasonably fit for the purpose for which it is to be used
and to which it is to be applied". 56
4-119 As was pointed out by du Parcq J. in G.H. Myers & Co. v. Brent Cross
Service Co. 57 the remarks of Kelly C.B. in the passage quoted above
referred to a contract for work and labour and not to a contract for the sale
of goods.58 This reinforces the opinions in the Young & Marten case, ill~s-
trated infra, that there is no distinction or difference between the pnn-
ciples to be applied in the case of contracts for the sale of goods and
contracts for work and materials":
''The cases which preceded and crystallised in the Sale of Goods Act 1893, do
not as far as conditions or warranties are concerned, seem to show any clear
con~ciousness of a difference in principle between a sale of goods and a con-
tract for labour and materials" .59
Where materials are the subject of a nominated sub-contract or supply
provision in the main contract, it has already been submitted that, in the
absence of express provision to the contrary, general principles require an
implied warranty of quality in terms identical to those applicable to the
main contractor's own materials ( or indeed the higher suitability warranty
if there has been reliance on the sub-contractor) since it is usual for the
main contract specifically to declare such suppliers or sub:contractors to
be suppliers of the contractor,60 or to be "deemed to be sub-contractors
'·' See supra, paras. 4·076-4·077. . . . .
04 See, e.g. the case of Adcock's Trustee v. Bridge Rural District Counctl, illustrated supra.
·" Per du Parcq J. in G.H. Myers & Co. v. Brent Cross Service Co. [1934] 1 K.B. 46, at p. 55,
approved by all judges in the House of Lords in the Young & NJ.arten case.
'" Per Kelly C.B. in Francis v. Cockerell (1870) L.R. 5 Q.B. 501, at p. 503.
' [1934] 1 K.B. 46.
7
,l! See also Samuels v. Davis [1943) K.B. 526.
,'! Per Lord Pearce in the Young & Marten case, and see the extracts from th~J_udgment of
Lord Upjohn, quoted supra, para. 4·107. ' Suitability", supra.
o1i Cf Clause 28 of the post-1963 RIBA standard forms.
SECT. 1] OBLIGATIONS OF THE CONTRACTOR 557
employed by the contractor" ,61 and without any such implied terms such a
supplier could default on his obligations as to quality with impunity.62 Sev-
eral c~ses invol~g sub-contractor suppliers of materials have already
been illustrated 1n the content of the higher suitability warranty under
"Design and Suitability" above 63 in addition to those below, which on
analysis are directly concerned with the lesser "merchantability" war-
ranty and for that reason considered under the present paragraph.
ILLUSTRATIONS
J\
(1) connecting rod fitted in a car by motor repairers broke and damaged 4. UO
the engine, due to a latent defect. The repairers had bought the rod from the
makers of the car and could not by reasonable care and skill have discovered
the defect. Held, by the Divisional Court, the implied warranty in a contract
for work done and materials supplied as to the fitness of the materials was not
less than that implied in a contract for sale of goods, namely an absolute war-
ranty of fitness. The warranty could only be excluded if the plaintiff did not
rely on the defendant's skill and judgment: Myers v. Brent Cross Service Co.
()934).M
~ate: On analysis ~f the facts, and despite the language used, this case in
reality would s~em t~ 1n".~lve the lesser merchantability warranty of quality
and not the des1gn/su1tab1hty warranty, so that reliance on the defendant was
strictly irrelevant.65J
(2) A builder sold a house in the course of erection. By clause 9 of the
contract he undertook to erect, build and complete it in accordance with the
plan and specification in a proper and workmanlike manner. The plans
showed hardcore under four-inch site concrete but there was no detailed
specification of the hardcore. Through no fault ~f the builder the hard core
contained sulphates which ultimately expanded and cracked t'he floor Held
by Diplock L.J. (after con~idering various contractual provisions and argu~
ments of law co~cef!Ied with the conveyance and deciding that they did not
cut do~n the obhgatlon under clause 9),66 (a) that the obligation under clause
9 apphed to work done before the contract was entered into, as well as sub-
sequent work; {b) that there was no substantial difference between the for-
mulation of a warranty of materials suitable and fit and proper for their
purpose and work carried out in a proper efficient and workmanlike manner
and the alternative formulation that the house should be habitable and fit t~
live in; (c) that the effect of clause 9, together with the implications arising
from the nature of the contract itself, was that the obligation in regard to
hardcor~ was not merely that it should be selected with skill and judgment,
~ut ~~at 1t should be ~t, proper and suitable for its purpose; and ( d) that the
hab1hty was absolute 1n the sense of being independent of fault. Held, by the
61
Cf Clause 59 of the 1955 ICE standard form.
112
See supra, paras. 4·109-4-110. See also Chap. 13, Sections 1(2) and 2(2).
1
6. See supra, paras. 4·091 et seq.
64
[1934] 1 K.B. 46.
..., For a further case where this same confusion is present, see Att.·Gen. of Canada v. Lam-
inated Structures Ltd., illustrated supra. For true cases i;,f materials/design, see Martin v.
McNamara; Stewartv. Reave/l's Garage and the·other cases illustrated under "Design and
M See the case further illustrated on these points, post, Chap. 5, paras. 5.053-5-058.
 558 PERFORMANCE (CHAP.4
Court of Appeal, that in such a case there is a threefold obligation-to do the
work in a good and workmanlike manner, to supply good and proper
materials, and to provide a house reasonably fit for human habitation: Han·
cock v. Brazier (Anerley) Ltd. (1966). 67
[Note: It will be noticed that the language used above by Diplock L.J. sug·
gests, as in the Myers case, a breach of the suitability obligation but, though it
does not affect the importance of or principles laid down by the case, it would
seem that the breach was also a breach of the lesser "good quality" obligation,
since the hardcore contained a serious latent defect (unless, perhaps, it could
be said that for other purposes the hardcore might have been of satisfactory
quality, in which case the lesser warranty would have been satisfied and the
higher warranty would be required to establish liability). On this view, the
case is an excellent example of a specification which was (not unnaturally)
partially silent (that is, the exact quality of hardcore was not specified) so that
hardcore suitable for laying under concrete had to be provided. While on the
facts before him, Diplock L.J. 's finding (b) above is unexceptionable, the situ-
ation would have been quite different had the precise kind of hardcore stipu-
lated and supplied been the cause of the later defects. In that case breach of
the higher suitability warranty would be required. 68]
4·Ul (3) M., developer/main contractors, by their representative (who was
experienced in roofing and tiling work) requested an estimate from sub-con-
tractors Y. to supply and fix a high-grade type of tile known as a "Somerset
13" for the houses on their estate. M. relied entirely on their own skill in the
choice of the tile. These tiles were made by only one manufacturer (B.). Y.
obtained and fixed the tiles through their own sub-sub-supplier Z., who him-
self purchased the tiles from the manufacturer B. This particular batch of !iles
contained a defect which could not be detected. When sued by the vanous
house purchasers, M. joined Y. as third parties. Y. could not join Z. because in
his case the limitation period had expired, so the issue was between M. and
Y.r,g Y. argued that as both material and ultimate supplier were chosen by the
developers, there was no warranty as to fitness or quality, only a warranty of
skill and care, and that the position was different from that under the Sale of
Goods Act. Held, by the House of Lords, while reliance on their own judg-
ment by the developers was sufficient to displace any warranty of suitability,
no further effect should be given to their selection of the goods and source of
supply, and this did not displace the warranty of merchantability or good
quality, so that M. was entitled to recover from Y. Despite the hardship of the
limitation barrier against suing Z., the justification, as in the case of sale of
goods, was the desirability of a chain of responsibility under which, if pro.Per
terms were obtained against sub-suppliers, the person ultimately responsible
would be made liable. Young & Marten Ltd. v. McManus Childs (1969). 70
4·122 (4) A RIBA contract in the 1957 (revised) form contained a PC sum for the
"supply only" of pre-cast pre-stressed concrete columns. Clause 21 of that
contract gave the main contractor a right to object on any reasonable grounds
to the nomination of a sub-contractor, and also on the ground that the sub-
contractor would not indemnify him against the same obligations in respect of
61 [1966] 2 All E.R. l,per Diplock L.J., at p. 901, C.A. See also Bil!yack v. Leyland [1968] 1
W.L.R. 471,per Edmund Davies L.J., illustrated post, Chap. 6, Section 3.
611 See supra, para. 4·066, where it is pointed out that the design/suitability warranty only
becomes relevant if the materials and workmanship warranties have been duly performed.
69 Even today no claim for such economic loss could have been brought in to_~! by M. or Y.
against B.: Simaan General Contracting Co. Ltd. v. Pilkington Glass [1988] Q.B. 758.
lU [1969] 1 A.C. 454.
SEcr. l] OBLIGATIONS OF THE CONTRACTOR 559
the sub-contract as those for which the contractor was liable under the main
contract; bu_t Clause 22 was silent as to right of objection in the case of nomi-
n~te~ suppliers. Th~ arc~itect nomina_ted suppliers of the columns. The sup-
I?lie! ~ tenns of tr~ding, incorporated into their original quotation, excluded
liabihty for defective columns beyond their replacement free of charge. When
the columns beg_an to be erected, serious cracks were observed, and the clerk
of works orally _instructed the contractors to suspend work on the frame till
the cause ~as discovered. The contractor admitted that he would have stop-
ped work tn any event. He confirmed the instruction in writing to the archi-
tect, however, saying that a delay would be caused and recorded and the
latter acknowledged the letter without comment. The contractdrs found
other work to do, but finally wrot~ saying that all work was now held up, and
short!y after asked for confirmation that damages would be paid. Without
warning, the contractors then purported to detennine the main contract some
five weeks later under Clause 20, which entitled them to do so if the work was
deiared f~r a mo?th by, inter ~lia, (a) architect's instructions; or (b) late
receipt of mstructions. At ~he time, the architect was still awaiting a report
from experts he had called 10. Subsequently the defects in the columns were
found !O be due.to an incorrect and unsuitable mix with excessive quantities
of calcium chlonde. The contractor conceded that if he was in breach of con-
tract himself, his determination would not be valid. It was also accepted that
on th~ fact.5 there h~d been a breach of the warranty of good quality, if it was
to b~ 1mphed. The issue was solely, therefore, whether or not the contractor
w:as tn breach, and this in turn depended on whether the implied tenn was
displaced or not. f!eld, by the House of Lords, that the tennination by the
contractor was valid. Per Lord Pearce, the contrast between Clauses 21 and 22
showed an ~ntention ~o e~clude the ~arranty, and the particular circumstance
of.th~ architect nominating a supplier who had limited his liability fortified
this view. Per Lord Upjohn, that the contrast between Clauses 21 and 22 did
not exclude _the warra~ty, but th~ resti:i~tion on liability of the supplier did.
P~,: Lo~d Wtlberforce, that the imposition on the contractor of special con-
~1t1ons 1n t~e sub-contract restricting his right of recourse and the absence of a
nght to obJect _under Clause 2~ were strongly against the implication of the
w~ran~y. By virtue of the special terms of the main contract and of the limi-
ta~ions 1!1 the sub-contract, no warranty should be implied. Per Lord Pearson
( disse~ting), that the contrast between Clauses 21 and 22 did not point to
exclu~1onof the warranty, and that on the contrary the words "declared to be
suppliers to the main contractor" in Clause 22 had a similar effect to the words
"declared to be sub-contractors employed by the contractor" in Clause 21 ·
~urt~er, _the restriction of liability in the sub-contract did not prevent th~
imphcatlon of a warranty of quality similarly restricted in the main contract 12
so that the main contractor was in breach of contract: Gloucestershire Coun;y
Council v. Richardson (1969).n
[No!e: The (!?o!'ce~tershire case was the subject of five full pages of close
analysts and cntlcism tn the tenth edition74 which it is not proposed to repeat
11
The effec! o_f his ju?gment is set out at gr~ater length, because the headnote of the report
does not, 1t is subnutted, accurately state tts effect in attributing its basis exclusively to the
contrast between Clauses 21 and 22.
72.Co~p?re}\'for~is v. Martin [1966J 1 Q.B. 716, at p. 729,per Lord Denning M.R. on the effect
of lim1tat1ons m a sub-bailment contract to which the bailor has expressly or impliedly
consented.
13
[1969] 1~-C:· 480. Se_e, for another application of the RIB AlJCT determination scheme in
, a rather similar nominated sub-contract ~ituation,Jarvisv. Rochdale Hou.sing Association
F9$7J 36 BLR 48, C.A., analysed and m part doubted in (1987) 3 Const. L.J. 274 and
illustrated post, Chap.12, Section 1(4). '
14
pp. 300---304.
 560 PERFORMANCE [CHAP.4
in the present edition, but which should be consulted if necessary in any rare
situation where similar wording is used at the present day. For the reasons
there stated, it is submitted that the judgment, which of course contradicts the
basic "chain of liability" principle, depended upon the contract's own pecu-
liar terminology, and various concessions ma~e by co~nse_l. T~e particular
standard form wording, and the absence of a nght of obJection 1n the case_ of
nominated suppliers only, is no longer, in any event, a feature of any English
standard form at the present day, so that its re~evance .to any cas~ ~ther- than
one involving that particular wording must, it ts submitted, be i_iun1mal, p~r-
ticularly in the light of the subsequent Independent B,:oadcastLng A':"t~orlly
case referred to above, and any argument relying upon 1t open to susp1c1on. A
particular weakness in the Gloucestershire decision is t~at the existence of an
implied right of objection was not brought to the attent1on of the House, nor
any argument based on waiver or estoppel consequent upon the contractor
placing his order with the nominated supplier without objection: s~e, for the
fonner, per Romer L.J. in Leslie v. Metropolitan Asylums.75 An rmportant
part of Lord Pearson's dissenting reasoning would also appear to have been
supported by other authority. 76]
4-U3 (5) H., owners of a helicop~er which had crashed duet? a defective replace-
ment retaining bolt on the tad rotor-blade, sued R., the1r wholly-own~~ sub-
sidiary, with whom they had an informa~ ora~ agreement for the serv1~~ of
the machine. It was held to be an oral or 1mphed tenn of the contract, ans1ng
from a course of business, that R. would when necessary obtain certified.spare
parts from the manufacturer's distributor in Australia. It was not practicable
for H. or R. to test for the latent defects in question. The replacement bolt had
come from the approved source with all the appropriate certifi~ation,_but con-
tained a latent defect which caused the crash, as a result of which H. incurred
substantial liabilities for which they sued R. Held, by the High Court of Aus-
tralia, that H., knowing of R. 's limited technical cap~bilities and o_f the ~ro"."-
enance of the replacement parts, had made a stipulation as to quality which it
regarded as of greater weight than anything of which R. was capab~e. It was
this for which H. bargained, and no necessity arose for the operation ~f an
implied warranty of quality. Per Barwick C.J., H. kn~w that a ~ew c_erttfied
bolt made by the Bell Helicopter Company to a particular specification and
imported into Australia would be used by R. No f.urther warr~nty was
intended. Per Stephen J., in the You:ig & Marten case,_1t was r~cognised that
the exclusion of a warranty of quality was more readily possible where the
supply of goods was only incidental to the services perfo~e~i. The p:ese?t
contract was predominantly for the performance of engi~enng ~e~1ces 10
maintenance and overhauling, the servicing of parts being an 1nc1dental,
albeit important, feature of R.'s contractual obligations: Helicopter Sales
(Australia) Pty. Ltd. v. Rotor-Work Pty. (1974). 77 •
[Note: The result and reasoning i1! this case seems, with respect, highly
questionable, and analogous to that 1n Lynch v. T_horr1;e. Much of the la?-
guage of the judgments seems relevant only to an rmphed warranty o~ suit-
ability-not to the lesser stan~~rd <:'f merchanta~ilit~, w~ere any ques_ti?? o,!
reliance is irrelevant. The dec1s1on ignores the VItal chain of responsibility
principle enunciated in the Young & Mf1-rt7n ~ase: from which, as from Myers
v. Brent Cross, the case seems virtually 1nd1stingu1shable. The_ Court se~ms to
have attached great weight to the expectation or requtrement, 10 an
1~ Quoted qnd discussed infra, paras. 4·184-4· 185.
10 Morris v. Martin [1966] 1 Q.B. 716, at p. 729,per Lord Denning M.R., followed by Judge
Fay Q.C. in Rumbelow v. A.M.K. (1980) 19 BLR 25, at p. 48, illustrated infril; para. 4· 125.
11 48 A.L.J.R. 390.
SECT.!] OBLIGATIONS OF THE CONTRACTOR 561
extremely informal agreement, that manufacturer's parts, with certified test-
ing certificates, would be invariably used. If the certificates were of a kind to
be issued by the manufacturer to the plaintiffs, that might well be a special
factor removing the need for any implied term, but itis hard to see how certifi-
cates issued to the defendants as repairer (perhaps to assist them in defending
a case for negligence in tort), and which would be valueless to the plaintiff
against the manufacturers in the event of latent defects, could justify displace-
ment of the implied term.]
(c) Workmanship
In the absence of any special term or direction in the contract specifying 4- 124
the manner in which work is to be done, there is an implied condition in all
contracts for work and labour that the described work will be carried out
carefully and skilfully or, as it is sometimes expressed, in a good and work-
manlike manner. 78 As in the case of the materials obligation supra, this
corresponds to the lesser "merchantability" obligation in section 14(2) of
the Sale of Goods Act 1893. It has already been pointed out, however, that
this obligation may involve, in matters of detail not specifically dealt with
by the contract documents, a design responsibility79 since in such cases
there will have been to that extent reliance on the contractor to choose
suitable materials and working methods, and accordingly the obligation
will be the higher "suitability" obligation as now defined by the sale of
Goods and Services legislation in England, which is dealt with under
"Design and Suitability", supra, and not the lesser "merchantability" obli-
gation which is the subject of the present paragraph. In cases Where the
working methods have been sufficiently precisely described, however, the
obligation amounts to no more than a warranty that reasonable skill and
care has been used in carrying out the described work.
The foregoing remarks and cases in "Materials", supra, 80 in relation to
the main contractor's responsibility for the quality of materials supplied
by nominated sub-contractors or suppliers, and the circumstances in
which the implied terms may be displaced, apply equally, it is suggested, to
his responsibility for the standard of workmanship shown by such sub-
contractors. Indeed, the dividing line between materials and workman-
ship may often be finer than is commonly supposed. Thus in the Glouc-
estershire County Council case, supra, a supply-only sub-contract for
pre-cast pre-stressed concrete columns which had excessive calcium
chloride in the mix, and so lacked compressive strength, would no doubt
have been regarded as a case of bad workmanship had the casting of the
concrete been done on, and not off, the site. The "chain of liability" prin-
ciple, as well as the express provisions to be found in many contracts pro-
73
Duncan v. Blundell (1820) 3 Stark. 6; Pearce v. Tucker (1862) 3 F. & F. 136; McKey v.
Rorison [1953) N.Z.L.R. 498; all illustrated supra, and cf Harmer v. Cornelius (1858) 5
· C.B.(N.S.) 236.
1
~ See supra, para. 4·072.
60
See supra, paras. 4·119 et seq.
 [CHAP.4 SECT.1] OBLIGATIONS OF THE CONTRACTOR 563
PERFORMANCE
562
quality of the work by reference to the approval or satisfaction of the own-
vidin for nomination require, it is submitted, a responsib~lity for
g hip s1'milar to that for the main contractor's own work in order er's A/E, in addition to the more obvious requirement of compliance with
k
wor mans bl" h d a1 the express contract descriptions of the work in the specification or draw-
that the necessary chain of responsibility may be esta is e . ings. These descriptions are also found in the express terms in the contract
conditions themselves describing the quality of workmanship or materials
ILLUSTRATION in more generalised terms.83 The importance of such "satisfaction" pro-
visions has in the past been both misunderstood and exaggerated, particu-
larly by civil engineers and.their institutions, but it remains true that in
4·125 earlier cases in the courts these provisions were sometimes given over-
riding force, particularly where no provision for arbitration was present in
the contract, over the more specific contract descriptions. This subject is
more fully dealt with post, Chap. 6, but in view of the widespread misun-
derstanding of such provisions, their origin and the history of their devel-
opment in English construction contracts has been explained in some
detail in C.C.C.P. 84 The modern tendency, however, is (rightly) not to
interpret such provisions as overriding express contractual descriptions,
in the absence of clear wording to the contrary.
In this context, the Court of Appeal (Denning L.J. dissenting), in the 4·127
difficult architect's negligence case of Cotton v. Wallis, 85 held that, where
under the then RIBA form of contract the builder undertook that the
materials and workmanship should be "the best of their respective kinds
and to the full satisfaction of the surveyor", the architect was not negligent
in passing work admittedly not of the best quality, as the low price of the
building was a material factor in determining whether the work could be
properly passed to his reasonable satisfaction in accordance with the con-
tract. Apart from the obvious difficulties of this decision, it may be
doubted whether it lays down any principle bearing upon the rights inter se
of the contractor and the building owner,86 although it is interesting to
note that, in the context of implied terms of quality, price may indeed be a
factor in deciding questions of the lesser "merchantability" obligations
with regard to both materials and workmanship: see section 4(9) of the
Supply of Goods and Services Act 1982.87-89

(3) Obligations as to Progress

In the absence of express provision, a contractor must complete within a 4·128

reasonable time. In addition to express provisions for completion Dy a
(d) Work to satisfaction of AIE stated date, virtually all construction contracts, for very good practical
As previously stated, it is a commonplace of the traditional n!n~~eent~ reasons, also contain provisions requiring due diligence or expedition by
4·126 centu wording of construction contracts, followed automatica y an the contractor at all times prior to completion. Thus, the English standard
withe~ much consideration in many modern standard forms, to define the
io See, e.g. in Clauses 13 and36ofthe ICE conditions and Clause 1(1) of the pre-1980 RIBA/
. d ee per Lord Upjohn,supra,para. 4·107. JCT conditions.
si See the discuss10n supra, paras.~· lO9 er se'!., an sh'ghly persuasive For the limitation of 114 See paras. 17-06 to 17-12 et seq., reproducing (1986) 2 Const. LJ.13.
115 [1955] 1 W.L.R. 1168, illustrated ante, Chap. 2, para. 2-199.
s219 BLR 25. This judgment and its reasonmg are i 729 erL~rdDeilni1;1gM.R.;per
Jiabilitypoint,seeMorrisv. Martin [1966] 1
Lord Pearce in the Young & Marten case, a P·
a,.B·J~!::~~-
, ,
pe;f.ord Pearsoh"in the Glouc- l<I, See the suggested explanation of this case, ante, Chap. 2, para. 2· 198.
87
..j!<J As to which see supra, paras. 4-067-4-068.

estershire case, illustrated supra.

 564 PERFORMANCE [CHAP. 4
forms provide that the contractor "shall ... regularly and diligently pro-
ceed with the [works]" and "shall proceed with the [works] with due
expedition and without delay", but in fact, even in the absence of such
provisions, it is submitted that there roust be an implied term that the co~-
tractor will proceed with reasonable diligence,90 although no doubt, in
cases where a completion date is stipulated in the contract, the degree of
required progress will be measured against the prospects of completion by
that date. The reason for this latter implied term, it is submitted, is that,
otherwise an owner will be forced to stand by helpless until the perhaps
distant co~pletion date, notwithstanding a rate of progress clearly inad-
equate to achieve the promised date and certain to cause irremedial future
loss to the owner .91
4-129 In the case of the implied obligation to complete within a reasonable
time, this may not be a fundamental term or condition, mere breach of
which will entitle the owner to treat the contract as repudiated once the
completion date has passed, any more than in the case of an express ~m-
pletion date; but failure to proceed expeditiously after reasonable nonce,
whether before or after the completion date, will, it is submitted, evince an
intention no longer to be bound and so justify the owner in rescinding and
treating the contract as at an end.92
By far the most common express remedy for delay in construction con-
tracts (although one which, in practice, is far more difficult to enforce and
for that reason of much less efficacy than most owners are led to believe) is
to be found in the provisions for liquidated damages for delay· in com-
pletion, often accompanied by additional provisions extending the d~te
for completion for defined reasons, leading to a perhaps unnecessanly
legalistic and complicated case law in which the validit~ of such provisio_ns
has often been successfully challenged in normal circumstances quite
likely to occur in construction projects.93
In fact, a more practical and less controversial means of improving p~o-
gress and avoiding delay, together with other advantages for owners, hes
in the use of suitably weighted stage instalments for interim payment
94
rather than the more common systems based on periodical valuation.
(4) Obligations as to Cost
4-130 Clearly, in a priced contract, where the cost of carrying out the contract
work by the contractor will not be of relevance to the owner, no con-
sc, See post, Chap. 9, Section (7), where the need for the implication of such a term is
explained.
91 See post, Chap. 9.
92 This subject is dealt with in more detail, post, Chap 9.
.i.1 This subject is consideredpOst, Chap. 10, paras. 10·024 et seq. '.
94 See C.C.P.P., paras. 23--23(c) and 24--22; further developed in ConstrU.S!ion Contract
Policy; published in 1988 by the Centre of Construction Law, King's College, London, pp.
225-7.
SECT. 1] 0BLIGATIO NS OF THE CONTRACTOR 565
tractor's obligation in regard to cost will exist; but in cost-reimbursable
contracts there will, even in the absence of express provision, be an obvi-
ous need for an implied term limiting the contractor's entitlement under
the contract to such costs of carrying out the work as have been reasonably
incurred by him and without fault on his own part, that is, an obligation of
reasonable competence and economy in carrying out the work.95
Howe~er: it has already been seen that a duty in tort under the Hedley-
Byrne pnnc1ple may be owed by a contractor to an owner, both of care in
giving any estimate of cost on which the owner is likely to rely in such a
case, and also to warn should any previously given estimate of cost sub-
sequently become likely to be exceeded.96 It is submitted that, on similar
principles to the other cases of duty to warn by a contractor already noted
in regard to the design of the work, the contractor's duty to warn as to
increased cost may also be contractually based.
ILLUSTRATIONS
(1) An engineer 8;greed hi~ fee rem~neration at $15,000, but required 4-131
expenses for professional assistance which he estimated to the owners at
approximately $5,000. He billed these expenses separately during the project,
bu~ when the~ reached $6,000 the defendants refused to pay more. The cost of
assistance ultimately reached over $14,000 for which he sued the owners.
They denied any agreement at all, but alternatively alleged breach of con-
tra~t. Held, by Gran~eJ., the defendants were entitled to rely on the plaintiff's
estimate and were !table for $5,000 only: Kidd-v. Mississauga Hydro-Electric
Commission (1979).97
[Note: Grange J. clearly considered that the plaintiff was in breach of con-
tract as well as liable under the principle of Hedley Byrne v. Heller: see
pp. 540---541 of the report.] '
(2) A contractor under a target cost contract gave an initial estimate of
$2_00,00? to t?e owner. Subsequently, when putting in a bill for $145,000, he
raised hts estimate for the completed work to $240,000 to allow for certain net
alterations. The owners then discussed making economies with the con-
tract.or, but?" an assurance of an ultimate cost of $235,000 to $240,00 they
continued with the project unaltered. The final bill was $276,000. Held, by the
Marrland Cc:,urt of Special Appeals, the contractor had a fiduciary or confi-
dential ~uty tn contract to. know of, keep track and advise the owners of any
substantial excess over estimate, and the contractor's claim for registration as
a mechanic lien must be limited to $240,000: Jones v. Hiser Construction
(1984).0'
(5) Notices before Claims
Building and engineering contracts frequently contain prov1s1ons 4·132
requiring a contractor to give notice within a reasonable time of events
95
See also ante, Chap. 3, Section l(S)(b ).
90
Abrams v. Ancliffe [1978] 2 N.Z.L.R. 420, illustrated ante, Chap. 1, para. 1·286.
97
97 D.L.R. (3d) 535.
1
~ 484 A. (2d) 302.
 [CHAP. 4
566 PERFORMANCE
occurring which he considers may entitle him to claim addition~l ?ay~ent
under the terms of the contract. Since the purpose of such prov1s1ons is to
enable the owner to consider the position and its :financial consequences,
(by cancelling an instruction or authorisi~g a v~ri~~on, ~or examp~e, ~e
may be in a position to reduce his financial hab1hty if the chum 15
justifed), and since special attention. to contemporary~ecoi:ctsmay
be essential either to refute or regulate the amount of the clann with_ pre-
cision there is no doubt that in many if not most cases the courts will be
reacty'to interpret these notice requirements as c~ndition~ precedent t? a
claim, so that failure to give notice within the reqmred penodmay deprive
the contractor of all remedy.
ILLUSTRATIONS
(1) An Australian standard form of sub-contract provided that the con-
tractor was not to be liable for any claim unless the sub-contractor lodged the
claim, together with full particulars, in writing with the cont:actor "not later
than 14 days after the date of the occurren:e of ~vents_ or circumstances ?n
which the claim is based", or else written notice of mtent1on to make the claim
given within the same period, followed by particulars lodged n~t later than 14
days before the issue of the final certificate. There was a rate m the contract
for compacting material in embankm~nts, but th~ arbitrator h:Id that some of
the material excavated required special processing before bemg compacted,
d that as there was no item for this in the bills the contractor was contrac-
98
:~ally entitled to be paid reasc_,n~ble remun~ration !or this v:ork. " The con-
tractor had not given notice w1th1n the required penod, and 1~ was_ argued on
his behalf that since he was entitled to the payme1:1t under an 1mphed term _of
the contract, there was no need to give the notice. Held, ~y ~mart J., dis-
9
tinguishing Tersons Ltd. v. Stevenage Development Corporation the purpose
of Clause 47 was to ensure that notice was given at an early sta~e so that the
main contractor could inspect and investigate the ~ve!lts or c1r~umstances
and consider his position. He might wish to issue a vanat1on. He m1~t need to
inspect or satisfy himself as to the site cond!tions and t~e qu~hty of th~
material The clause was in the nature of a residual clause imposing an obli
gation t~ give notice where mon~~ was cl_aimed for work over and above the
minimum work if optimum conditions existed. The _clau~e was not concerned
with whether the work was covered by express or unplied terms ':f t~e con-
tract, but upon the occurrence of events or circumstances neces~1tattn~ the
work. The claims in question required the sub-cont:actor to gi~e wntte~
notice in time and the claim failed: Jennings Construction Ltd. v. Birt (1986).
(2) Clauses 11 and 12 of a Canadian contract provided for change orders.
4-133
and for prior agreement on their cost, and by Clause 4 that the contractor was
to be reimbursed for the cost of delays caus~d by the ow_ner or other contrac-
tors By Clause 22 either party was to be entitled to be reimbursed for damage
cau~ed by the wrongful act of the other,.and claims under that clause were t~
be made in writing within a reasonable time after first observance of the dam
9611 Possibly a dubious "omitted item" claim---:-see post, para. 8·024.
'I? [l 965] 1 Q.B. 37, illustrated post, Chap. 7, para. 7·053. . ,: ial
1 [1987} 8 N.S.W.L.R. 18. See also the decision of Rogers C.J. m the N.~.W.,9Dmmerc
Division in Wormald Engineering v. Resources Conservations International, unreported,
November 2, 1988.
SECT. !] OBLIGATIONS OF THE CONTRACTOR 567
age. The contractor made of number of claims based on the contention that
the contract did not permit the owner to instal machinery and plant in the
bottling factory which was under construction before construction was com-
pleted. In general these were refuted, but a number of claims were allowed as
change orders, and prices agreed with the owner. Subsequently the contract-
or claimed extra compensation for alleged "impact costs" arising out of the
change orders already given. Held, by the British Columbia Court of Appeal,
that "where an extra price is agreed to in respect to a particular item, that
person has a right to assume that the contractor has taken into account all of
his costs, direct and indirect, flowing from the change in circumstances that
led to the re-negotiation, and he will not later be presented with a bill for
additional compensation" (following Mahoney J. in Walter Cabott Construc-
tion v. The Queen 2). Held, further, (approving the text of the present Subsec-
tion of Hudson, supra, as set out in the tenth edition) that since no breaches
outside Clause 22 had been found to exist, and the contractor had claimed just
before completing the work after the owner had let many agreed change
orders pass and taken no further steps to deal with the situation, the claim was
too late to be reasonable, and Clause 22 should be construed as a condition
precedent: Doyle Construction Ltd. v. Carling O'Keefe Breweries of Canada
(1988).'
Notice provisions or time-bars, sometimes allowing very little time, 4-134
as a condition of making any claim at all under a contract are
common in commercial fields other than construction contracts.4 In
construction contracts, specific notices in relation to particular claims or
remedies permitted by different clauses of the contract are also extremely
common,4a quite apart from residual clauses requiring notice of all claims
generally, such as that noticed in the Jennings case, illustrated supra.
Thus contractors' financial claims under the contract made for the first
time after final certificate are prohibited under the RIBA/JCT contracts.5
Notice under Clause 40(1) of the ICE conditions (claim for suspension
of work ordered by owner) is also a condition precedent. 6 Again the
ICE conditions have particularly difficult provisions as to notices in
Clause 52(2) with regard to variation claims,7 and a more residual notice
for claims generally llJlder clause 52(4). 8 The very important Clause 12
of the ICE conditions (unfavourable physical conditions) also did have
stringent provisions for notices,9 but these have been greatly relaxed, if
not entirely removed, in the post-1973 ICE conditions. 10 The cases on
2
(1974) 44 D.L.R. 3d 82, 90.
3 Unreported, British Columbia C. of App., February 1-2, 1988.
4 See post, Chap. 18, para. 18·048, and for the FIDIC time bar, see post, para. 18·058 and
c.c.P.P., Chap. 1s.
,i, See post, Chap. 7, paras. 7·051 et seq., and Chap. 18, paras. 18·049 et seq.
'See, e.g. Emson Contractors Ltd. v. Protea Estates (1987) 39 BLR 131.
6 Crosby Ltd. v. Pordand Urban District Council (1967) 5 BLR 121 [Donaldson J.J.
1 See Hersent Offshore Ltd. v. Burmah Oil Tankers Ltd. (1978) 10 BLR 1.
6 See post, Chap. 7, Section 2(3), and the case of Tersons Ltd. v. Stevenage Development
Corporation [1965] 1 Q.B. 37, para. 7·053, and see also Blackford and Sons [Caine] v. Christ
Church Corporation (1962) 60 L.G.R. 214.
• See Humber Oil Terminalv. Hersent [1981J 20 BLR 16 for a relatively severe decision by
Robert GoffJ. on the pre-1973 Clause 12 required notice,post, Chap. 8, Section 1(2)(d).
10 See particularly Clause 52(4)(e).
 568 PERFORMANCE [CHAP.4
notices under Clause 52 of the pre-1973 ICE conditions are set out post,
Chap. 7; under its pre-1973 "unfavourable physical conditions" Clause 12,
see post, Chap. 8; and on the time-bar for arbitration in Clause 66 of the
ICE conditions and Claus~ 67 of the FIDIC conditions, post, Chap. 18.
However, later producer influence on civil engineering standard forms
appears to have virtually emasculated the sanctions for non-compliance
with notice requirements in the case of the post-1973 ICE conditions and
the post-1987 FIDIC conditions. 11
4· 135 The RIBNJCT forms of contract are much less stringent in this respect,
and there is virtually no important claim of the contractor under those
conditions which can be said to be clearly barred by the wording of the
contract, although notices are required in relation to extension of time. 12
Certainly, financial claims by the contractor under the RIBA/JCT forms
will be barred by the not very stringent requirement that notice of arbi-
tration should be given within 14 days after the final certificate, but even so
this would not appear to prevent a contractor's claim for damages for
breach of contract. 13
Various Commonwealth countries, including England, confer a statu-
tory discretion on the courts in cases of "hardship" to extend time limits
imposed by contracts on the right to go to arbitration. 13a However, both in
England and Australia it has been held that these statutory discretions will
only apply to a contractual right to arbitration, and not to time-bars placed
upon claims generally or upon individual claims under particular pro-
visions of the contract which do not in terms bar the right to arbitration. 14
However, such time-bars might attract the provisions of the English
Unfair Contract Terms legislation. 15
Some contract provisions, in particular under termination clauses,
impose special requirements of form, such as notice by registered post.
There have been conflicting decisions as to whether failure to comply with
the required form is a condition precedent where a less formal service is
proved to have been effected in fact. These are discussed post, Chap. 12.16
SECTION 2. OBLIGATIONS OF THE OWNER
(1) General Summary of Obligations
4·136 The common thread uniting all the obligations of the owner discussed in
this Section is to be found in the implied "prevention principle" and "co-
11 See Clauses 52(4)(b) and 53.4 respectively.
12 See post, Chap. 10.
1, See Clause 30(7) and Clause 30.9.1.2 of the pre- and post-1980 forms respectively. See,
however, the 1987 Amendment No. 4 to Clause 30.9.
1,,See post, Chap. 18, Section 2{4)(d).
14 Babanaft Internationalv.Avant Petroleum [1982] 2 Lloyd's Rep. 99, and see Jennings Con-
struction Ltd. v. Birt (1987) 8 N.S.W.L.R. 18.
is See ante, Chap. 1, Section 9(7).
16 Section 1(8).
SECT. 2] OBLIGATIONS OF THE OWNER 569
operati~n" implied terms discussed in Chapter 1, ante, and adumbrated in
the sermnal_dicta of Ashurst J. in Botham v. East India Company, Lord
Bla~kburn 1n McKay v. Dick, and Vaughan-Williams L.J. in Barque
Quzlpe v. Brown there quoted. 17 The law considered in this Section gener-
ally reflects no more than the application of those principles and terms to
the factual background of a normal construction contract.
The more important ?bligations and responsibilities· of the owner, apart
f~o~ payment, and which frequently are not the subject of express pro-
v1s1on, may be listed as follows:
(a) Administration
(i) where the contract documentation requires it, to nominate and 4.137
~ppoint an A/E and/or quantity surveyors (or more often, in prac-
tice, to replace those already appointed if required for good
cause, as, for example, if they should die or retire);
(ii) where the contract documentation requires it, to nominate sub-
contractors or suppliers ready to contract in suitable terms with
the main contractor; and
(iii) wh ere the cont~act doc~entation requires the AJE or quantity
su1:"~yor to ce~~ or act m accordance with his own independent
op1mon or dects1on, not to obstruct, interfere with or improperly
influence him in doing so. is
(b) Possession of the site
~9 not ~ctively to misrepresent the physical state of the site; 4-138
~~) to give an adequate degree of Undisturbed possession of the site;
(u1) to secure undisturbed possession as against other contractors or
persons employed by the owner;
(iv) to give the contractor a good title to quiet possession of the site as
against third persons.
(c) Information and instructions
(i) to give all necessary information required by the contractor in 4-139
good time (including nominated sub-contract nominations as in
(a)(ii) above); '
(ii) to meet special obligations with regard to timing and content of
variation instructions (changes).
. . Wh~re an ~Eis employed by the owner, a number of these reponsibil-
1tle~ ~ be dIScharged by him as agent of the owner, but some matters
which lie solely within the control of the owner himself.
17
See ante, Chap. 1, Section 6(2).
13
For this see post, Chap. 6, Sections 5(4) and (5).
 570 PERFORMANCE [CHAP.4
After payment, the next most important obligations, and the most fre-
quent basis of disputes and contractors' claims, are those relating to pos-
session and the supply of necessary information, which will accordingly be
discussed in that order.
(2) Payment
4·140 Section 1, supra, has shown that the obligation of the owner to pay for the
work does not arise in the case of entire contracts until the whole of the
work has been satisfactorily completed, subject to the mitigating effect of
the doctrine of substantial performance, and that only in the rare instances
of contracts of general employment will payment become due pari passu
with the execution of the work. Further, an obligation to pay by instal-
ments or on account at specified stages or intervals will usually only arise
from the express terms of the contract, although such arrangements are
near universal in formal building contracts. Whether a failure to make
payment when due amounts to a repudiation of the contract is considered
infra, Section 3,19-20 and more shortly post, Chapter 8, Section 1(7).
(3) Giving Possession of the Site
4·141 This may conveniently be considered under three heads, namely, the state
of the site, the extent and time of possession, and the nature of the quiet
possession to which the contractor is entitled.
(a) State of the site
4-142 A great weight of authority exists showing that an owner, in the absence
of an actionable misrepresentation or deliberate concealment, or of some
express warranty, owes no implied duty to a contractor, whether o_f ~is-
closure or otherwise, in either contract or tort in regard to the pre-existing
state of the site. Cases establishing this have been seen in Section 1,
supra,21 and see also ante, Chapter 1,22 where misrepresentations and war-
ranties as to the state of the site, and possible duties of owners and others
in that regard under the Hedley Byrne principle, have been discussed.~
similar position has been taken in the United States, in at least one expen-
enc~d and well-informed State jurisdiction, when rejecting any implied
duty of disclosure. 23 • •
The only duty that the owner will usually owe to a contractor m this
Infra, paras. 4·221 et seq.
11>-i<l
21 Subsection (l)(b), paras. 4·036 et seq.
ii Sections 5(4)(t), paras.1·158-1·161. . See the cases collected under "Duty to Warn",supra.
n Morrison-Knudsen Internationalv. State of Alaska 519. P. (2d) 834 (1974), 1l!~strated and
discussed ante, Chap. 1, para. 1·160. See also the Australian case of Dillinghhm Construc-
tion v. Downs [1972] 2 N.S.W.R 49 there illustrated, para. 1·158.
SECT. 2] OBLIGATIONS OF THE OWNER 571
regard will be in tort under the Occupiers' Liability Acts, although in some
very special cases, such as contracts for the conversion of premises or for
doing work in existing premises, or where a site is still uncleared, and in
some sub-contracts, the owner or, in the case of sub-contracts, the main
contractor, may be under an express or implied contractual duty to have
the site cleared and ready for the contractor or sub-contractor to start
work. 24
The duties in tort under the Acts of 1957 and 1984 have been fully dis-
cussed. 25 but it should in any case be appreciated that this is a duty as to the
safety of the premises, in relation to damage to property or personal injur-
ies, and is not a duty in respect of pure economic loss, such as more difficult
or costly work occasioned by the state of the site or sub-soil.
In general, therefore, the owner owes no duty to the contractor to do 4· 143
work to render the site easier to work upon, 2fi-27 or to conduct surveys or
sink boreholes or make other investigations, notwithstanding that the
reality of the situation may be that, on engineering contracts in particular,
a lengthy survey may in fact be necessary before the project can be prop-
erly designed or its cost estimated, and notwithstanding that the system of
tendering may only permit tendering contractors a very short period in
which to price and tender. The owner may suspect or know that the con-
tractor has underestimated the difficulties, but is under no duty to warn
him,28 in the absence of fraud or deliberate concealment. On the contrary,
in a number of circumstances, the contractor may be under a duty to warn
the owner of site conditions which may affect the design. 29 However, un-
der the Misrepresentation Act 1967, damages can now be awarded for an
innocent misrepresentation, if there were no reasonable grounds for
believing it to be true, and there is also a potential liability in tort under the
Hedley Byrne principle. 30 As pointed out in Chapter 1, construction con-
~racts a~ost ~variably contain express exclusions of responsibility for
information given, and these were originally caught by the "fair and
reasonable" test in section 3 of the Act, later replaced by the rather more
restricted section 8 of the Unfair Contract Terms Act 1977.31 In most con-
struction contracts, however, such exclusions are likely to be regarded as
reasonable. n
24
See, e.g. A.M.F. (International) Ltd. v. Magnet Bowling Ltd. [1968] 1 W.L.R. 1028, at
p. 1040, see ante, para. 1·335, for the contractual terms in that case, and for the implied
term. See also the case of Carr. v.A. J. Berriman Ltd. illustrated in-F--a paraoraph (b) parn
4·147. ' '1" ' .,.. ' •
2.1 See, ante, Chap. 1, Section 12(4).
27
u,.. See, e.g. the facts in the case of Ibmacv. Marshall (1968) 208 E.G. 851,supra, para. 4·013,
:Ill and see Jackson v. Eastbourne Local !3oard (1886), illustrated supra, para. 4·047.
See,e.g. the case ofBottomsv. Yor~hire Corporation, illustrated supra, Section 1(1), para.
4·048, and see also Atlas Co~truction Co. Ltd. v. City of Montreal, ante, Chap. 1, Section 5,
paras. 1·165-1·166 and Lewis v. Anch~rage Asphalt Paving Co., supra, Section 1, para.
4·101. See also R. v. Walter Cabott, illustrated ante, Chap. 1 Section 5(4)(t) paras.
1·154-1·155. ' '
29
3
~ But see f?ill~gham Construction v. Downs, illtistrated in Chap. 1, paras. 1·158-1·159.
31
The Act 1s discussed ante, Chap. 1, Section 9(7).
32
PerLordDenningM.R. inHowardMarinev. Ogden: see ante, Chap.1,paras.1·137-1·139.
 572 PERFORMANCE [CHAP.4
(b) Extent and time of possession
4·144 The degree of undisturbed possession or access which must be afforded
by an owner must obviously vary with the nature of the work (which
might, for instance, in an extreme case be for repairs or reinstatement of
existing premises while still occupied) or other circumstances (as in sub-
contracts when the work often must take place alongside and subject to
interfere~ce by other trades or the main contractor's own work). 33 But in
the case of a new project the main contractor will normally be entitled to
undisturbed possession of the entire site in the absence of express stipu-
lation to the contrary.34 One common express exception is to be found in
the terms normally found permitting the owner on the site of other con-
tractors employed by the building owner35 ; another is a provision com-
monlyfound permitting the owner to engage other contractors to do a part
of the contract work if the contractor refuses to comply with any relevant
instructions of the architect. 36 ( On the other hand, the owner will not be
entitled to omit work with a view to handing it over to other contractors
where there has been no breach of contract by the contractor. 37
"I think the contract clearly involves that the building owner shall be in a
position to hand over the whole site to t~e bu~lder. immediately_ upon the
making of the contract. I think that there ts an 1mphed 1:1n?ertak1ng on the
part of the building owner, who has contracted for the bu1ld1ngs to be placed
by the plaintiff on his land, that he will hand over the land for the purpose of
allowing the plaintiff to do that which he has bound himself to do". 38
4·145 Although the word "possession" is almost invariably used in the express
provisions of main contracts and in the terminology of the industry, it is
clear that this does not mean exclusive possession in the legal sense ( as
would be the case in a tenancy, for example) but merely a temporary and
revocable right ot'occupation incidental to, and only to the extent reason-
ably required by, the work undertaken by the contractor in his contract. In
England in.1971, however, the contractor, under an ordinary standard
form of main contract, was held to have an implied irre,vocable licence to
occupy the site until completion (that is, revocable only in accordance
with the terms of the contract and so, in an appropriate case, enforceable
by injunction against the owner). 39 This decision see~ed obvio~sly.wrong,
for compelling consensual reasons as well as of business practicality, and
was almost immediately analysed and doubted in 1972 in the Law Quar-
1l For a modern example where "stop" and "start" instructions were not a breach of contract,
see Kitsons Sheet Metal Ltd. v. Matthew Hall Mechanical and Electrical Engineers Ltd.
(1989) 47 BLR 82,per Judge Newey Q.C., Q.B.D.
Ji The two preceding sentences were approved by the S~preme Co1;1rt of Canada m Penv1d1c
. ..
v. International Nickel [1976) 1 S.C.R. 267, at p. 276, illustrated infra, para. 4·148.
J5 Clause 29, post-1963 RIBA forms; clause 31, ICE condi_ti:rns.
~ Clause 2(1), 1963 RIBA forms; Clause 39(2}, ICE cond1t1ons.
,1 See Carr's case, infra, para. 4·147.
JK Per Collins L.J. in Freeman v. Hensler (1900) 64 J.P. 260. •: ;'
J9 Hounslow London Borough Council v. Twickenham Garden Developments [1971] Chap.
233.
SECT. 2] 0BLIGATIO NS OF THE OWNER 573
terly Review"° and shortly after powerfully disapproved in well-reasoned
decisions in New South Wales and New Zealand, which are clearly to be
preferred as a statement of the law, it is submitted.41
The word "site" has been used in the present discussion as convenient
shorthand to describe areas where undisturbed possession, if in the con-
trol of the owner, must be afforded to the contractor, and this will nor-
mally include reasonable working space and access on land of the owner
adjoining the immediate site-plan of a building:
"Subject to express exclusions, the 'site for the work' must in the case of a
c?mpletely new structure, comprise not only the ground act~ally to be occu-
pied by the completed structure but so much area around it as is within the
cont:ol of the ow~er and is reasonably necessary for carrying out of the work
effict~ntly and m accordance with generally accepted construction
practtce".4Z
Since ~ ~ufficient degree of possession of the site is clearly a necessary 4,,146
pre-conditI?n o!
the contractor's performance of his obligations, there
must be an 1mphed term that the site will be handed over to the contractor
within a re~sonable time of signing the contract,43 if no date for doing so is
stated a?d, In most cases a sufficient degree of uninterrupted and exclusive
po~session must ?e afforded to permit the contractor to carry out his work
unnnpeded _and 1n t~e manner '?f his choice, so as to complete by the date
for completion requrred by the contract documents: "If in the contract one
finds the time limited within which the builder is to do the work, that
~eans, not only that he is to do it within that time, but it means also that he
IS to have that time within which to do it".44
ILLUSTRATIONS
(1) The plaintiffs, having contracted with the defendants to make drainage
works, sued the defendants for damages for having wrongfully prevented
them from completing the w?rks, and for the value of works already com-
pl~ted. ~he defendants set up tn answer to the first claim a forfeiture for insuf-
fic1en?Y m progress and to the second that the work was only to be paid for on
a certifica!e of completion. The plaintiffs replied that the insufficient progress
was occasioned by the default of the defendants in not providing land for the
40
(1972) 87 L.Q.R. at pp. 309-312.
41
Mayfield Holdings v. Moana Reef [1973] 1 N.Z.L.R. 309, per Mahon J.; Graham Roberts
f;~·v. Maurbeth Ltd. [1974] 1 N.S.W.L.R. 93,perHelshamJ., both illustrated post, Chap.
42
R. v. WalterCabottConstruction(1964)44D.L.R. (3d)82, atp. 93,perMahoney J.,Fed. Ct.
of Canada, quoted and appro".ed on appeal by Urie J. in the Federal Court of Appeal
(1977) 69 T.L.R. (3d) 542, and illustrated ante, Chap. 1, Section 5(4), paras. 1·154--1·155.
43
44
See, e.g. Roberts. v: Bury Co.mmissioners (1870) L.R. 5 C.P. 310, at pp. 320 and 325.
Per Vaugh~~ Williams L.J:. m Wells v .. Army & Navy Co-operative Society (1902) 86 L.T.
?64. In add1t10n to the case illustrated infra, see Bywates v. Curnick (1906) Hudson, Build-
mg Contracts (Vol. 2), p. 393, illustrated post, Chap. 8, para. 8·073.
 574 PERFORMANCE [CHAP.4
works in accordance with an express term in the contract. Held, ?r
the Irish
Court of Common Pleas, that the provision of the land was a con~1t1on prece·
dent to be fulfilled by the defendants, and that th~ defenda~ts(l~:~~;rers
were bad: Arterial Drainage Co. v. Rathangan Drainage Boar · Supreme Court of Canada, that the owner was liable in damages for delay by
4-147 (2) The plaintiffs agreed to pull down 15 house~ belo1_1ging to the cte:ftI_1daI_1t
and build in their place 12 houses constructed 1n a ~1ngle block with tn ttx
months of the date of the contract. There was a clause 1n the co~act: ~\~~
brickwork was to be carried up simultaneously all round.. e ~ ~tn t f
d ost onement of a fortnight of the commencement an at~ o
~~;e le:~: ~f th~ work. Toe defendant did not give the plaintiffs possession
a p of the site until long after the fortnight had elapsed, ~nd then gave
of ny . p1ecemea
possession . 1, s0 that the plaintiffs did not get possession
f of1 the
f last A
house to be demolished until one month before the date or co~p 7~on. d
m er contract was thus turned into a winter contract and the plamti ~ sue
su m for breach of contract. Held, by the Court of Appeal, that !twas
; :i:1i~~e:erm of the contract that the defendan~ should give possess10? of
the wCote site to the plaintiffs within a reasonable time; that a reason~1:J.e t1:e
did not in the circumstances extend beyond the fortnight agree~; an at e
plaintiffs were entitled to recover: Freeman v. Hensler (1900).
(3 B a building contract dated May 3, 1950, the documents provided that
the Jwier himself would excavate over the site to certain levels and htd o;:~
possession of the site to the contractor on May 29, 1950. He fa1ledhto ?d~{e of
by May 29 The contractor telephoned about once a week up tot e mi. b contract provisions are considered post, Chapter 9, Section (8).
Jul askin. when the site would be clear. In July he learn~ that certain su -
coJtract w~rk would be omitted from his contract and came? out by another
contractor for the owner. The contractor ref1;1s~d to go on with the con~~~~~
alleging that the delay in possession and om1ss1on of work were two!. t d
mental breaches of contract entitling him to treat the contract as
Held by the High Court of Australia, both breaches had bee~esta is. e ·
:_p~ : ;~
the f~cts, a failure to remedy the breach ~ft~r the::i:!:t::Ughgt~~oai:;::~:~~
so long and in such circumstances as to evince, no a d
any notice by the contractor, ~n ~ntention not to be bo~d bithe{~Jt(;;1,3)~47
therefore amount to a repud1at1on: Carrv. J.A. Berrtman ty. ·
4·148 (4) A contractor tendered on documentation which ind~cated that th:e
would be further contracts in the area owned by the owner~ th:Ufi:J:ue. e
obtained a contract for one building, but during construct1on ~ . er c~~-
tracts were ut out to public tender, one of which would ~e 01;1 1an _1mme l-
ately adjoinfng the area of his own building, which would 1nevtta~ly 1;;e1e~e
with his access working space, and other aspects of the construction. e1 , Y
the Federal c~urt of Appeal, while dismissing any dutr of care o~ the p~t ~f
the owner to disclose information as to his future intentions, that. t e _con r~c -
or was nevertheless entitled to possession of ~e ar7~ of the site, 1n~l~d1n1
i:o
reasonable areas of the owner's adjoining land m addition th~ac!tua ~·t~tt
the structure, and could claim damages for the breach: . v. a ter a
Construction Ltd. (1975). 43
(5) A contractor agreed to provide a line of ballast and track on a sub-
b Hast railroad bed to be prepared by other contractors of the owner, and
u:ing as access to one end of his own line rolling stock of the owner over a
•S 6 L.R.Ir. 513. · ..;, 4·158
"° 64 J.P. 260, C.A. Contrast the Pigott and Swanson cases, inJra, para. : _,
: ~; ~'.t.ii~cfJf·5~2~s~f!~ery interesting case on its facts is illustrated ni:6re fully ante,
Chap. 1, Section 5(4), paras. 1·154-1·155.
SECT. 2] OBLIGATIONS OF THE OWNER
575
junction to be constructed by the owner's other contractors to an existing line
of the owner. Held, by the Ontario Court of Appeal, and affinned by the
the owner's other contractors in constructing the junction needed for the
access: Penvidic v. International Nickel of Canada (1976). 49
[Note: The judgments in the case are primarily expressed in tenns of the
owner's own failure to provide the access, but it is clear from the report that
this was due to delays by other contractors of the owner].50
Some (particularly civil engineering) construction contracts contem-
plate progressive or successive possession of different parts or sections of
the site or project, and there may be express provisions regulating this;
but, if not, there will be a similar obligation to afford possession within a
reasonable time. In this context, programmes required by the contract to
be supplied by the contractor, or else stipulated by the owner's advisers in
the contract documents themselves, may be of relevance. In some cases
there can be use (or abuse) of optimistic programmes showing completion
before the contract date, particularly where claims for delay or disturb-
ance are put forward. The intention and effect of such programmes or
In the case of sub-contracts, or cases where the contract contemplates
that other contractors of the owner will be on the site at the same time,
however, it is obvious that, depending on the facts, different consider-
ations may apply, and itis doubtful if any general rule can be established as
to the degree of permissible disturbance, which will vary greatly. Tbis
makes detailed express provision an essential commercial precaution,
which is usually well understood by main and sub-contractors.51
Where a contract states expressly that possession is to be given to the 4·149
builder, du Parcq L.J. was of the opinion that the owner has no general
right to come upon the premises after possession has been given,52 but it is
submitted that "possession" should more realistically be construed as sub-
ject to an implied right of reasonable access for the owner or persons auth-
orised by him for purposes of inspection and also, of course, for the
architect or engineer or other consultants for all purposes necessary for
the supervision and administration of the contract. 53 Where nothing is said
regarding possession, the implication is certainly not necessarily that
exclusive possession should be given, but the contractor must clearly be
allowed such use of the site as he requires for the purpose of carrying out
the work in the way which he thinks best. The common express obligation
of. the main contractor to assume responsibility for the safety of the works
•
9
[1976] 1 S.C.R. 267.
.IO See [1976] 1 S.C.R. 267, at p. 272.
si see, e.g. the cases of Kitsons Sheet Metal v. Matthew Hall (1989) 47 BLR 82; Swanson
Construction v. Govt of Manitoba (1963) 40 D.L.R. (2d) 162; Pigott Construction v. W. J.
52 Crowe Ltd. (1961) 27 D.L.R. (2d) 258, Canada, illustrated infra, paras. 4·158 and 4·160.
Nabarro v. Cope & Co. [1938] 4 All E.R. 565.
53
Express rights are reserved in the standard forms-see Clause 7 of the 1963 RIBA forms
(for the architect) and Clause 37 of the 1955 ICE form (for the engineer).
 576 PERFORMANCE [CHAP. 4
during construction requires, it is suggested, a high degree of effective
control of the site, and the practical and legal limits, often not sufficiently
appreciated by lawyers, on the architect's or engineer's control over meth-
ods of working,54 reinforce this view. If, therefore, it is intended that the
premises should remain occupied by the building owner, his servants or
agents, or that other contractors should have access for special works, the
contract should make express provision for these contingencies.55 Further,
the contractor is prim.a facie entitled to possession of the whole of the site
until completion or practical completion and the employer is not, in the
absence of an express right, entitled to take possession of parts of the
works before the completion of the whole. 56
(c) Quiet possession
4·150 A contractor may be denied undisturbed occupation before starting
work, or subsequently find it interfered with after starting work, due to a
number of matters, some of which may be within the control, contractual
or otherwise, of the owner, and some not. Within the former category will
be other contractors employed by the owner to do work or supply
materials in connection with the contract works, as also the owner's title to
the land upon which the contractor's ability to build lawfully will depend.
Within the latter category may be unauthorised occupation by third par-
ties, such as trespassers or squatters, strikes and picketing, or neighbours
bringing unwarranted proceedings for injunctions for nuisance or tres-
pass, or statutory undertakers exercising rights to protect their own works.
EaCh case needs to be carefully examined. Some matters may be regarded
as contractor's risks; some may require a "best endeavours" or due care
obligation on the owner's part; and some may be regarded as an owner's
risk attracting an unqualified warranty or indemnity independent of fault
on the owner's part.
(i) Other contractors of the owner
4·151 Most standard forms of contract expressly permit other "direct" con-
tractors of the owner to work on the same project-without such pro-
visions, or other indications in the contract documentation contemplating
and impliedly permitting such work, other contractors could usually be
excluded from the site by the main contractor until his own work was com-
plete, since their presence, at least in the case of a main contract, will usu-
ally constitute breach of an implied term by the owner. In England and the
Commonwealth express provisions accordingly often provide for com-
pensation to be paid should other contractors unreasonably disturb
54 See ante, Chap. 1, paras. 1·295-1·296, 1·379-1·380, 1·383-1·385; Chap. 2, paras. 2:009 and
2·138-2·140 and post, Chap. 5, paras. 5·020-5·024.
ss The standard forms do, for the latter contingency see infra, para. 4·151. ~- ;·'
16 See also Subsection (7), infra, and Clause 16 of the 1963 RIBA forms, whicfiOnly contem-
plates partial possession by agreement.
SECT. 2] OBLIGATIONS OF THE OWNER 577
the main contractor's progress. But, even apart from such express pro-
visions for compensation, where the contract contemplates that the owner
will, by himself or other contractors, do work or supply materials in con-
nection with the contract works, he will almost invariably be liable for
damage suffered by the contractor as a result of his or their failure to do
the works or supply the materials at the proper time, or by obstructing the
contractor by any extended presence on site. The exact circumstances of
each case must be carefully examined to see whether the implication of
such a term is required. Obviously very different considerations will apply
where sub-contractors are expected by their sub-contracts or by the
nature of their own work to co-ordinate their work with other trades or
with the progress of the main contract as a whole.57 Furthermore, in s~me
spe_ciaJ circumstances, the mere fact that the owner contracts directly with
a supplier will not in all cases mean that he undertakes responsibility to the
builder for the supplier's due performance of his obligations, although this
~ill ~ndoubtedly usually be the case. It goes without saying, of course, that
a mam contractor can never, in the absence of express provision, recover
for- interference by sub-contractors, whether private or nominated, since
responsibility for co-ordinating sub-contractors is one of the cardinal re-
sponsibilities of his function.
ILLUSTRATIONS
. (1) The plaintiff agreed to build a railway fQr the defendants and complete 4-152
1t by_June ;. 1840, and to suffer a deduction from the contract price of £300 per
day if he did not. The defendants agreed to supply the rails and chairs necess-
ary for completing the permanent way by instalments on certain dates. The
plaintiff did no~ complete the railway until 24 days after June 1, 1840, and the
defen~ants clau~1ed to deduct £7 ,500. The defendants had failed -to provide
the rails and chairs necessary to enable the plaintiff to complete the railway by
Ju~e 1, 18~0. Held, by Alderson B., that the plaintiff was entitled to bring his
~ctlon a~amst them for breach of contract in which it would be open to the
Jury to give full redress for all the damages (including the deductions if caused
by the defendants' neglect) which the plaintiff had suffered: Macintosh v.
Midland Counties Ry. (1845).58
(2) The plaintiff contracted to do the carpenter's work on the defendant's
house in Ontario, according to plans prepared by the defendant's architect, by
November 2, 1864. The stonework was let to other contractors, and in conse-
quence of their delay the plaintiff was delayed and had to do his work in win-
ter at much greater cost. The plaintiff brought an action to recover the extra
cost. The defendant pleaded that the plaintiff knew that the stonework was to
be done by other contractors, and therefore that he {the defendant) had not
undertaken to proceed with the stonework so as to enable the· plaintiff to
perform his contract within the specified time. Held, by Draper C.J., the plea
showed no defence, as the defendant must be treated as having impliedly
undertaken to do what was necessary to enable the plaintiff to proceed with
', s, See the sub-contractor cases; illustrated infra, (ii).
511
l4M.&W.548.
 578 PERFORMANCE [CHAP.4
his contract, and the fact that the defendant had e~ployed others, against
whom the plaintiff could have no remedy, made no difference: Yates v, Law
(1866)."
4-153 (3) In May 1878 the plaintiff agreed with th~ defendants to. do cer!ain
dredging in the Mersey by October 1, 1878, sub1ect to ~n ~xtens1on of tune
should staging on the site to be dredged not be removed m time to ena~le the
plaintiff to complete by the day named. The s~age was not re~oved until Sep~
tember 1879. The plaintiff claimed damages 1n respect of this delay. Held, by
Denman and Manisty JJ.s that there was an implied contract that th~ re.mo val
of the staging would not be unreasonably delayed and that the plamtiff was
entitled to damages: Lawson v. Wallasey Local Board (1883). 60
(4) Joiners undertook work on a ~uilding whe~e other t~a~esmen were
being employed by the defendants in the following terms .. We offer to
execute the work ... for the sum of £2,128 and undertake t~ finish our depart-
ment of the work by April 15th next". The joiners we!e 1n fact de~ayed by
plasterers, whose contract, which contained an appropnate completion d~te,
the defendants had omitted to have executed. Held, by the Court of S~~1on,
Second Division, there was an implied condition p~ecedent that the Joiners
should be given possession so as to make co~~letton ~y the contract date
possible. Alternatively, the defendants, by 01llltt1ng to bind the plaster.ers ~o
completion by a fixed date, had prevented the joiners fr?m compl~t1ng in
time and consequently the latter were entitled to the pnce of their work:
Dun~anson v. Scottish Investment Company (1915). 61
4·154 (5) The plaintiffs agreed to build a memorial arch and two !odges at the
entrance to a park for the defendants for a lump sum by a cer!a1n day·. It was
provided by the contract that the defendants, who had previously with the
consent of the plaintiffs negotiated for the supply of the stone for the. works,
· should pay the suppliers of the stone and deduct the amount to be pru<l; fr?m
the contract sum. By reason of delays in the delivery of the stone the plaintiffs
suffered damage which they sought to recover from the defendants. Held, by
Tomlin J., that there was no implied obligation on the owners to supply the
stone. At the highest, they were only obliged to hol<l; the benefit of ~econ-
tract with the suppliers for the plaintiffs, and accordingly were not liable to
them: W.H. Gaze & Sons Ltd. v. Corporation of Port Talbot (19_2~).@
[Note: The unusual result in this case !s exp~ained, i.t is ~ubm1tted, by the
stone having been part of the contractor s onginal obligation, and no doubt
the owner was regarded as effectively the agent of the contractor when he
made the new direct arrangement with the suppliers.1
(6) A railway owner's other direct contractor failed to provide a junction
line to the owner's existing line in time to enable a contractor for a new length
of line to obtain access to his own work, so that he had to make more expen-
sive arrangements for access. Held, by the Supreme Court of Can~~a, that the
owner was in breach of contract and must pay damages: Pen_vidzc v. Inter-
national Nickel of Canada (1976). 63
19 25 Up.Can.Q.B. 562. Compare this case with Swanson Construction v. Government of
Manitoba (1963) 40 D.L.R. (2d) 162, Canada illustrated infra, para. 4·158.
60
11 Q.B.O. 229. . d · fr 4155
1,1 [1915] s.c. 1106. Contrast the U.S. S~preme. Cou!t cas~s, illustrate m. a, paras. · -
4· 156. This Scottish case contains an mterestmg d1scuss10n .of the Ame.ncan cases at that
date and indicates that English law was in a state of transitmn at that tlflle (see, per Lord
Dundas, at p.1114 and Lord Salvesen, at p.1116) and perhaps closer to th:.lf·S. Supreme
Court position. -,;.
6Z93J.P.89. b h ill t td
o3 Illustrated more fully supra, para. 4·148, and see aso R. v. Walter Ca ott t ere us ra e ·
SECT. 2] OBLIGATIONS OF THE OWNER 579
Before leaving the subject of interference by the owner's other con-
tractors, it may be pointed out that the law in England and the Common-
wealth, which in all but most unusual circumstances will, in the absence of
express provision, render the owner liable for delays caused by other con-
tractors, independent of fault on his own part, appears to be stricter than
that applied some decades ago by the Supreme Court of the United States
in a number of appeals from the Court of Claims in government contract
cases.
Historically, the use by public owners in the United States of separate 4·155
direct contracts for one project, notwithstanding the description of one of
them as the "general" or "principal" contractor, appears to have been the
rule rather than the exception in the first half of the present century.
In England, on the other hand, owners generally, from a comparatively
early stage, recognised the substantial advantage of using one contractor
only for the project, With the remaining contractors engaged as sub-
contractors, whether private or domestic on the one hand or nominated
or, in United States parlance, "sourced" on the other, thus eliminating the
potential financial liability of the owner for disturbance and co-ordination
disputes likely to arise between the various contractors. In consequence, it
became a normal and understood practice in the United States for owners
to require the various direct contractors on a substantial project to under-
take expressly to co-operate and co-ordinate with other contractors, and
exempt the owner from liability for damage caused by other contractor
defaults and delays-the so-called "no damage" clauses, common in the
United States and to some extent in Canada, but unusual in the remainder
of the Commonwealth or in England. These permitted an extension of
time but expressly denied compensation for such delays. 64 This system was
not difficult to justify where at the time of tendering for his own part on a
project, the identity and prospective roles of the remaining contractors, or
at least the tender lists, was known to the individual tenderer, but it is
clearly more difficult to justify in the case of a tenderer exposed to possible
disturbance by other contracts not yet placed, or by other unknown con-
tractors not yet selected even for tendering purposes, since it is difficult to
see how a contractor could be reasonably expected to price such a
contingency. 65
The otherwise difficult Supreme Court cases of Crook v. U.S., U.S. v. 4,156
Rice, U.S. v. Blair, and U.S. v. Foley 66 are perhaps best explained on the
basis that under the terms of the contracts in question, knowledge of the
terms of the other contracts, and of possible extensions of time and power
to order changes in those contracts, was sufficiently indicated by the terms
of the claimant contractor's own contract, including its co-ordination and
"no-damage" clauses, so that its dates were to be regarded as provisional
and, in the absence of fault on the part of the government's officers, con-
1,1See post, Chap. 8, para. 8·217.
65
See the Walter Cabot! case, supra.
66
270 U.S. 4 (1926); 317 U.S. 61 (1942); 321 U.S. 730 (1944); and 329 U.S. 64 (1945),
respectively.
 580 PERFORMANCE [CHAP.4
tractor's risks. It should perhaps be noted that in every one of those
Supreme Court cases the Court of Claims judges were overruled, and that
there were strong dissenting justices in the Supreme Court itself in the last
case of Foley.
In England and the Commonwealth, on the other hand, there is no
doubt that, in the absence of contractual provisions indicating that con-
tract dates and periods are contingent on the progress of another contract,
they will be treated as firm and the owner will, independently of fault on
his part, be held liable for damages so caused by delay on that contract.67
(ii) Sub-contractor's possession
4-157 As stated quite different results may occur in the case of sub-contracts,
where the expectation of the parties in a particular case may often be that,
because of its nature, the work will inevitably be subject to interruption or
dislocation by other sub-contractors or the main contractor.68
ILLUSTRATIONS
(1) Tunnelling sub-contractors unde_rtook "the execution ?f the work ...
according to the dimensions and specifications as set forth 10 the contra~t
between [the main contractors and the owners]". By them~ contract spe~1-
fication the owner had reserved the right to stop the excavation and requtre
the contractor to complete the sewer and backfilling up to such point as the
engineer might direct, before proceeding further with the excavation, and the
contractor was not thereby to become entitled to demand any allowance or
compensation. The engineer exercised this power, with the result that the
contractor had to order the sub-contractors to stop work for the time being.
They claimed damages, and the main contractor co°:te:nded that the main
contract specification was incorporated, but that evei: tf 1t was not, there was
no express term obliging the main contractor to penrut the sub-contractors to
do the work continuously. Held, the specification was not incorporated for the
purpose of the clause in question, and in the absence of an ~xpress term there
was an implied term that the main contractor should permit the sub-contract-
ors to proceed in a reasonable manner without any undue or unreasonable
delay or suspension of their operations, and the main contractor was accord-
ingly liable in damages: Smith & Montgome;y v. Johnson Bros. .(1954). 69
[Note: The continuity of t~nelling work 1s of course economically excep-
tionally important for technical reasons.]
4·158 (2) A plastering sub-contract contained no provi_sions a~ to the time of c~r-
rying out the work, other than that it was to be earned out 10 accordance "."'1th
the main contractor's requirements. The main contract had been entered mto
at a time of steel shortage and the main contractor had undertaken to do the
work as fast as possible as and when steel was available, but leaving out
67 See the analogous and difficult decision of the House of Lords in Trollope and Collsv. N. W.
Metropolitan Hospital Board [1973] 1 W.L.R. 601, illustrated post, Chap. 10, para.
10·091A, where on very strong facts an implied term excusing the owner Wf!_~'.refused.
6s Cf The U.S. Supreme Court cases discussed supra. '
091 D.L.R. (2d) 392, Canada. Cf the Neodox case,post, Chap. 7, para. 7·039.
SECT. 2] OBLIGATIONS OF TI-IE OWNER 581
plumbing,. heating and ventilation and providing temporary heating in the
buildings during construction only. The main contractor started work in 1956
and in September told the sub-contractor that his work would soon be
required. Later he told him, without objection, that his work would not be
required until the following spring. During the winter of 1956 the main con-
tractor did not provide heating as required, which slowed down the work gen-
erally. The plasterers visited the site in March 1957 for an inspection, and
made no protest until April 1957, when they were required. to start work,
which they refused to do except on the basis of extra payment. Held, by the
Ontario Court of Appeal, on the facts, that there was no implied term that
work should start on any particular date. Even though the failure to provide
temporary heating during the winter of 1956 might have been a breach of a
term of the main contract to proceed as expeditiously as possible, it did not go
to the root of the sub-contract or Constitute repudiation: Pigott Construction
v. W.J. Crowe Ltd. (1961).10
(3) A contract for the concrete deck and sidewalks of a bridge in Canada
provided that it was expected that the erection of structural steel would not be
completed before August 15, 1959; that the deck contractor was expected to
proceed with his work prior to completion of steel erection and should co-
operate to this end with the steel contractor; that the contract was expected to
be completed in the summer; and that no payment would be made for any
heating which might be necessary. The steel erector did not, in fact, leave the
site till October 1959, and as a result the deck contractor could not complete
that year, and a summer contract (in Canada) became a winter one. Held, by
the Manitoba Court of Appeal, in view of the express provisions, no term
+
,. could be implied affording the deck contractor exclusive possession after
August 15: Swanson Constructive v. Government of Manitoba (1963). 71
( 4) Sub-contractors contracted to provide the formwork for concrete on a 4·159
major housing development. The main contract was in the RIBA/JCT
English standard form, and the sub-contractors undertook to perform all the
obligations and agreements imposed on the main contractor under the main
contract, which was expressly referred to. The sub-contractors also under-
took to proceed expeditiously at such times as the main contractor should
require having regard to the requirements of progress and co:itditions of the
main contract works. Under the extension of time clause in the main contract
there were a number of matters which entitled the main contractors to an
extension of time. The main contract was considerably delayed, and its time
was extended by the owner. The sub-contractors argued that their work had
become unprofitable, being carried out over a protracted period, and they
alleged breach of an implied term that the main contractor would make suf-
ficient work available to the sub-contractors to enable them to maintain
reasonable progress and execute their work in an economic manner, and
should not hinder or prevent the sub-contractor in the execution of their
work. Held, by the Court of Appeal, that, having regard to the express terms
of the sub-contract, there was no room for any implied term of the kind for
which the plaintiffs contended: Martin Grant & Co. v. Sir Lindsay Parkinson
& Co. (1984).n
(5) Sub-sub-contractors for the installation and insulation of pipes and 4·160
ducts submitted their quotation, after perusal of all the documents between
1027 D.L.R. (2)d 258, Canada.
7140 D.L.R. (2d) 162, Canada, affd. (1964) 44 D.L.R. (2d) 632.
n 29 BLR 31. Compare the (time for information) Neodox and other cases.ante, para. 2· 133.
 PERFORMANCE [CHAP.4
582
the managing contractor for an airport tenninal and the sub-contractor to
whom they were themselves quoting. The sub-sub-contractor plaintiffs then
started work, -and a few months later the defendant sub-contractor entered
into his own contract with the management contractor, and at the same time
placed an order with the plaintiffs which provided that their work was to be
carried out "in accordance with the instructions of our site management team,
to enable the ... services to be complete on [a named date]". Some months
later the formal sub-sub-contract was signed. The plaintiffs claimed
additional payment, on the ground that work had not been made available to
them as required by the latest agreed revised program prior to formal signa-
ture of their sub-sub-contract. Held, by Judge Newey, the contract must be
construed against its factual matrix, which included the terms of the main
contract, the fact that many trades were working on site, that the sub-con-
tractors were dependent upon the management contractor for possession for
areas of work, and that the owner was entitled to vary the main contract work,
so that there was a great likelihood of delays and of trades getting in each
other's way, and the prospect of being able to work closely to a program was
small. Clause 6(2) of the sub-sub-contract had provided that the defendant
sub-contractors should, so far as they were able, secure availability for the
plaintiffs of such part or parts of the site and such means of access as should be
necessary to enable the plaintiffs to carry out their work. That clause meant
that so long as they tried to obtain areas and access needed by the plaintiff's,
the plaintiffs' work could be stopped altogether without the defendants
necessarily being in breach of contract. Although there was a variation clause
which included instructions as to alterations of manner or sequence of work-
ing, since the plaintiff's express obligation was effectively to do work on an
"as required" basis alterations of manner or sequence could not by them-
selves constitute a variation: Kitsons Sheet Metal Ltd. v. Matthew Hall
(1989)."
(iii) Statutory undertakers
4·161 A contractor's progress may frequently be disturbed by the presence of
highway authorities, or other public bodies exercising statutory powers in
relation to utilities such as gas, water or electricity, or by delay by these
bodies in starting or completing their work. In many cases the legislation
governing such matters can be verycomplicated.74 In most cases, the legis-
lation envisages notice being given before any relevant part of the con-
struction work is started, and charges for the work being imposed by the
public body, or alternatively being carried out by them under priced con-
tracts made with the project's owner or contractor.
Construction contracts in England usually provide expressly for the
work in question either to form part of the contractor's overall price (usu-
ally through nominated sub-contracting or provisional sum machinery in
the bills) or, on the other hand, may contemplate a direct contract by the
owner with the authority or utility. In the absence of express provision, it
will clearly not be difficult to imply, in order to allocate financial responsi-
bility for delays or dislocation as between owner and contractor, terms
1J47BLR82. ,:
,. See, e.g. the summary of the English public utilities street works legislation irf1973 in The
ICE Conditions of Contract, pp. 87-88.
SECT. 2] 0BLIGATIO NS OF THE OWNER 583
requiring best endeavours and co-operation by each party.1s Where, how-
ever, ~e cause of the delay or obstruction is clearly the fault only of the
~uth?nty or statutory undertaker in question, there will usually be no
IIllphed warranty on the part of the owner that the contractor will not
suffer delay or disturbance in such ~ case, it is submitted, since such delays
are a well-known hazard of certain classes of construction work. Even
wher_e a construction contract expressly contemplates direct contractual
relations betw~en the owner ~d the undertaker, therefore, there may
~ell be a questI~n whether, provided the owner has given notice in ample
tim: and used his best endeavours to secure appropriate contractual pro-
t:ctlo~, an~ absolute liability independent of fault should be imposed on
him, smce 1n many cases the owner has little or no option, to the know-
ledge ?fall concerned, but to accept whatever terms are offered to him by
a public body in this position.
. '!hese m~tte:s are very frequently, of course, dealt with by express pro- 4·162
v1s1on, but In view of the potential variety of the circumstances and con-
tractual provisions .in thes_e situations, it is not possible to lay down any
genera! rule; and 10 particular whether any implied obligation of the
owner Is absolute or one of due care only.
ILLUSTRATIONS
.. ~1) A con~ract for road works required the relocation of a number of
u~tl.es. The c1_ty's main contrac~or expressly u~dertook to co-operate with
utihty co~parnes, to ~e responsible for co-ordination of other contractors
and the utthty companies, and that the cost of all damage to utilities should be
borne by the ~ontract?r. The city's consultants had, in their contract of
employme~: w1~ the city, agr:ed to.give "guidance" and supervision to the
contra~~~r, ?nd _1n the.event did chair meetings between the contractors and
th~_°:tilitl~s, issuing trunutes as to action in the normal way. Delays by the
utilitie~ distur~ed -~e ~on tract, and the contractor sued the city to recover his
loss, with the city Joining t~e consultants as third parties. Held, by HughesJ.,
and affinned ~y the Ontano Court of Appeal, that certain required notices
h!1d not been gtven to the utilities, the responsibility for which as between the
c1!r and the consultants had not been established, but in any event responsi-
b_1hty for mu~h of th~ delay in relocation of services had been caused by agen-
cies over which the city could exert a measure of control independently of the
consultants, so tha~ the contract?r was entitled to compensation, but the con-
sultants were not hable to the city: Marentette v. City of Sudbury (1974).77
. (2) An_ RIBAIJCT contract for a large housing project permitted exten- 4·163
s1ons ':f time for del!1ys of statutory undertakers, but provided expressly for
financial compensation only in the case of "persons engaged by the owner to
;:_ See as to this the Kitsons case supra. See also for such implied terms, ante, para. 1·179 et seq.
See a1;te, _Chap. 2, paras. ~-191-2· 192 and ante, Chap. 1, paras. 1·297-1 ·298 for this unwise
wording m Canadian engineers' contracts.
71 (1972) 31 D.L.R. (3d~ 398,perHughes _J.; affd. by the Court of Appeal, (1974) 45 D.L.R.
(3d) 331. the factual mferences drawn m this case, as reported seem somewhat doubtf I
however. ' u,
 [CHAP.4
PERFORMANCE
584
carry out work not forming part of th~ contrac~". ProvJsional amounts for
water, gas and electricity services were included 1~ 0.e
bll.Is, but the contract
also showed that the owner was in fact to pay the uttlit1es directly, and that the
cost was not in the contractor's price. The utilities were at fault, and the con-
tractor claimed the express compensaton for their delays_. Held, by Judge F~y,
that on the contract wording delays by utilities did qualify for co~pe~satron
as work not forming part of the contract. This was in confor~ty with. ~e
general scheme of the contract, since i~ the owner contr~cted wtth the utihty
he had an opportunity to safeguard himself from .the nsk. If, .ho-:vever, the
undertakers had exercised their statutory powers without entenn~ mto a con-
tract the loss would be like force majeure and lie at the door of neither party:
78
Hen;y Boot v. Central Lancashire Development Corporation (1980).
The first of the above cases may be regarded as an illustration of the
"prevention" or "co-operation" impli~? terms.19 The second should ~ot
be taken as authority for the propos1t1on that, where a contract exists
between the owner and such a public body, that alone will in all cases
render the owner liable to the contractor for the public body's defaults, if
he has done his best to obtain satisfactory terms. Only where the default
constituted a breach of the terms of the contract made with the owner by
the public body, leaving him with a remedy, would the "chain of liability"
principle justify the implication of an unqualifi.ed warranty i~~epend~nt of
fault on the part of the owner in the construction contract, 1t 1s submitted.
(iv) Strikes and industrial action
4-164 The risk of these particular interruptions of possession or of work on the
site are often the subject of express provision in standard forms and other
sophisticated types of construction contrac~. What are normally c.onte~-
plated by these provisions, however, are stnkes by the contractors or his
sub-contractor's employees, and not those of other contractors or of the
owner himself, although such strikes may indirectly activate expr_ess
terms, which are quite common, entitling the con~racto~ to com~ensatton
for owner's or other contractor's delays. Cases mvolv1ng the interpret-
ation of these latter express terms, in regard to claims for either extension
of time or for compensation, have arisen following strikes of_ st~tutory
undertakersso or in the case of a contract with the government, stnkes by
81
the employees df another unrelated department of the government.
Where there have been strikes by a contractor's employees, or a sub-
contractor's, it is submitted that this will afford the contr~ctor no excuse
for failure to perform, in the absence of express provision, unless the
strikes are such as to qualify as force majeure, either under express pro-
visions of the contract or more general doctrines permitting temporary
,H 15 BLR 8. See, however, the doubts expressed supra as to the.practical difficulties of secu-
ring adequate contractual protection in this particular situation.
n Referred to supra, para. 4· 136, and explained anre, paras. l ·186 et seq. ~· ;''
oo See, e.g. Boskalis Westminster Construction v.1:,iverpool City Council (1983) 24 BLR 83.
" 1 Commonwealth of Australia v. Austin (Australia) (1986) 5 A.C.L.R. 19.
SECT. 2] OBLIGATIONS OF THE OWNER 585
suspension of the contractor's obligations, or a full frustration of the con-
tract permanently releasing the parties from their obligations.82
The present discussion is concerned, however, with the owner's or main
contractor's obligations to provide sufficiently undisturbed occupation to
the contractor or sub-contractor respectively. The question will be
whether these obligations are to be interpreted as unqualified on the one
hand, or dependent on fault on the other, where the immediate cause of
the owner's or main contractor's alleged default is strike action. There is
little direct authority.
ILLUSTRATION
Sub-contractors' work on a steel works being built for the British Steel Cor- 4-165
poration was interrupted, when 90 per cent. complete, by a violent and unlaw-
ful stri,ke a?~ picketing on the highway at the entry points to the site by the
oMl:er s strilon? employees. The sub-contract provided that "access and pos-
session ~f the site s~all be afforded to the [sub-J contractor by the [main con-
tractorJ in proper time for the execution of the work. The [sub-J contractor
shall have access by means only of those roadways and railway sidings of [the
owner] as shall be made available". Held, by Robert Goff J., upholding the
arbitrator, that there had been no breach of contract. The contractor had
"affo~ded access", since he. made available the physical means of access
promised, and the opportunity of making use of it. It was the activities of a
third party which had prevented the sub-contractor from taking advantage of
the opportunity: L.R.E. Engineering v. Otto Simon Carves (1981).83
. Alt.!1~ugh co~cerned with an express term, the above case supports the
view, 1t 1s subnntted, that where an owner's obligation to provide undis-
tur~ed occupation is implied, this will not be interpreted as a guarantee
against the unauthorised actions of third persons' employees over whom
the owner has no control.84 It does not, of course, deal with a case where
the strike is by the employees of the owner himself (or, in a sub-contract
case, those of the main contractor).
(v) Title and third parties
Under this heading it is proposed to consider the owner's lawful entitle- 4·166
ment to build on the land in question through his contractor, which in
general, as between the various parties to a construction contract, will be
regarded as within the owner's exclusive control and, in the absence of
vety special circumstances, his own contractual responsibility.
~2 For the more dubious doctrines of force majeure and Act of God, and the more established
law of frustration, see infra, Section 3.
1024BLR27.
84
Cf. Porter v. Tottenham Urban District Council illustrated infra, para. 4· 167.
 586 PERFORMANCE [CHAP. 4
ILLUSTRATIONS
(1) Under New York building legislation, property owners were required
to deposit plans and specifications and obtain a building permit before work
commenced. A masonry contractor signed a contract, under which possession
was immediately afforded, with time of the essence and penalties for delay,
and proceeded to commence work. The owner submitted his application for
the permit late, and in a defective form, and work had to be stopped for a
period until the pennit was finally obtained. The contractor claimed reim-
bursement for the delay. The contract was silent as to the obtaining of the
permit. Held, by the New York Appellate Division, that there was an implied
term that the owner would obtain the pennit in time to allow the contractor to
proceed as required by the contract. Per Rumsey J: "The rule of law is that,
when the obligation of performance by one party to a contract pre-supposes
the doing of another act by the other party prior thereto, there arises an
implied obligation of the Second party to do the act which the performance of
the contract necessarily involves".: Weeks v. Rector of Trinity Church
(1900)."'
4·167 (2) A contract for the construction of a council's school required the.con-
tractor to build a temporary road across adjoining land of the council to a
highway for purposes of his own access and work, and, after removal of the
road on completion of building the school, to construct a permanent path up
to the highway and to do certain work making up the highway itself. There
was a completion date and penalties for late completion. After starting work
and completing and making use of the temporary road for a short period, a
neighbouring landowner claimed that the road was a private one on his own
land and not a public highway, and threatened to sue the builder if its use
continued. The builder ceased work until the council succeeded in obtaining
an injunction against the neighbour by establishing that the road was indeed a
public highway, and then resumed work and completed the contract. He then
sued the council for the cost of the delay, alleging an implied term that no
third person would interfere with his access to the temporary road, and also
an instruction by the council to stop work. At the time of the interruption the
council had not yet made the arrangements with the highway authority which
would have entitled the contractor to carry out the later permanent work in
the highway itself. Held, by the Court of Appeal, that there was an implied
warranty that the council and persons claiming through them would not inter-
rupt the builder's use of the temporary road, but no warranty against persons
making unfounded claims challenging the owner's title. So far as the perma-
nent work in the highway was concerned, there had been no breach, since the
time for ensuring the contractor's entitlement to do that later work had not
yet arrived. If the council had told the contractor to stop work, whether or not
because of fear of the neighbour's threats, that would have entitled the con-
tractor to recovery, but there was no sufficient evidence of this having hap-
pened. Per Lord Buckley, the owner was no doubt under an obligation to do
all acts so far as he was concerned to enable the builder to perform his con-
tract. But he was in no default. Somebody else intervened, and for the act of
that intervening party the owner was not responsible: Porter v. Tottenham
Urban District Council. (1915).86
85 67 N.Y.S. 670, New York. __
~0 [191511 K.B. 776. See also Bywates v. Curnick (1906) Hudson, Building ConttllCts (Vol. 2),
p. 339 illustrated post, Chap. 8, para. 8·073.
SECT. 2] OBLIGATIONS OF THE OWNER 587
(3~ A contra~tor ~n~ertook to build and complete a parking facility for the 4, 168
parkmg autho~1ty within 52 weeks following award of the contract. The con-
tract also P!Ov1ded that "the Authority will apply and pay for building permits
and Ontano Factory Act pennit" and that the contractor "shall apply pay
and bear cost for all other permits or licenses". The contract required the
contractor to provi~e detailed shoring design drawings, and a pennit could
not as a fact be obtamed without similar drawings. The authority infonned the
c<:>ntracto_r some ~ve days after contract signature that it needed assistance
with s.honng drawm~ to obt~ill: the pennit, which the contractor gave, but the
perrmt w.as not ob tamed until eight weeks after signature, and work could not
start until then. The contractor sued for damages. The authority contended
that the contr~ctor should hav.e known from indications as to shoring of the
con~ract drawings that a pennit could not have been obtained on that infor-
mation. H7ld, by O'Leary J., that the owner's obligation to make application
for a permit meant a proper application, including the deposit of drawings in
proper form, and that the contractor was entitled to assume that the authority
had mad~ a ~roper apPiication. Following Weeks v. Rector of Trinity Church
and cons1dermg the Porter a~d Pen vidic cas~s, it was implicit in the wording of
the contract that th~ authority was to obtain the excavation permit and any
oth~r ~eeded perilllts at least as soon after the signing of the contract as the
plaintiff coul_d be ready to commence work, and the owner was liable: Ellis-
Don v. Parking Authority of Toronto (1978).87
(4) A tunn_elling contractor for a railway authority intended to use continu- 4·169
ous. t~ree-s~t a~d w~ekend wo_rking, and at pre-tender meetings, before
deciding on his pnce, discussed with the authority the possibility of being pre-
ve?ted fro~ doing_so, but w~ infonn~d that the authority's enabling legis-
latio.n gave 1mmumty from suit for nU1Sance. The arbitrator found that the
~arttes had contracted on the basis that the work was to be carried out con-
tinuously, and that the authority had represented that no injunction could or
~ould be granted, notwi0stan~g that the W?rk would be noisy and disturb-
mg. and pass thr~ugh res1~ent~a~ are~s. Dunng construction, neighbouring
res1d~ntial occupiers obtained 1n1unctions t? prevent three-shift and Sunday
working, t~e New So~th Wales courts holding that the legislation protected
the authonty ~ut no~ its ~ontra~tor~. The contractor sued for the delay and
expe~se, alleging an llllphed obhgat1on of the authority to extend the time for
completio~ and indemnify the contractor against loss should it be prevented
from ca?1'1ng out _the work in shifts as planned. Held, by the High Court of
Australia, ove~rul~g the New South Wales Court of Appeal, that no such
term could be 1mphed: Codelfa Construction Ltd. v. State Rail Authority of
New South Wales (1982).88
The _Codelfa decision above has been widely regarded as controversial. 4·170
The High Court, Brennan J. dissenting, then proceeded to hold that the
contract _had been frustr~ted, notwithstanding the absence of the implied
te:m. It is true that the implied term pleaded was not very elegant, and
nught perhaps h~ve been ?etter e~pressed as an implied warranty by the
.owner that continuous shift working could be used, or an implied term
that the contractor's price was conditional on three-shift continuous
:"orking and that a reasonable or adjusted price should become available
if the condition did not eventuate. Although the earlier decision in the
87
Now reported in (English) 28 BLR 106.
88
149 C.L.R. 337. Illustrated on frustration and discussed infra, paras. 4·260--4-261
 588 PERFORMANCE [CHAP. 4 SECT. 2] OBLIGATIONS OF THE OWNER
589
residents' proceedings that the enabling statute did not as a matter of law contractor was to be liabl fo ·d
protect the authority's contractors must have been surprising to all con-
cerned, the denial of a warranty of undisturbed working can best be justi-
::~c~ ~\!~~~;~a:;~:ebr ~ifio~:;1ti~cth:; d~~~~:~:rr°:!!~: ::!:
pee cation e contractor was to repair t hi
!~~rs:
fied, in terms of the present discussion, on the footing that the injunctions ~o;i~:~ib~~ltng~, walls or fences which it might be necessary to :emiv~:~
for noise and nuisance were lawfully obtained under the general law, the Hi h gC disturbed t~rough the operations of the contractor. Held, by
which in theory at least must have been as well known to the contractor as indem!t u~~~rof Au~tra_ha, that the contractor was entitled to an implied
did not y 1 dthe pnnc1p!e of the Sheffield Corporation case. Condition 25
to the authority, who could be seen as only expressing a contrary opinion app y to amage which was caused not by the contractor's o erati
at the meeting with the contractor. Consequently this was not, as in the ~:J~~~ but ~s a n;cessary consequence of the work itself, and the spe~uica:i:
case of the other challenges to the owner's title illustrated above, tractor :~~(c/~a amage.c:usefd away.from the immediate site where the con-
unknown to or unforeseeable by the parties when contracting. In the nor- ,, . k & Kve no ng t o entry in order to effect repairs: The Crown v
nennc son nutson (1911).n ·
mal case, of course, contractors might be presumed to be considerably . (Not~: The reasoning of the court in avoiding the express contr
more familiar than private owners with the law of noise and nuisance, and
with the risk of third party interventions resulting from particular working
:~~~~: ~f ~~~:
~;ste=a~r e~!lyowo1' bcuot t~de gebnler~l principle, if applicablea:
• ns1 era e importance The d
methods, and these would normally for that reason be regarded as con- appear to have been cited to the High Court in the Code!fa ca:~] oes not
tractor's risks as to which the owner gives no warranty, it is submitted.s9

(vi) Implied indemnity (vii) Other interferences by the owner

4-171 There may, however, be other Australian authority supporting the
liability of an owner where a contractor becomes exposed to third party
claims in circumstances very close to those in the Code/fa case. In Sheffield
Corporation v. Barclay, Lord Hals bury enunciated a general principle: "It
is a general principle of law when an act is done by one person at the
request of another which act is not in itself manifestly tortious to the
knowledge of the person doing it, and such act turns out to be injurious to
the rights of a third party, the person doing it is entitled to an indemnity
from him who requested that it should be done" ,9° That principle, together
with later authority approving it, has been applied in the case of persons
or ~II the pre~e~g ca~es are only examples of the general "prevention"
4·172
to t;o;pe:ati~n l~phed terms described and quoted in the introduction
Co ts ect:J.on, ~din the further quotations from both United States and
wil~onweal!h Judgments in the present Subsection (3). Obviously there
e many differe1;1t ways in which owners or their employees ma inad-
vertently or by design physically obstruct or impede the const~ction
process.
ILLUSTRATION

bona fide submitting What were in fact invalid share transfers for regis-
tration by company registrars. 91 However, the principle was also applied
earlier by the High Court of Australia in a construction case which seems
to have escaped attention.
ILLUSTRATION
Contractors entered into a contract with the government for the construc-
tion of a main sewer which involved passing through a number of private
properties. The contractor carried out the work in the required locations
through the land of the plaintiff but, as a necessary consequence of the works
and without negligence on the part of the contractor, the plaintiff's buildings
outside the immediate site of the works were damaged by the removal of
lateral support, and the contractors were obliged to pay damages to her. The
government relied on two provisions in the contract. By condition 25, the
89
For the law on nuisance, trespass and noise, etc., see ante, Chap. 1, Section 12(5).
90 [1905] A.C. 392, at p. 397. -,,,.
91 Yeung v. Hong Kong and Shanghai Banking Corporation [1980] All E.R. 599, at p. 606.
ne::J1en the work of rebuilding_ part of a bridge for a highway authorit was
y complete, a surfaceman tn the employment of the authority wifh th
consent of the contractor's foreman, who was the contractor's son but
withe
~ut the ctntradoctor's knowledge, secured the removal, after inquiridg whethe;
1 was s~ e to so, of the wooden supports under the arch fo
ow~er, m ~onsequence of which the bridge fell. The contr:c~~(b~~~ ~t!::.
::~~~g:~~t the ~tho~ylfdor the contract value of the work so far d~ne at
e acct ent. ne , by the Court of Session the work havin bee
i;!:~~~perly. ~nd afording to the contract and the 'contractor not tavin:
Richardso~a;D1 en~""r anh~ faRult on his own part, he was entitled to recover:
· um1, ,ess ire oad Trnstees (1890).94
~part from such clear cases, the obscure and often misunderstood
4-173
also ts on the ~ow~rs of A/Es. when supervising construction work should
be borne tn rmnd. There ts no doubt, it is submitted, that the A/E must
92
(1911) 13 C.L.R. 473.
: See supra, para. 4·136, and see ante, paras. 1·186 et seq.
17 Sess. Cas. 805, Scotland.
 590 PERFORMANCE [CHAP.4
have implicit power to intervene on behalf of the owner and order the
removal of defective pennanentwork which is being constructed, or which
does not conform to the various contract descriptions express or implied.95
But in relation to working methods or temporary works which have not
been expressly prescribed by the contract, and which may or may not
affect the final permanent work, he may well, in the absence of express
provision, have no contractual power to intervene or give instructions,
and if he does so may expose the owner to claims, subject to quantum and
causation, for wrongful interference.96
Moreover, again in the absence of express stipulation, a bui~ding owner
has no right to dictate the order in which the works will be carried out or ~o
alter it and if he refuses to allow the contractor to carry out the works 1n
the order of his choice, the contractor may for that reason be entitled to
damages for wrongful interference, since many variation clauses ~n clo~e
examination only allow changes in the permanent work described m
the contract, and do not confer power in regard to temporary work ~r
methods of working where these have been left to the contractor and will
not affect the final permanent work. 97
In this context, provisions under which the A/E is required to approve a
programme to be furnished by the contractor will usually only be inter-
preted as assisting the engineer in regard to the order in which drawings
and information will be required from him, or to assist him in making
decisions on questions of extension of time, and not as authorising him to
impose on the contractor against his wishes a particular order or sequence
of working or particular working methods. To secure that result, those
powers or requirements will need to be expressly stipulated in the specifi-
cation or elsewhere.97a
(4) Supplying Instructions as to the Carrying Out of the Work
(a) Generally
4·174 Where an owner uses the traditional method of engaging an AfE to
design and supervise his project, and places a subsequent construction
contract in which the contractor is required to carry out the work to the
A/E's designs and specifications and under his supervision, the practice
has steadily grown up whereby, particularly in building and civil engineer-
ing cases, the A/E only produces drawings and specifications in sm:ficient
detail to go out to tender and enable the tendering contractors to pnce the
work, while not in the comprehensive detail which the selected contractor
95 See post, Chap. 5, paras. 5·025 et seq.
%See for this ante, Chap. 1, paras. 1·297-1·298, 1·312-1·313, 1·383-1·385; Chap. 2, paras.
2·009 2· 136-2· 140 and 2· 196-2·197; and see supra, paras. 4·053-4·055.
., See C1ause 51 of 'the ICE conditions, which only authorises changes in the specified
sequence or methods of working, although see also the difficult and b~dly d~~fl:ed C;lause
14 of that form of contract with regard to order and methods of workmg, Cfl_tlctsed 1n the
author's ICE Conditions of Contract, pp. 54 et seq. ·,,.
01, For programmes see post, Chap. 9, paras. 9·040-9·042.
SECT. 2) OBLIGATIONS OF THE OWNER 591
will ultimately require in order to carry it out, although the NE will still
wish to specify and instruct the final required detail and not leave it to the
discretion of the contractor, as would be theoreticaly possible. These later
post-contract instructions ("working" drawings or specification details)
are not designed, therefore, to be variations or changes which will entitle
the contractor to any adjustment of the contract price, and should be dis-
tinguished from the post-contract instructions which will, of course, be
required if the owner or A/E wishes to make any variation or "change" in
the originally contemplated work. 98 There appear to be relatively few dis-
putes between A/Es and contractors in the English and Commonwealth
jurisdictions as to whether later "working" information or details involve
a variation or change.
In addition, there may be some parts of the work where no final decision
has yet been reached by the owner's advisers at the time of contracting,
which are usually dealt with in English-style contracts by contingent or
provisional sum items in the bills or specification.98a Similar considerations
may also apply in the case of much nominated sub-contract work.
Many contracts for traditional building and civil engineering are not,
therefore, fully "pre-planned" at the contract stage to the same degree as,
for example, some classes of construction contract with a high mechanical
content, such as oil refineries and other industrial plant projects.
Additionally, in many more complex projects, such as hospital con-
tracts, there may be unforeseen temporary inhibitions on possession of
some parts of the site, as also in some classes of civil engineering contracts
where possession is likely to be afforded progressively in stages, such as
pipeline, or road or railway contracts, so that the required construction
drawings for one part of the work may not yet be available or, although
already fully detailed, may not yet be formally "released" to the contract-
or. In such cases, it may only be a question of semantics to whether
describe claims for delays so caused as being based on late information
rather than on late possession.
Again, in a number of contracts involving fabrication, for example, of 4-175
structural steel, or even reinforcement steel, the contract may·contem-
plate a series of information exchanges, which may take the form of initial
dfawings to be supplied by the NE or the owner's consultant structural
· engineer, followed by preparation of detailed "shop" or fabrication or
installation drawings by the contractor or his sub-contractor, followed by
their submission for checking and approval by the owner's consultant
. . · (a_nd also, perhaps, by the A/E for co-ordination purposes prior to being
allowed to proceed with manufacture or fabrication and the subsequent
work of installation or erection. Thus, in these cases there will often be two
stages of owner obligation, namely the initial preparation and issue of
drawings to the contractor, either in the contract documents themselves or
98
For the different classes of drawings, see ante, Chap. 3, Section 1(3), para. 3·018. See also
ante, Chap. 2, paras. 2·004 and 2· 130-2·132
~ Seeanre, paras. 3·020 et seq., and 3·089 et seq.
 592 PERFORMANCE [CHAP. 4
subsequently, and the later checking and approval of the contractor's fab-
rication or installation drawings when received. 99
Contractors' advisers occasionally seek to assert a duty to supply all
required information at the outset of a construction contract. Only in rare
cases will this be so in the absence of express provision, 1 since it will not
correspond to the realities, but on the other hand a realistic degree of
"lead time" to enable the contractor to place orders and organise and pre-
plan his woik may often be legitimately required. 2
The basic ''co-operation" and "prevention" implied terms 3 which lie at
the root of nearly all the owner's obligations in a construction contract,
therefore, require the supply of all necessary information by the o~er or
his AIE in reasonable time to enable the contractor to carry out his own
obligations. This is essentially a question of fact, and in general previously
decided cases can offer little direct guidance. The most valuable case of
recent years is likely to be the MacAlpine case in South Africa, wh~re t~e
principles involved are fully discussed. 4 It is proposed to deal with this
subject, first in relation to the original contract work, secondly in regard to
variations or changes, and thirdly in regard to nominated sub-contractor's
work.
(b) Original contract work
4·176 What is a reasonable or proper time for instructions has already been
discussed, and the suggested criteria summarised in the context of the
A/E's duty to the owner in this respect, and the leading cases there exam-
ined. 5 As already pointed out, ante, Chapter 2, Section 6, the A/E's duty to
the owner in regard to the supply of working or other drawings, or other
information, is likely, in the absence of some special need or intervention
of his client, to be conditioned by and co-terminous with the owner's duty
to the contractor in this regard under the construction contract, so that it is
not proposed to develop the subject further in the present subsection. The
basic position is that, if the A/E fails to issue drawings or other necessary
information or approvals within a reasonable time he will, as the building .
owner's agent, commit a breach of contract for which the owner will be
liable in damages to the contractor:
99
See ante, Chap. 2, paras. 2·115, 2·130-2·132 and Chap 3'. pa~a 3·018.
1Compare the instructive discussion on time for possession 1n Porter v. Tottenham Urban
District Council [1915] 1 K.B. 776, and in particular Phillimore L.J.'s judgment, at pp.
790-792.
2
See the criteria suggested ante, Chap. 2, paras. 2·130-2·132.
3 See supra at Section 2, para. 4·136, and see ante, Chap. 1, paras. 1·186 et seq.
4
Illustrated ante, Chap. 2, paras. 2· 133-2·135. See also Fischbach and Moore of Canadil v.
Noranda Mines (1978) 84 D.L.R. (3d) 465, Sask., C.A. . 11
s See ante, Chap. 2, Section 6(2)(c), paras. 2·133 et seq; a~d see Neodox Ltd. v.Swmton and
Pendlebury Borough Council (1958) 5 BLR 34, and .th~ rmport~~t So~th ft..._frican Court of
Appeal case of MacAlpine & Son v. Transvaal Provincial Adm1mstrat1on (1974] 3 S.A.L.R
506 there illustrated.
Se=. 2] 0BLIGATIO NS OF THE OWNER 593
"The contractor, also, from the nature of the works, could not begin his work
until the commissioners and their architect had supplied plans and set out the
land, and given the necessary particulars; and, therefore, in the absence of
any express stipulation on the subject, there would be implied a contract on
the part of the commissioners to do their part within a reasonable time; and, if
they broke that implied contract, the contractor would have a cause of action
against them for any damages he might sustain ... " 6
The traditional express term as to the time of instructions in the RIBA/ 4·177
JCT forms of contract is "as and when from time to time may be necess-
ary"7 and in the ICE form "from time to time during the progress of the
works". 8 In the Neodox case,9 a definition of reasonable time and of the
word "necessary" in this context based exclusively on the contractor's
requirements was expressly rejected by Diplock J., who apparently took
the view that the owner's and engineer's reasonable requirements should
also be considered, but a different view has been expressed in an earlier
case: "The plaintiffs [who were the builders] Illust within reasonable limits
be allowed to decide for themselves at what time they are to be supplied
with details". 10
It is sometimes said that the term which should normally be implied, in
the absence of express provision, would be that details should be supplied
on request only. 11 It is submitted that in circumstances where it is obvious
that the contractor requires the details at a particular time, the owner will
be bound to ensure that they are supplied at that time without any request,
but otherwise the contractor cannot claim damages unless he has
requested details which have not thereafter been duly provided, if the A/E
had no reason to suppose they were needed immediately. 12
The 1963 edition of the RIBA standard forms contained a new and elab-
. orate definition of the time for instructions, related to the contract date for
completion, in a clause designed to secure additional payillent to the con-
tractor in the event of instructions arriving late. 13 However, this clause,
and an elaborate machinery of notices set up under it, is not intended to
supplant the common law right to damages for breach of contract if
instructions are received late. 14
A special problem exists if an A/E chooses to delegate his own design 4-178
function ( that is to say, the provision of drawings or specifications necess-
ary for the carrying out of the main contractor's final permanent work) to
a person who is, or later becomes, a nominated sub-contractor or supplier,
6
Per Blackburn and Mellor JJ. in Roberts v. Bury Commissioners (1870) L.R. 5 C.P. 310, at
pp. 325-326.
1 Clause 3(4), post-1963 RIBA forms; Clause 5.4, post-1980 forms.
8
Clause 8 (1955 ed.).
9
Illustrated ante, Chap. 2, para. 2·133. See also the Martin Grant case, supra, para. 4·159.
10
Per Wright J. in Wells v. Army & Navy Co-operative Society (1902) 86 L.T. 764.
Cf Stevens v. Taylor (1860) 2 F. & F. 419.
12
For a list of the suggested criteria, which include the need for notice, see ante, Chap. 2,
paras. 2· 130-2·132.
13
. Clause 24(1)(a) (Clause 26.2.1 of the post-1980 form).
14
Clause 24(2).
 594 PERFORMANCE [CHAP.4
with or without express provisions in the main contract or sub-contract
stating that the design function (for example, the provision of reinforce-
ment drawings and bending schedules) shall be carried out as part of the
sub-contract. This practice has already been discussed, 15 and it has been
submitted that an A/E cannot escape his professional responsibilities to
the owner in this way in regard to the design itself, particularly because of
the potential conflict of commercial interest in regard to design between a
nominated sub-contractor and the owner. 16 Where the provision of design
information to the main contractor is expressly undertaken in the sub-
contract by the sub-contractor, a fortiori, of course if it is contemplated by
the main contract, there is clearly no room for an implied term imposing
liability for delays so caused on the owner. 17
4,179 In addition to details of the work, the contractor will frequently require
instructions upon other matters, such as the depth to which the ground,
once opened up and examined, is to be excavated for foundations 18 and
the same principles will apply as in the issue of details. But the important
limits, in the absence of express provision, on the architect's (and hence
the owner's) powers over the contractors temporary works and methods
of working19 should be borne in mind. Contractors faced with difficulties
or unexpected contingent expenditure necessary to achieve completion20
frequently seek instructions from architects or engineers in these situ-
ations as a first step to presenting a financial claim for an alleged "vari-
ation" .21 Thus contractors will argue that the words "such drawings or
details as are reasonably necessary ... to enable the contractor to carry out
and complete the works in accordance with these conditions" in Clause
3(3) or (4) of the post-1963 standard forms entitle them to be given
instructions when an unexpected difficulty occurs, even with difficulties
caused by their own defective work or working methods. Similarly, where
the diffiCulties arise in the course of nominated sub-contractors' work they
will seek to rely on provisions such as Clauses 11(3) and 27 of the current
RIBA forms, which provide that P-C or provisional sums are to be
expended in accordance with the architect's instructions. These particular
provisions mean no more, it is submitted, than that an effective nomi-
nation giving full details of the work to be done must take place and not
that there is any continuing duty thereafter to supplement previous
1> See ante, Chap. 2, Section 6(2)(a)(ii), paras. 2·112-2·113;supra, Section 1(2), paras. 4·060,
4·073--4·074, 4·108-4· 110, and see the cases, paras. 4·091 et seq.
16 See the case of Moresk v. Hicks, and the later cases ante, Chap. 2, paras. 2·112-2·113.
11 Fairweather Ltd. v. Wandsworth London Borough Council (1987) 39 BLR 106. For nom-
inated sub-contracts, see further infra, Subsection (5) and post, Chap. 13.
1s Where this is left by the contract to later decision, as where the drawings are not dimen-
sioned and the quantities are marked "provisional" or "as directed by" the AJE.
19 See ante and Chap. 2, paras. 2· 138-2· 140 and 2· 196-2·197, and the important case of Clay-
ton v. Woodman [1962] 2 Q.B. 533, per Salmon J. and [1962] 1 W.L.R. 585, C.A. there
referred to and see the other references inn. 96 supra.
20 See supra, Section l(l)(b ).
21 Compare the cases of Charon v. Fincliley and Pearce v. Hereford Borough (q!fflcil, supra,
para. 4·051, and see post, Chap. 7, para. 7·028 and the case of Kirk & Kifk v. Croydon
Corporation there illustrated.
SECT. 2] OBLIGATIONS OF THE OWNER 595
instructions as and when difficulties, however unexpected, occur.22
All such clauses need to be construed in the light of the fact that under
the terms of most contracts, the A/E's duty is only to supply such infor-
mation as will indicate the permanent final result required by the owner
and not to assist the contractor in a difficulty by devising methods of work,
or ordering variations for this purpose, in cases where the contractor's
obligation to complete according to the existing design is unqualified. For
this reason, A/Es should be careful to frame their approval of working
methods in permissive terms and to disclaim any intention to give
instructions. 23
On the other hand, while not bound to do so, it may be in an owner's 4·180
interest to give instructions when a contractor is in a difficulty, or in the
face of unexpected conditions, particularly if the difficulty or conditions
are such as to throw doubt on the long-term suitability of the work after
completion, or defective work requires a technical change in order to miti-
gate cost or delay. Thus an owner is entitled, for example, to do nothing if
ground conditions make completion hazardous or costly; but if they will
result in a completed building likely to fail at some date after completion
(when the contractor will usually no longer be responsible), the owner and
his A/E may have an interest, for example, to alter the design of the foun-
dations, which may then have the incidental effect of extricating the con-
tractor from a costly or uneconomical situation.24 Nor is a contractor
entitled to expect detection of his own defective work at an early or any
stage of the work;, or instructions to remove and replace it, when to do so
might be comparatively inexpensive.25
Late delivery by the owner or his NE of drawings or necessary infor-
mation properly required by the contractor to enable him to carry out his
work is, at the present day, rightly taken for granted as a breach of contract
by the owner. Depending on the relative importance of the work in quest-
ion, and after reasonable notice, it may also constitute a repudiation justi-
fying rescission of the contract.
ILLUSTRATIONS
(1) The defendant agreed on November 28 to supply the plaintiff with 150 4-181
tons of iron girders according to drawings to be provided by the plaintiff's
architect. The plaintiff provided some drawings and ordered 14 tons of gir-
ders but on March 4, no further drawings having been provided, the defend-
ant wrote declining to proceed with the contract. Thereupon the plaintiff's
12
But see, in regard to P-C and provisional sums, the decision of the House of Lords in
-Bickerton v. N. W. Metropolitan Hospital Board (1970] 1 W.L.R. 607, discussed infra, Sub-
section (5), paras. 4·191 et seq.
23
The absence of suitable express provision to cover these various situations is a serious
criticism of nearly all U.S. and Commonwealth standard forms. (Contrast the Singapore
SIA contract, Clauses 1(2), (3) and 2, set out in C.C.P.P., pp. 553--4,556.)
24 See post, Chap. 7, Section 1(2)(f).
25
See ante, Chap. 1, section 12(2), Chap. 2, Section 6(2)(k), and post, Chap. 5, Section 1(6).
 PERFORMANCE [CHAP.4
596
solicitors on March 13 sent further plans and ordered a further 50 tons of
girders and asked for delivery of the 14 tons ..The defendant refuse~ to supply
any girders and the plaintiff br?ught an. ac.hon for damage~. The JUry found
that the drawings were not delivered w1th1n a reasonable time. Held by the
Court of Common Pleas (Wilde C.J ., Williams ~d Cresw~ll JJ .), t~at the con-
tract was entire, and that as the plaintiff had failed to furn1~h ct:aw1ngs ~or the
whole 150 tons within a reasonable time, he could not mamta1n an action for
26
non-delivery of the girders: Kingdom v. Cox (1848).
(2) During a contract for carrying out alterations and addi~ons to a .dwell-
ing house, the contractor was delayed, inter alia by the dr~wmgs, details and
information. The works were to be completed by a certain day ~ut the ~on-
tract provided that if the contractor should be ?elaye~ by reason, inter al~a, of
his not having received in due time necessary 1nstruc~ons from the architecJ,
for which he should have applied in writing, t~e architect sh?uld.make a fair
and reasonable extension of time for completion. In an arb1trat1on the con-
tractors claimed damages for loss suffered by reason of the delay. The ?wner
counterclaimed penalties for non-completion by the due date ..The arbitrator
extended the time for completion to the date of actual completion pursuant !o
the power in the contract, but did not award damages. The award was stated 10
the form of a special case. Held, by Channell J ., that the contr~ctors we7e
entitled to damages for delay occasioned by non-supply of drawings~ details
and information, in addition to an extension of the time fo.r complet10~; the
counterclaim was dismissed: Re Trollope & Colls Ltd. v. Smger (191~~·
[Note: The arbitrator appears to have interpe~ed t~,e contract P;,0V1S1on for
extension of time as_ the equivalent of an Amencan no-damage clause.]
4-182 (3) A specification omitted all mentioned of many necessary items-fire-
places, tiles, kitchen fitments, wardrobes, garden w~s, cupboar?s, ~tc. An
arbitrator found that both parties had expected t~ giv~ and receive 1ns~uc-
tions for such items. Held, by Blain J ., there was an 1~phed te.rm for suffic1~nt
instructions. The owner had failed to give instructt?ns until ~er prachcal
completion and the contractor was, on the facts, entitled to rescind the con-
tract: SJ. &M.M. Price Ltd. v.Milner (1968). 28
The last of the above cases, though somewhat inadequately reported,
supports the view that variations as well as original contract work cann?t
be instructed after practical completion of the remainder of the .wo~k~ rn
the absence of express provision, unless of course the contractor is willing
to carry them out.29 If it were otherwise, the owner could use the power to
vary to change the contract into a "two-visit" project.30
(c) Variations ordered by the owner
The owner's obligations in regard to supplying instructions. drawi~gs
4-183
and information for the purpose of variations or "chan~es" ~equ1re special
consideration. The intention of these clauses is almost 1nvanably to co~er
an unrestricted discretion on the owner to vary the work at any time
2,15 C.B. 522.
n Hudson, Building Contracts (4th ed.), Vol. 1, p. 849._
28
206 E.G. 313. S d B d · th ill trated
wseealsopost Chap.7,para.7·093andthecaseofRussel/v. a a an eira:. ere. us ,
Jo Cf the U.S. ,;cardinal change" case of Luria Bros. v. U.S. 369 F. (2d) 701 (1966), illustrated
post, para. 7·085.
Seer. 2] 0BLIGATIONS OF THE OWNER 597
before completion. 31 Accordingly, the valuation provisions in nearly all
variations or "changes" clauses in English and Commonwealth contracts
are "open-ended", in the sense that, while they may provide for prices
contained in the bills or schedule of rates 32 to be applied to the varied
work, they also recognise that, by virtue of timing, location fi:nd other fac-
tors, the prices in the bills or schedule which prima facie are to apply will in
appropriate cases be subject to adjustment on a comparative cost basis if
the varied work is in fact carried out in different conditions from the undis-
turbed basis which usually governs the prices to be found in the bills or
schedule.33 Where an "open-ended" valuation of this kind is present, there
is clearly a considerably reduced need for limits on the time or circum-
stances in which variations may be ordered. The only limits will be, it is
submitted, first, that the variation should not be outside the "scope" of the
contract and its variation clause (or, in United States Court of Claims par-
lance, not a "cardinal change") 34 and, secondly, that the variations should
be ordered before practical completion (or perhaps in some cases some-
what earlier, before the process of demobilisation of the contractor's plant
and personnel has gone too far, which will be a question of fact).
On the other hand, once the variation has been ordered, the normal
considerations for supplying any necessary further drawings or infor-
mation within a reasonable time will be precisely the same as in the case of
original contract work. 35 However, very occasionally in the Common-
wealth some construction contracts make no provision for adjustment of
the contract prices which are to govern varied work if carried out in differ-
ent circumstances, and this is a very common feature of many United
States-drafted contracts (some of which, even less realistically, empower
the owner to order changes unilaterally but deny extra payment to the
contractor unless prices are agreed beforehand).
In these latter cases, while a court would lean against an interpretation
which prevented the owner from varying the work at any stage, there is, it
is submitted, more room for an implication that extras and alterations will
be ordered at a reasonable stage in relation to the works as a whole so as to
permit its economic and orderly execution without disruption or
additional unit costs to the contractor; but this cannot be asserted with
confidence, since there is no rule of law (other than the English Unfair
Contract Terms legislation or its equivalent, which almost certainly would
not apply) enabling a court in a common law country to rescue a commer-
Cial contracting party from entering into an unwise transaction.
f A. MacAlpine Ltd. v. Transvaal Provincial Administration [1974] 3 S.A.L.R. 506, illus-
3
trated ante, Chap. 2, para. 2· 134.
3.2 For these see ante, Chap. 3, Section 1(3), paras. 3·024-3·025.
"For this basis of valuation, see C.C.P.P., para. 8--04.
34 See post, Chap.-7, Section2(4)(h). See also the Court of Claims "cardinal ch!inge" case of
Luria Bros. v. U.S. 369 F. (2d) 701 (1966), illustrated post, para. 7·085.
:is See the judgments in the MacAlpine case in South Africa on these points, ante, Chap. 2,
para. 2· 134.

[CHAP.4
PERFORMANCE
598
(5) Nomination of Specialist Sub-Contractors and Suppliers
(a) Original nomination
Nomination of sub-contractors is a peculiarly ~nglish system, :i~er~:y
4°184 . . ·s made in the main construction contract ena ing e
express provts1on I
that is nominate, sub-contractors or supp iers
r of
elect
owner t o s , • Th · purpose of
materials or goods, often of a specialist character. e ~rnnary . ·t or
the system is to enable the owner to secure bette: quality or dura~ili y .
e than would be the case if the choice was left to t e m~tn
~~~~:~~cwho could be expected, under straightforward and una:01d-
able mark~t constraints, to select the cheapest war~ or_ go~d~ av:~l~t~:
which could be said to meet the specification. N o~~ahon is l~ p fr
most often carried out by the owner or his NE obta~mg quotations om
ntractors against a full sub-contract documentlon already preparetd
Sub-Co · · t the main contractor o
b the A/E, so that a subsequent mstruction o . , express powers of objection,.orprohibitions against an inconsistent nomi-
iace the order in question will usually not merely involve the AIE _s nam-
fng of the desired sub-contractor, but also stipul~tion !? ~h~::~-~~::
tractor of the exact terms of the sub-contract against w ic t . 1
tractor has quoted. Theoretically, of course,. it would be s~~ent : : ~ :
to name the sub-contractor, and this sometimes happens wit ma . '
but that would open up a process of negotiation on price or even qu~li:
. d ub contractor from which the sub-contractor mig
between main an s - f d t to
withdraw' or it might lead the sub~~ntractor :o put or"':~\hit:~ of
which the main contractor could legitimately obJeCt. To ~vo1 . bl bt ·n
. owners and their A/Es will almost mvaria y o a1
~:1ra::~-~:d:;b~~~e~~~::~~::in~~~:!e
accompan1e Yan
~:~:~t:.:~~~~n::~~~~et~~
d "th the owner's
he will enter into the sub-contract on the quote terms ~1 1 d within
main contractor' although usually subject to the order ?e1ng p. ac~ d sub-
a stipulated period. In sophisticated contracts this nom1na e
contract "package" should ideally, therefore:
a comply with all reasonable requirements of th~ m~in contractor to
( ) nable him to fulfil his own main contract obligation; and . .
(b) !;~:~::
e
1
of a ra id acceptance without any further negotiation,
:ain coril.ractor placin~ his order (although in s~m: cases
the sub-contractor's acknowledgement of the order may e c~n-
tractually necessary as between main and s~b-co~trac:or, on pnn-
ciples of offer and acceptance and cons1derat1on, in order to
conclude a legally binding sub-contract).
Put shortly' the owner's nomination obligation is dis:h~r~~d w~~n ~~
,1-185
ts forward to the main contractor a sub-contractor wtl~ng.:to su co
fr:ct on suitable terms for the work or materials in question, and a sub-
~---
SECT. 2] OBLIGATIONS OF THE OWNER 599
contract on those terms is later concluded. Price will rarely be an obstacle
in-this situation, it should be realised, since under English nomination sys-
tems, and the modern Standard Methods, the main contractor has no pric-
ing risk, and is expressly entitled to be paid by the owner whatever has
been agreed with the sub-contractor or becomes due to him together with
additional profit percentages and discounts and attendance allowances. 36
For these reasons it is clear that, where work is to be done by sub-con-
tractors or suppliers nominated by or on behalf of the owner, there roust
be ·an implied term that the owner or his NE will select or nominate the
supplier or sub-contractor, and talce any necessary preliminary steps by
way of obtaining tenders and quotations, in sufficient time to enable the
main contractor to fulfil his obligations as to time and carry out his work
economically and expeditiously. In addition, there will be an implied term
that the owner or his A/E will nominate a supplier or sub-contractor will-
ing to enter into a sub-contract in a form consistent with the obligations of
the main contract37 ( although all the English standard forms now contain
nation38). Thus, Romer L.J. said in an early leading case: "The [contract-
Ors]-clearly could not be compelled to enter into a [sub-] contract which
did.not adequately protect them". 39 On the other hand, the contractor, by
placing an order with a sub-contractor, without protest, particularly where
there is an express right to object, will usually be held to have waived any
breach of this term, or be estopped from alleging it: "If the terms of those
[sub-] contracts prove insufficient to properly protect the [contractors],
that is their fault or misfortune and they cannot hold [the owners] liable in
any way".39a
As previously pointed out, the A/E may require nominated specialists 4·186
to prepare drawings and details of sub-contracted work. In such a case the
AIE, will clearly need to nominate in sufficient time to enable the sub-
contractor not only to be engaged, but also to provide the main contractor
with all necessary drawings and information for the work to be done and
completed within the contract period (or a reasonable time if no period is
applicable, although in critical sub-contracts or where deliveries are leng-
thy or uncertain it is quite common to find that a prudent NE will have
pre-ordered drawings or fabrication to meet this problem on a guarantee
or-"letter of intent" by the owner of the sub-contractor. On the other
hand, it is elementary that, in the absence of express provision, the owner
does not warrant that nominated sub-contractors will honour their deliv-
ery or starting and completion dates and, provided these are satisfactory,
~ See post, Chap. 13, for sub-contracts generally and nominated sub-contracts in particular.
37
This implied right of objection to nomination was neither considered nor argued in the
House of Lords in Glouce~tershire County Council v. Richardson [1969J 1 A.C. 480, com-
mented on supra, para. 4· 122, and is a principal reason for doubting the reasoning in that
case. This sentence was in the ninth edition.
JI! Post-1963 RIBA forms, Clauses 27(a) and 28(b); ICE conditions, Clause 59(l)(a).
39 ln Leslie v. Metropolitan Asylums District Managers (1901) 1 L.G.R. 862, at pp. 868, 869.
l!!>Jbid.
 600 PERFORMANCE
so that the nomination cannot be rejected, he will not be liable for sub-
sequent delays in doing work or delivering goods,40 since in that event the
main contractor will have his remedy against the sub-contractor.
ILLUSTRATIONS
4·187 (1) The plaintiffs agreed with the defendants to build a hospital, including
chimney stacks and heating apparatus, in two years. The contract provided
for the stacks and heating apparatus to be done by specialists, and the archi-
tect, having negotiated a price per stack with the specialists, instructed the
plaintiffs to send formal orders to the specialists, which the plaintiffs did. The
plaintiffs suffered loss as a result of delay by the specialists and sued the
defendants for damages alleging that there was an obligation on the defend-
ants to see that the work was done by the specialist sub-contractors within a
reasonable time. Held, by the Court of Appeal, that the plaintiffs and not the
defendants had made the: contract with the specialists and that the defendants
were not liable to the plaintiffs for the delay by the specialists: Leslie & Co. v.
The Managers of the Metropolitan Asylums District (1901). 41
(2) The plaintiff contracted to do certain works for the defendants for a
lump sum. The contract provided that the engineering and other specialists'
work was to be done by named firms, who were to be paid by the plaintiff. The
plaintiff was not to be liable for delay caused by the specialists or for defective
plant supplied by them unless he was guilty of contributory negligence. The
specialists caused delay in the execution of the works which caused damage to
the plaintiff. The plaintiff sued the defendants for this damage alleging that
there was an implied promise by the defendants that the delivery of the
machinery should not be unreasonably delayed or that delivery and fixing
should be made and done at such reasonable times during the erection of the
buildings as would enable the plaintiff to complete the same within the time
fixed by the contract or within a reasonable time thereafter. Held, by Philli-
more J ., that there was no such implied promise and there being no contract
between the defendants and the specialists the defendants were not liable for
the delay: Mitchell v. Guildford Union (1903).42
4-188 In theory most difficult problems could arise in this field. 43 The owner
may nominate a supplier immediately following signature of the main
contract, and even at this early date it may be found that the supplier can-
not deliver in time to permit completion within the contract period. The
goods in question may have been notoriously subject to long delivery
dates or, on the other hand, the difficulty in supply may have been quite
unexpected. The owner may have nominated in what would normally be
ample time, but an unforeseen change in the supply position may have
rendered satisfactory delivery impossible. Are these nominations in
breach of contract or do they activate an express contractual right of
40 See also post, Chap. 13, Section 3.
41 1 L.G.R. 862, illustrated more fully post, Chap. 13. (An early example of the "chain of
liability" principle.)
ii 1 L.G.R. 857. See further cases post, Chap. 13, Section 3.
4.1 See also the discussion ante, Chap. 2, paras. 2· 144-2· 145.
SECT. 2] OBLIGATIONS OF THE OWNER 601
objection? At least where the supply position is well known in the indus-
try, should not the contractor be taken to know as much or more about this
tha1: the owner, if he si~s a contract with an impossible contract period
havtng regard to the delivery position, or if he omits to warn the owner or
request early nomination and details? Or should he in such a case be
entitle~ to suppose that the owner has already made arrangements before
t~e mam contract has ?one out to tender which will enable quite excep-
tional dates to be obtained? Is there any distinction between mechanical
~oods, like machinery or pipes and specials, which are intended to be
incorporated in the works in many engineering contracts as part of a later
or secondary stage of the work peculiarly under the owner's design or
control,. and which in times of inflation or steel shortage may be on very
long delivery, and on the other hand goods connected with the strictly civil
engineering, or in building contracts the structural, part of the contract
work, such as structural steelwork or bricks?
The abu~e .examples show how difficult it may be to define in precise 4·189
terms the t:Immg of the owner's obligation to nominate and make infor-
matio? availab_le. It is.submitted with some diffidence that the duty is to
make 1nformatton available so that work or supplies can be ordered within
a reasonable time, and that in deciding what is a reasonable time, regard
should be had to:
(a) the .g.eneral state of knowledge in the industry as to the delivery
position of the goods in question;
(b) any special knowledge the owner may be expected to have of the
delivery position or manufacturing period of the goods in question
by reason of prior inquiry (for instance, in relation to unusual
materials or goods specially chosen or manfuactured for the con-
tract works);
(c) any requests for details or warnings from the contractor in a matter
of which he has special knowledge;
(d) the contractor's programme, if known;
(e) the contract period;
(f) the contractor's actual progress on site.
If the architect or engineer has delayed unreasonably in the light of the
~bove considerations, and a satisfactory delivery or completion date can-
not be obtained in consequence, there will be a breach of contract. On the
other.hand, .if the owner or ~s NE nominates a sub-contractor ready to
pro~se delivery or completion by a satisfactory date, he will clearly not
?e hable for any subsequent default. But the promise must be legally bind-
ing and any qualification or exclusion of legal liability by the sub-con-
tract~r, incons!stent with the main contractor's obligations, would, it is
submitted, entitle the contractor to reject the nomination. 44
44
This _sentence was in the ninth edition. The proposition was not in fact argued before or
considered by the House of Lords in the case of Gloucestershire County Council v
Richardson [1969] 1 A.C. 480, commented on supra, paras. 4· 122 et seq. ·
 602 PERFORMANCE [CHAP.4
4-190 However even if the AJE nominates within a reasonable time in
accordance 'with the foregoing principles, the nomination can sometimes
fall foul of an express right of objection, such as that in Clause 27(a)(i) _of
the RIBA/JCT pre-1980 contracts, which (unexceptionably) permits
refusal of any nomination which is inconsistent with the contractor's own
obligatons to the owner. But in one case where a nomination offered sub-
contract dates in good time to avoid any disturbance of the contr~ctor's
actual progress on a separate later ph~se of his c?ntrac~, due to_ his own
delays (or delays for which he had received exte1;1s1on of t11?e) while ca:111-
ing out work on earlier phases, the documentation ~ad fa1.led to take into
account the possibility of such earlier delays when stipulating the contract
dates for starting and finishing the later phases, and the House of Lords
refused to imply a term permitting a nomination consiste~t with the c?n-
tractor's actual situation on site, as opposed to one offenng completion
dates consistent with the now obsolete and academic dates fixed by the
contract for the later phases, thus enabling the contractor to create a tacti-
cal impasse by the highly legalistic device of refusing to accept the other-
wise perfectly satifactory nominations on this ground. 45 •
As already indicated in Subsection (5), supra, an A/EIS under no fur-
ther duty, in regard to information, any more than in the ~ase of the c.on-
tractor's own work, once he has provided a sufficiently deta1~ed
specification or drawings of the sub-contract work and made an effective
nomination. Thereafter he is under no further duty, should unexpected
difficulties arise, to supplement or alter the original instructions, and any
express terms in the contract, such as Clause 27(a) of the RIB~JCT
pre-1980 contract_ providing for instructions in regard to the exJ?end1tur.e
of P-C and provisional sums, mean no more than that an effective noill!-
nation, with a sufficiently detailed description of the sub-contract work m
the sub-contract or main contract documentation, needs to be made. 45a
(b) Re-nomination on fai~ure of first sub-contractor
4·191 Once a nomination had taken place, the policy of all earlier English
construction contracts following the emergence of nominated su?-con-
tracting at the beginning of the present century, had been to requrre the
nominated sub-contractor to be treated in exactly the same way as do-
mestic or "private" sub-contractors, so that any breach by the sub-co~-
tractor would constitute a breach of his own main contract by the mam
contractor.46 Indeed the contrary was never seriously argued, although in
the earlier stages of the case~Jaw unsuccessful attempts had been made by
main contractors in the courts to claim compensation from owners for
nominated sub-contractor defaults. 47
•> Trollope & Collsv.N. W. Metropolitan Hospital Board [1973} l W.L.R. 601,illustrated and
doubted post, Cbap.10, para.10·091A.
•s, But see the Bickerton case, post, Chap. 13, para. 13·073. .
46 Compare Young and Marten v. McManus Childs [1969] 1 A.C. 454, illus~~ated supra,
para. 4· 121 in a "selected product" case.
,, See post, Chap. 13, Section 2(2) for the early cases.
SECT. 2] OBLIGATIONS OF THE OWNER 603
Thus, if the nominated sub-contractor repudiated his sub-contract vol-
untarily, or if he became insolvent and his trustee or liquidator disclaimed
the sub-contract,. the main contractor would on this view be regarded as in
breach of the main contract, and therefore under compulsion to reduce or
eliminate his liability for damages by making alternative arrangements to
c?mplete the sub-contract work as quickly and satisfactorily as possible by
his own employees or by another sub-contractor. Any view that the owner
~uld be liable to the main contractor in this situation would offend ( and
~ndee~ reverse~ the "chain of liability" principle, and would defy the
mtention to be inferred from the express provisions found in many con-
tracts declaring the nominated sub-contractor to be an actual or deemed
sub~c~ntra.ct~r of the contractor. Moreover, there was no satisfactory way
of d1stingmshing between voluntary repudiations by sub-contractors who
for example, found their prices had been too low and abandoned the pro~
ject, which would make a mockery of the system and defeat the owner's
?bvious requi~em~nts, ~nd the "involuntary" repudiations arising on
insolvency (which In reality represent the voluntary decision of the trustee
or liquidator to disclaim rather than adopt the contract).
Many contracts made this position extremely clear: see, for example, 4·192
the English central government contract (known as CCC/Wks/1, the later
1973 GC/Wks/1 successor of which provided expressly: "the Contractor
shall make good any loss suffered or expense incurred by the Authority by
reaso~ of any default or failure, whether total or partial, on the part of any
[~ormn~t~d] sub-contract .or supplier".48 This particular express provision
did not, It 1s true, concern itself expressly to provide for a duty to re-nomi-
nate, but since it entitled the owner to full compensation against the main
contractor in the event of, inter alia, a re-nomination, the issue whether or
not there was a duty or only a power to re-nominate would be of little
importance). ~n contracts without such a provision, the practical import-
ance of a possible duty of the owner to make a second nomination might
be that, depending on the wording of the contract, and without any fault
on t~e owner's part, the contractor might seek to claim compensation on
receipt of the re-nomination instruction for loss caused by:
(i) the first nominated sub-contractor's defaults prior to termination
of his sub-contract; or
(ii) the unavoidable delay before a second sub-contractor could be
obtained and be able to start or re-start the nominated sub-con-
tract work; or
(iii) from the very conunon result of many such "mid-stream" re-
nominations, namely that the second sub-contractor would be
unable to offer completion dates which the main contractor
48
GCfWks/1 (1973 edn.), Clause 31(3).
 604 PERFORMANCE [CHAP.4
had been entitled to insist upon in the case of the first
sub-contractor.49
4-193 In the case of nominations under the then current RIBA/JCT forms of
contract, two courts had, prior to 1970, already ruled that no duty was
imposed on the owner in those contracts to nominate a second sub-con-
tractor upon the insolvency of the first. 50 However, in early 1970, the
House of Lords reached the unexpected conclusion, overruling the two
previous cases, that in a case where a nominated heating sub-contractor's
liquidator had disclaimed the sub-contract shortly before work was due to
start, there was an obligation on the owner to make a second nomination
and, in that case, to pay the main contractor the higher sub-contract sum
charged by the second substituted sub-contractor, who had been selected
by the owner's architect by agreement on a "without prejudice" basis fol-
lowing the failure of the first. 51 The only issue between the parties in Bick-
erton was whether the main contractor was only entitled to the amount of
the first sub-contractor's accepted quotation, or the extra amount of the
second. The reasoning in Bickerton, very recently decided at the time of
the tenth edition, was there exhaustively analysed and doubted52 and has
since been discussed in the light of important subsequent cases in England
and Australia which, it is submitted only served to reinforce these initial
doubts. 53 On any view, the following points should be noted about
Bickerton:
4·194 (a) The key reason for the decision was the interpretation placed on
the express wording of the RIBA/JCT contract, namely in Clause
27(a) that "Such [P-C] sums shall be expended in favour of such
persons as the architect shall instruct ... ", coupled with the House
of Lords' view that a "P-C sum" could not be regarded as fully
"expended" in a case where a sub-contractor had ceased work
prematurely.54 In other words, there was a continuing duty of the
AfE to give instructions as to this work, and not a once and for all
duty discharged by the AfE on securing a perfected nomination of
the sub-contractor. 55
49 For an example of all these matters arising, see the later House of Lords case of Bilton v.
Greater London Council [1982] 1 W.L.R. 794, see post, Chap. 13, para. 13·074, and dis-
cussed in C.C.P.P., para. 21-20.
50
J. M. Reilly Ltd. v. Belfast Corporation unreported, 1968, Northern Ireland Court of
Appeal; and see also Sir Walker Carter's decision in K. Cross v. East Riding County Coun-
cil unreported, 1966.
si Bickerton v. N. W. MetropOlitan Hospital Board [1970} 1 W.L.R. 607 post, para. 13·073.
51 Tenth edition, pp_. 333-337.
53
See post, Chap. 13, Section 3(2), and see also C.C.P.P., Chaps. 21 and 22, analysing the
Bickerton and Bilton cases in the English House of Lords, and the]ennings case ln the High
Court of Australia (infra).
54 [1970] 1 W.L.R. 607, at pp. 610E-611B,per Lord Reid.
ss That was not only a crucial misunderstanding of the typically archaic and obscure wording,
it is submitted, but the significance of the "declared to be sub-contractors e~ployed by the
contractor" wording is ignored. See the tenth edition, pp. 385-386 and see e~c.P.P., paras.
21-11 to21-17.
SECT. 2] 0BLIGATIO NS OF THE OWNER
605
(b) Bickerton is not, the~efore, of any authority whatever except in
:egard to contracts usmg the comparatively unique form of words
m the RIBAIJCT pre-1980 contracts."
(c) ~n any view,, Bickerton is not authority for holding the owner to be
in brea~h ~f contract to the contractor, provided that he re-nomi-
nates within a reas~nable time, or that the owner is compelled to
compensate the main contractor against loss arising from the sub·
contractor's default or from the subsequent re·nomination.
Th~ ~riticis~ of Bickerton expressed above have received strong sup- 4-195
port, It is sub_m1tted, from the House of Lords itself, which rightly held, in
~e case of Bilton v. Greater London Council, 57 that not only had the word-
ing of the pre-1980 RIB A/JCT contracts made no express provision in the
~ontra~t for re~nomination ?Y
the owner ( as had been recognised by the
Judges in the Bickerton c~se itself), but it had also failed to provide for any
com~ensatory payment 1n that event in the detailed and otherwise wide-
rangtng "loss and expense" cl~s permitted by Clause 24 of the pre-1980
fo~s, and had ~ot even provided for an extension of time, in the equally
~etatled and Wide-ranging Claus_e ~· to cover the unavoidable delays
likely t.o result from a second nomination. The result in the Bilton case was
that the owner was held entitled to deduct liquidated damages for delay
caused by unavoidable later dates offered by the second sub·
co.~tractor. In an obite~ dictum, however, Lord Frazer suggested that the
bmlder could have Objected to the nomination of the second sub-con-
tractor on that gr.ound, and thought that, if he had done so, neither side
would have been m breach (so producing an impasse, which could only be
resolved, pre~umably, either by agreement or by the owner exercising his
power to o~t the ~emaini~~ sub-contract work-truly an extraordinary
and wholly lIIlpractical position to bring about in a construction contract
~d a _clear reflection on the validity of the original Bickerton interpret~
at1on 1tself58).
Subsequently, however, on extremely complicated facts unlikely to be
repe~ted, :i,ord Frazer's dictum was adopted by the Court of Appeal in
19851nFairclough Building Ltd. v. Rhuddlan Borough Counci{.59 Only the
House of L~rds ca~, it i.s .submitted, now resolve these logically insur-
mountable diffi~u.lties ans1ng on the wording of the pre-1980 JCT forms
and from the ong1nal Bickerton interpretation. However, under the later
56
See in particular Jennings Industries Ltd. v. City of Adelaide (1985) 57 AL R 455
para.. 13·~83, where the High Court of Australia cited not very important duferen~:;:f
wordu~g, m .a contract closely bas~d on the RIBA/JCT contracts, as their reason for not
foll~wrng f!ickerton, and had no difficulty in discounting the difficulties felt by the Bicker-
ton Judges if there was to be no renomination duty. See this further explained ,·n cc pp
para. 22-06. · · · ·,
: [1982] 1 W.L.R 794, see post, para. 13·074.
-,See C:.C.P.P., pa~~s._ 21-20 to 21-22, where the reasoning behind this dictum is further
exammed and cnt1c1sed.
5\1 (1985) 30 BLR 34, see post, para. 13·076, discussed and explained in C.C.P.P. paras. 21-34
to 21-37 and see also para. 21-22. '
 606 PERFORMANCE [CHAP. 4
1980 RIBA/JCT contract, a policy of full compensation of the main con-
tractor for nominated sub-contractor defaults, including any loss arising
on re-nominations, although one of the most extreme complication, has
now been openly and expressly adopted.60
4-196 In the case of the ICE contracts, highly complicated procedures, includ-
ing a very limited participation by the owner in sub-contract termination
decisions, and an ultimate guarantee of a defaulting nominated sub-con-
tractors' solvency by the owner to the main contractor, are now to be
found in the post-1973 domestic standard forms in England. 61
In contrast, the central government's GC/Wks/1, by Clause 38(5)
(clearly a direct response to the Bickerton decision itself), calls for re-
nomination by the engineer in cases of repudiation by nominated sub-
contractors, but this is to be expressly at the expense of the main contract-
or, the latter entitled only to credit against the owner's claim for damages
for the payment which the first sub-contractor would have earned had he
completed his work in the normal way. 62
To summarise, it is submitted, that in the absence of express provision,
there will be no implied obligation on an owner to make a second nomi-
nation should the first nominee sub-contractor repudiate his sub-contract
after becoming contractually bound to the main contractor. This will
apply in the great majority of contracts, other than the two English stan-
dard forms referred to above, in conformity with the "chain of liability"
principle. Even if a contract does impose an obligation to re-nominate,
there will again, in the absence of express provision, be no liability of the
owner to compensate the contractor in anyway and, on the contrary, the
owner will be entitled to damages for breach, whether for delay or other-
wise, giving credit only for such sum as would have been properly due to
the main contractor in respect of the first sub-contractor's account. Nor
will the owner, in the absence of express provision, be under any duty to
intervene in, advise or direct the actions of the main contractor in regard
to terminating the contract of a defaulting nominated sub-contractor.63
(6) Appointing an Architect, Engineer or Surveyor
(a) Duty to make appointment
4·197 Where construction contracts provide for the project to be adminis-
tered and supervised by the owner's A/E, and perhaps also for valuation
or other services to be performed by the owner's quantity surveyor, some
of the contemplated duties or services will be performed simply as servant
' ' MSee this "discretionary" descrip~on by VJnelottJ. in London Borough of Merton v. Leach
.o See the 1980 contract, Clauses 35 and 36, and C.C.P.P., para. 30-26.
61 See Clauses 58 and 59 of the fifth edition, and the detailed commentary in Th~ ICE Con-
ditions, pp. 196 et seq.
62 (1973) GC!Wks/1, Clause 38(5). But see now the 1989 edition of GC!WksJJ;.,Clause 63(9),
which purports to give a guarantee to the contractor in insolvency ~ases: -~·-·
63 James Longleyv. Reigate Borough Council (1982) 22 BLR 31, C.A., illustrated post, Chap.
13, para. 13·079.
SECT. 2] OBLIGATIONS OF THE OWNER 607
or agent of the owner in the exercise of the latter's contractual obligations
~o the co~tractor, ~s, for ex31?ple, the supply of necessary working draw-
ings ~nd information or the issue of variation orders. In other cases his
functto.ns m~y be. more "d~cretionarr":64 for example, in considering ~on-
tractor s clauns, m valuation, or deciding questions of extension of time
and ~f deduction of liquidated damages for delay. These latter certifying
functions have more recently been aptly described as "somewhere
~etwe_en t~ose of a servant and those of an arbitrator" ,6s and in the past as
'quas1-arb1tral".
. Not only will the pres~nce of an AfE or professional quantity surveyor
m many cases be essential for the administration of the contract there-
fore.' but in ad~ition the identity of such a professional administra~or and
certlfie_r, even if "in-house" in the employment of a government or local
authority or large company, may often be a significant "pricing factor"
£i:om a contractor's point of view, in whichev~r of the categories the ser-
vices to be performed may fall.
In most c~ses the AfE is expressly identified in the original contract
documenta~1on, and to cover the obvious possibilities of death, retire-
ment, or wtthdrawal, the words "or such other person as may be nomi·
nated ~y" the owner, or the owner's architect [or engineer] appointed
"from time to tfme•: or "for the time being" may be added. Although there
~ay be other s1tuat1ons, such as covenants to build as between lessors and
lessees, where such a provision might be regarded as merely a license for
the lessor to supervise,66 it is submitted that in construction contracts the
owner is under an implied duty to appoint an A/E, or a successor to a
pr~vious AIE, within a reasonable time, and a refusal to do so, unless
wa1~e~, m~y be a breach goin~ to the root of the contract and justifying
re~c1s_s1on, if the contract requIIes the exercise of certifying functions of
!his kind: Conver~ely, there will be an implied right to appoint a successor
if a previous certifier ceases to act.
ILLUSTRATIONS
(1) The en~ineer was described as "A.B. or other the engineer" of the 4-198
o:-vr1:er · A.B. died, and the contractor objected that his successor had no juris-
dtct~on to fix th~ price ~f extra work. Held, "other the engineer" meant the
engineer from time to time, and where work had begun under one engineer
and had to be continued under his successor, the latter's certificate was
necessary under the contract: Kellett v. Mayor of Stockport (1906).61
[1985] 32 BLR 51, at p. 78, and discussed m rather different terms in C.C.P.P., paras. 17-06
to 17-10. See generally post, Chap. 6, Section 9.
1n PerMacFarlan J. in Perini Corporation v. Commonwealth of Australia (1969) 12 BLR 82
at p. 98. '
"".Seelonesv. Cannock(1S50)5Ex. 713, and contrast Combev. Green(1843) 11 M & W 480
and Hunt v. Bishop (1853) 8 Ex. 675. · ·
01
701.P.154.
 608 PERFORMANCE [CHAP.4
(2) The architect and quantity surveyor in a local authority contract were
identified as "the Chief Architect [Chief Quantity Surveyor] of the London
Borough of Lambeth". The chief architect deputed the day-to-day adminis-
tration of the contract, but not certification, to private firms of architects and
quantity surveyors. The chief architect certified an extension of time decision,
but then retired. Subsequently the contractor applied for additional loss and
expense due to the same matter under Clause 24 of the pre-1980 RIBA/JCT
forms, which required such claims to be considered and ascertained by the
architect, but the private architects and quantity surveyors to whom the con-
tractors initially submitted their claim informed them that the claims were to
be submitted directly to the council, who had appointed no successor, and
that the claims would be dealt with by the council's officers. After more than a
year during which the claims received no consideration, the contractors
brought proceedings for summary judgment in the courts for a sum which had
been recommended by the private architects, and the council applied for a
stay for arbitration, alleging the absence of a certificate as a reason why arbi-
tration must be held. Held, by the trial judge and affirmed by the Court of
Appeal, that the council's actions, including but not limited to the failure to
appoint a successor, were in breach of an implied term requiring them to take
such steps as were necessary to enable the contractor's claim to be examined
and ascertained; the stay would be refused; and judgment for the £100,000
recommended sum should be given as an interim payment, and for damages
to be assessed: Croudace Ltd. v. London Borough of Lambeth (1986).68
4·199 It is not uncommon for private developers to place construction con-
tracts with associated companies without any intention of using an archi-
tect, or indeed for private owners to do so, but nevertheless to use
standard forms of contract providing for an architect, but without naming
one. As a matter of elementary draftsmanship this practice is obviously
highly unwise, although if the work is started or carried out the courts will
do their best to apply the contract, particularly if the documentation
makes it clear that no AJE is to be appointed. Failure to appoint an A/E
will obviously be waived if work continues for a sufficient length of time
and other methods of administering the contract or of affecting interim
payment, for example, have been adopted by the parties, it is submitted.
(b) After appointment
4-200 It has been seen that an owner gives no warranty to the contractor as to
the adequacy of the A/E's design. 69 Nor does he warrant the A/E's com-
petence in performing the A/E's certifying or discretionary functions dur-
ing the supervisory stage of the contract.10 However, not only does the
owner owe the contractor a negative duty not to interfere with the A/E in
those cases where the latter is required by the contract to act fairly as
between the parties and exercise his own judgment, but it has also been
68 33 BLR25.
69 See supra., Section l(l)(b).
70 See, e.g. Pacific Associatesv. Baxter [1989} 3 W.L:R.1150, illustrated ante,_ Chap. 1,paras.
1·303---1·304 holding that there was no duty of care owed to the contractOi by the A/E in
such cases. See also post, Chap. 6, Section 5(4).
OBLIGATIONS OF TI-IE OWNER 609
held that the owner owes the contractor an affirmative dut ·
whe t th , Y, m a case
fun r~, o e ow~er s. knowle~ge, the architect is failing to perform his
. ction at all, or is going outside his proper terms of reference or taking
into a~count extraneous considerations not warranted by the contract to
~;e ~s best e~deavours to see to it that the A/E does carfY out the
q~1red ~nctions properl~. Thus, in a case where a surveyor refused a
certificate m respect of repairs done on a ship on grounds of their cost and
n?t of their quality, (with which latter alone he was required to concern
himself under the contract), it was said:
"· · · I thi~k the Co~t ought to imply an undertaking by the owners that in the
e;e~t of ~ts becoming known to them that their surveyor was departing from
t . e unction that both parties ha~ agreed he was to perform, they would call
him to_b?ok and tell bun what his real function was ... In the result ram of
the ?P1n1on that they were under a contractual duty to keep their ;urve or
straight on the scope of w~at I metaphorically call his 'jurisdiction', by whfch
I do not me~n that he was 1!1 any s~n~e an arbitrator, but only that as an expert
e?trns_te_d WI~ th~ d1;1ty o; 1mpart1ahty within a certain sphere, he had to form
his op1n1on with JUd1ctal mdependence within that sphere. »71
ILLUSTRATION
d Und~r a go~ernm~nt contract questions of extensions of time were to be 4·201
c:alt wit~ by the Director of Works", a senior official not personally con-
~ed 'Y1th the ~?ntract, who acted on the advice of other officials' infor-
~atton in exerc1s1ng his discretion, and who, it was alleged, considered
~~mself as ~ound.t? follow departmental policy directives, for example, refus~
g extensions of time for normal as opposed to exceptional rainfall Held by
MacFarl~_J., answering questions for the purposes of an arbitration th~re
was a po~itlve d1;1ty that the government would ensure that the direct~r per-
fo1?1ed ~ts f~nctions correctly, as well as a negative duty to abstain from inter~
fenng with htm when acting as certifier: Perini Corporation v Commonwealth
of Australia (1969).n ·
A not uncommon and disreputable practice has grown up outside
England_ over recent years whereby some irresponsible owners, including
some Middle Eastern governments and property developers in the Far
East, put a ~ontract o~t to tender using named reputable professional
finn.s ~s AIE s or quantity surveyors, and then proceed to dismiss them on
-~ecunng the contract_, appointing in their place small local firms or even
In-house employ:es hkel_y to be more amenable to improper owner press-
ures. Whether this constituted a breach of an implied term might well in
the absence of proof of bad faith, be difficult to establish since clearly' 1·1
mustb e poss1"ble tor an owner to disrmss · · professional ' advisers for
: z~:e:;u;~:t:~~a~~{a;:c~i:fcif Lloyd's Rep. 114, at p. 124,per Scott L.J. See the
12 BLR 82, more fully illustrated post, Chap. 6, para. 6· 133.
 610 PERFORMANCE [CHAP. 4
bona fide reasons, or in an extreme case to dispense with them altogether,
for example, for reasons of economy. The only safe course, therefore, is to
provide expressly for this eventuality, although the drafting requires con-
siderable care to avoid abuse, and the bargaining power of many contract-
ors will not extend to securing such a provision against an owner of this
type. A provision imposing a reasonable restraint on owners in this regard
is to be found in the Singapore private sector SIA contract.73
(7) Obligation to Permit the Contractor to Carry out the Whole of the
Work
4-202 It is self-evident that the building owner must permit the contractor to
carry out the whole of the work, and that if he prevents the contractor
from so doing, the owner will be in breach of contract and liable for dam-
ages unless there is an applicable power to omit work in the contract.
ILLUSTRATION
The S. Co agreed to supply to T. A. & Co. "the whole of the steel required
by you for the Forth Bridge" less 12,000 tons of plates which were to be sup-
plied by another contractor. The conditions contained a clause: "The esti-
mated quantity of steel we understand to be 30,000 tons more or less." T. A. &
Co. bought 1,450 tons of steel rivets more cheaply from another supplier. The
S. Co. claimed to be entitled to supply the whole of the steel required. T. A. &
Co. contended that "30,000 tons more or less" meant with a margin forwaste5
per cent. more or less of 30,000 tons. Held, by the House of Lords, the S. Co.
were entitled to provide the whole of the steel required for the bridge:
Tancred Arrol & Co. v. The Steel Company of Scotland Ltd. (1890).74
The point arises, however, in a more subtle way where there is a vari-
ation clause in the contract empowering the owner to omit work, and the
owner's reason for omitting the work under that clause is because he
wishes the work to be carried out more cheaply by someone else than the
contractor. It is implicit in most contracts that an owner who exercises a
power to omit work must genuinely require the work not to be done at all,
and cannot exercise such a power with a view to having the work carried
out by someone else. 75 Thus, in the absence of express provision or the
contractor's agreement, it is submitted that work to be done by the main
contractor could not be omitted and then carried out by a nominated
1~ Article 3 (1980 ed.), set out in C.C.P.P., p. 549.
14 15 App.Cas. 125.
is See post, Chap. 7, Section2(2), and the cases of Gallagherv. Hirsch N.Y.45 App.Div. 467
{1899) New York; 61 N.Y.Supp. 607, Carrv.A.J. Berriman Pty. Ltd. (1953));17 A.LJ. 273,
Australia, and Commissioner for Main Roads v. Reed & Stuart Ltd. (1974) 48:A..L.J.R. 461,
there illustrated.
SECT. 2] OBLIGATIONS OF THE OWNER 611
sub-contractor substituted under a power to vary the work, if the owners'
reason for so doing was simply a desire to have the work done more
cheaply.76
In this latter case damage might be difficult to establish, however, since
~nder the terms of most English contrac.ts and Standard Methods govern-
ing payment for nominated work it is likely to be far more profitable and
risk-free than the contractor's own work.n
Hpwever, if there are sound technical or commercial reasons for omit-
ting the work, and not simply a desire to escape the contract prices, as, for
example, a desire to postpone the work until after the expected com-
p~eti_o:11 date due to technical or commercial doubts about its present
viab1hty, or an unexpected shortage of funds, it is suggested that this
would be within the owner's discretion contemplated by the omission or
postponement provisions of many variation clauses.
(8) Duty of Disclosure
Contractors have frequently endeavoured to assert a duty on the part of 4·203
owners to warn contractors or to disclose factors which might influence
the pricing of the contract during the pre-tender period, particularly in
regard to site conditions. It has been seen in Chapter 1 and in Section
2(3)(a) supra, that, in the absence of positive misrepresentation or fraud,
these latter have been generally unsuccessful. 78
In the case of United States government contracts, however, the Court
of Claims has exceptionally evolved a duty of disclosure by the govern-
ment where it possesses vital information indispensable to satisfactory
performance of the contract, and which the contractor has no means of
ascertaining and would not assume to be the case in the light of the
descriptions and wording of the specification.19
This Court of Claims doctrine would not, however, seem to accord with
· ordinary contractual principles in England or the Commonwealth. 80
SECTION 3. DISCHARGE FROM FURTHER PERFORMANCE
Obviously, full performance of all the obligations in a contract bring a 4·204
\·P,Wy's liabilities to an end, although this should be distinguished, in a Con-
·, .,,. The current English standard forms would not appear to permit this.
?!:See post, Chap. 13.
'~)~ee ante, Chap. 1, Section 5(4)(f), paras. 1·158-1·161 and see C.C.P.P., pai:as. 27-32 and
"27-33.
19
.Helena Curtis Industries v. U.S. 312 F. (2d) 774 (1963); and see Natus Corporation v. U.S.
.,J71·F. (2d) 450, at p. 458 {1967). See also the Morrison-Knudsen and Lewis cases illus-
trated ante, Chap. 1, Section 5, paras. 1·160-1·161. '
0
/ 'See particularly Dillingham Construction v: Downs [1972] 2N.S.W.R. 49, illustrated ante,
-c:; Chap.1, paras.1·158-1·159.
 612 PERFORMANCE [CHAP. 4
struction contract, from final completion of the work, or final payment by
the owner. Continuing liabilities may still exist, such as those arising under
indemnities given against future claims by third parties, and, for the per-
mitted periods of limitation of action, for claims made under the contract
for compensation or damages.
Two other forms of release (or more strictly, perhaps, of avoidance of
contractual liability) have already been dealt with in Chapter 1 (namely
rescission of a contract for mistake, or for misrepresentation). 81 The pre-
sent section is concerned with the different concept of discharge or release
from all further performance of an uncompleted contract, and will deal
specifically with:
(1) repudiation by one party accepted by the other (that is, discharge
by breach of the guilty party);
(2) mutual release;
(3) frustration or impossibility;
(4) death or illness;
(5) illegality;
(6) limitation of action (not strictly, of course, a discharge, but a
defence or protection against suit for breach).
Termination under express contractual provisions, often, of course, con-
ditioned on breach, is separately dealt with post, Chapter 12.
(1) Repudiation and Termination for Breach
(a) Generally
4·205 It is evident, particularly in relatively long-term contracts, that the
remedy of a right to damages while·remaining obliged to continue, or to
attempt to continue, with the contract to the end will for practical pur-
poses often be a quite inappropriate remedy for an innocent party,
whether an owner faced by wholescale incompetence and defective work,
or by extreme delay or abandonment on the part of the contractor, or a
contractor faced with chronic delays by the owner in making interim pay-
ment, or a continued lack of information or possession which persists
beyond a certain point. The right of the innocent party to rescind or ter-
minate a contract because of breach by the other, apart from obtaining
damages for it, will basically arise in the following situations:
( a) Where there is a breach of a term of the contract which is so serious
in itself that it would be unreasonable to expect the other party to
continue with the contract. It is sometimes said of such terms that
they are "fundamental", and that breach of them evinces an inten-
~1 Chap. 1, Section (5).
DISCHARGE FROM FURTHER PERFORMANCE 613
tion not to be bound by the contract, but this is at best a legal fiction
and the br~ach _may well be involuntary and the guilty party may~
fact be domg his best to perform, although simply unable to do so
for whatever reason, such as financial stringency, lack of com-
petence, or outside events for which he is contractually responsible.
These breaches of "fundamental" terms are also sometimes said by
lawyers to.be breache~ of a "condition" as opposed to a "warranty"
(the technical expressions used in the sale of goods legislation). The
u~e. of t_he word "condition" in this special legal sense is to be
d1stmgu1shed from its common use in construction contracts for
the "conditions of contract", which could as well be described as
"articles" or "clauses", and are no more than terms of the contract
giving no indication of this special superior status where a single
breach may justify terminationB2;
(b) Where there is breach of a term which, while not by itself suf- 4-206
fic1ent~y senous, ~ay be so protracted or repeated, despite protest
?r no~ce by the mnocent party, that it either evinces a subjective
intention not to be bound by the contract, as in the case of deliber-
a_te ~d continued breaches (however minor), or simply an objec-
tlve.mvoluntary inability to perform the contract properly.83 Notice
calling on the party to perform, while not always strictly necessary if
the facts speak for themselves, is highly desirable from the evidenti-
ary point of view to establish both the seriousness of the continued
breach and the un~llingness or inability of the guilty party to per-
form, as we~l as to dispel any defence based on alleged waiver of the
breach. No innocent party is bound to accept deliberate incomplete
perfo~nce by the other, if proper performance is feasible, it is
subnntted, and the doctrine of substantial performance will not
avail a guilty contractor, for example, however slight his failures of
performance, unless they are involuntary and due to matters out-
si~~ the contractor's control or represent a genuine endeavour to
mitigate a breach84;
(c) Where a party actually informs the other that he intends not to per-
form the contract as a whole, or any part of it, either presently or in
the future, 85 or where he acts in such a way as to render his own
future performance impossible.86 These are usually called "antici-
patory" breaches;
( d) Where. the parties indicate expressly by the contractual language 4·207
that a smgle breach of a particular contractual obligation is to have
the same consequences as a fundamental breach entitling the inno-
82
See infra, paragraph (b).
s., ~;e
1
farrv. A. I. Berriman (1953) 27 A.L.J.R. 273, High Court of Australia, infra, para.
B-1 ~~:pra, para. 4·019 in the context of substantial performance, and,perCardozo J., para.
85
Hochsterv. De la Tour (1853) 2 E.N.B. 678.
&. See, e.$- King v. Allen (David) Bill Posting Ltd. [1916] 2 A.C. 554, where a billposting site
was alienated after the grant of a license to post bills thereon.
 PERFORMANCE
[CHAP. 4
614
cent party to rescind the contract, even though it would not ot~er-
wise be treated as a fundamental breach justifyi~g ~ed1at~
termination. This is frequently brought abo,~t by ..leg~l Ja~~on
involving the use of express words such as condition_ or con-
·i· recedent" or "of the essence" in regard to a particular con-
d11on p .. " d" nty"
tract obligation&1 (compare the "condition an warra
wording used in sale of goods legislation); . . ..
( e) Finally, where the parties insert express tenrunation prov1s1ons _fo~
the benefit of a party in certain defined events.ss Here the parties
rights in the event of a termination will depend upon the expr~s
terms of the contract, which may often differ from those resulting
on a" common law" rescission ( as to which see infra). (Thus e~ress
termination clauses, as a result of inadequate draughtsmanship to
protect the owner in owner termination cases, usually only contem-
plate completion of the ·remaining work by an?th~r contractor,
whereas on a "common law" rescission or te0?1natt?n an owner
would, in principle, be free to claim damages m a differ~nt form
(should, for example, permanent aban~onment of the proJect be a
reasonable course for him to take). It will be seen that such express
clauses are, in the absence of express indication to .the. contrary,
additional to and not in substitution for the owne~ s nghts on a
"common law" accepted repudiation, always assuming that~ ~uf-
ficientlyserious breach is present to justify a co~on ~aw ~esc1ssion
as an alternative to the contractual right of terminat:Ion.
As a matter of t~rminology, lawyers today frequently use. the
4-208
· "reset·nct" or "resc1·,,1·on" as legal. shorthand for the exercise
expression . . of
the innocent party's termination remedy 1n the. f_ace of a repudiation.
More strictly, "rescission" and "rescind" were on~mally used by lawyers
to describe the remedies available in cases of m1s~ake (where the l~w
regarded the contact as void ab initio or "gone") or 1n the context of mis-
representation (where the contract was regarded as "voidab~e"); whereas
the remedies available and the effect of a rescission or te~atton based
on the other party's repudiation will be quite different and, be1~g b~se~ o?,
default more powerful. In the present discussion the words resci~s1on
or "te~ination" will be used synonymously for the exer.:ise o~ the_ ng~t ~o
accept a repudiation by the other party, but the word. ~erm~nat:Ion (m
fact the term usually used by the express contract provisions m const:°c-
tion contracts) may also comprehen~ the s~ictly "contractual" termma-
tions or determinations mentioned 1n Section (2) abov~, as well as t?e
"common law" terminations or rescissions here di~c~ssed, whtl~
" escission" on the other hand, is limited to the latter. It 1s important t
b:ar in mind not only that contractual termination clauses may often be
s7 For the use and effect of this technique by contracting parties, see Lombard North Central
le v Butterworth [1987] Q.B. 527, at pp. 535-536,perMustill LJ.. ~<
111' fhes~ express "forfeiture" or "determination" clauses are the subject of Chap. 12, post.
s9 See post, Chap. 12, paras. 12·006 et seq.
SECT. 3] DISCHARGE FROM FURTHER PERFORMANCE 615
conditioned on breaches which would not be sufficiently serious to entitle
the other party to rescind the contract at common law, but they may even
be conditioned on events which are not a breach of contract at all (in which
event damages will not be recoverable, in the absence of express pro-
vision, upon the exercise of the contractual termination remedy).9()
(b) What breaches are repudiatory?
(i) Fundamental terms
Whether a term of a contract is so fundamental as to justify rescission 4·209
will be a question of fact, and often of degree, although this, perhaps sur-
prisingly, does not usually give rise to difficulty in the construction con-
text. Obvious examples will be a failure of the owner to give sufficient title
to enable the work to be carried out lawfully, or a sufficiently severe and
not merely temporary failure on his part to provide information or pos-
session, but in all cases the whole contract will need to be examined,
including any express rights to compensation or extension of time which
may be afforded to the contractor in the events which have happened. On
the other hand, abandonment of the site by a contractor or removal of
plant or site offices and huts will prima facie be a clear fundamental
breach, in the absence of some very special explanation. Moreover, it is
submitted91 that failing to proceed with due diligence, if persisted in after
reasonable notice, will entitle an owner to rescind for breach of an implied
fundamental term-no owner can be expected to wait and hope for com-
pletion, it is submitted, where the contractor, for example, maintains a
small hut and a watchman on site and without justification proceeds to
more profitable work elsewhere while promising to return at some
unspecified future date. What is due diligence in this situation will obvi-
ously be measured against any agreed or reasonable contract completion
dates. On the other hand, in the absence of express indication, such as "of
the essence" wording, completion to time by the contract date, or that date
as extended under an extension of time clause, will not generally be a
repudiatory breach.92
Equally, an unjustified and continued failure to remedy defective work 4·210
which rquires removal or repair before further work should reasonably
take place will also be a breach of a fundamental implied term, it is submit-
ted-no owner can be expected to watch helplessly while defective per-
~anent work is built into his land and covered up, with later reinstatement
at reasonable cost or without serious delay progressively Jess likely. 93
Similarly, the requirement of a surety bond by the contractor "forthwith
on the acceptance of his tender" was held to be a fundamental term,
00 See Feather (Thomas) & Co. Ltd. v. Keighley Corporation (1953) 52 L.G.R. 30,illustrated
post, Chap. 8, para. 8·167.
91 See supra, Section 1(3), and see also post, Chap. 9, Section 7.
1n See post, Chap. 9.
•
93
.See post, Chap. 5, Section 2(2), where an opposing "temporary disconformity" theory is
discussed.
 616 PERFORMANCE
breach of which justified the other party in treating the contract as repudi-
ated. 94 Again, in a case where information was not available for a large
number of matters not adequately covered by the specification by the time
the remainder of the work had been completed, this was held to justify
rescission by the builder.95 On the other hand, a term which made proof of
payment in full of all sub-contractors a condition precedent to interim
payment of the main contractor was held not to justify a rescission by the
owner.96
In all these cases, notice requiring due compliance before the contract is
terminated is highly desirable, even if not strictly necessary, particularly
where, given the opportunity, the party in breach might be in a position to
remedy it, and quite apart from the additional need for a clear acceptance
of the repudiation at the time of rescinding. However, where a breach is
self-evidently final and incapable of remedy, such as abandonment, for-
mal acceptance of the repudiation is not required, and a simple placing of
the remaining work with another contractor, for example, will be
sufficient.97
(ii) "Conditions", "conditions precedent" and "of the essence" obligations
4·211 There are certain legal expressions which, if used in the contract, may
often be treated as "terms of art" permitting rescission for what might
often be an otherwise "non-fundamental" breach of contract which would
not, unless so described, have justified rescission. 98 However, the mere use
of these expressions, and particularly the simple word "condition", will
not by itself be conclusive. The contract as a whole will be examined to see
that it is consistent with this intention.
ILLUSTRATION
A term in a sales distribution agreement with foreign suppliers required the
English distributor to visit customers at least once a week. It was the only
provision in the contract which was described as a "condition". There was also
a provision entitling the foreign supplier to terminate the agreement for any
"material breach" if it continued for 60 days after notice. The suppliers com-
plained on a number of occasions of failure to visit customers, and purported
to give the 60 days' notice at one stage, but some months later the suppliers
again had reason to complain, and this time terminated the contract at once
without further warning. Held, by the House of Lords, notwithstanding the
use of the word "condition" in only one place in the contract, but also having
regard to the earlier conduct of the suppliers in relying on the "material
9• Swartz & Son Ltd. v. Wolmaransteadt Town Council [1960] 2 S.A.L.R. 1, South Africa.
95 S., J. & M. Price Ltd. v. Milner (1968) 206 E.G. 313, illustrated supra, Section 2, para. 4· 182.
% Alkok v. Grymek (1968) 67 D.L.R (2d) 718, Canada.
91 Verona Construction v. Frank Ross Construction [1961] S.C.R. 195, Canada. See also
Carr's case infra, para. 4·212. ~.
'IH See this technique explained by Mus till L.J. in Lombard North Central pie'v. Butterworth
[1987] Q.B. 527, at pp. 535-536.
[CHAP.4 SECT. 3] DISCHARGE FROM FURTHER PERFORMANCE 617
?reach'.' provisio~; this was not a "condition" in the full legal sense, but only a
~ate.nal breach and therefore required the 60 day notice, so that the ter-
m1nat1on was wrongful: Wickman Sales v. Schuler (1972).99
(iii) Non-fundamental breaches after notice
. Breaches of terms not in themselves fundamental may evince an inten- 4·2U
tio~ not t~ b~ bound if ~ersisted in for long periods, or after receipt of
notice, or If wilful or deliberate in character.
ILLUSTRATION
An owner who had undertaken to excavate over the site to certain levels
and hand ~verpossession to the contractor on May 29, 1950 had, by the month
of July, failed to excavate over the site as required, despite numerous requests
by t~e contra~tor. Under the terms of the contract, the owner was also to
provide certain _structural steel which the contractor was required to fabri-
cate, and for which he had made arrangements. In July the architect informed
the_ contractor that the owner had made other arrangements for the fabri-
catron of the steel, and that this work should be omitted from the contract.
The contractor then refused to carry on with the contract. Held, by the High
Court of Ausn:alia, tha!, as to possession, failure to remedy the breach after
the .due d~te llllght contmue for so long and in such circumstances as to evince
an Intention not to be bound, notwithstanding the absence of any notices
from the ot?er party_, and ~h~refore amount to a repudiation. Furthermore,
the bre~ch _1nv?lved tn om1tt1ng the fabrication, which was deliberate, was a
further 1nd1cation that the owner did not regard himself as bound by the con-
tract: Carr v. J.A. Berriman Ltd. (1953).1
(c) Need for clear and prompt election
There will be no successful rescission, whatever the nature or extent of 4·213
the guilty party's breach, unless there has been a clear and unequivocal
acceptance of the breach by word or action on the part of the innocent
party. If the breach is of a "one-off'' character, however serious, failure to
elect t~ accept a kn_ow~ breach within a reasonable time will lose the right
to re~c~d, though It will not affect the right to damages. If the breach is a
~ntmumg one an~ sufficiently fundamental, however, the innocent party
will be able to rescind later ( as, for example, in a case of a sustained failure
to proceed with due diligence).
-i:
is a common feature of construction contracts that warnings and com-
plaints may develop to a point where the innocent party, however reluc-
tantly, finally decides to rescind. Much as in the case of offer and
119
[1972] 1 W.L.R. 840.
1
27 A.L.J.R 273. For this case, as a restriction of the power to order omissions see post
Chap. 7, Section 2(2). ' '
 618 PERFORMANCE [CHAP.4
acceptance,2 considerable care will be needed both in regard to the clarity
with which the rescinding party expresses himself when doing so and in
regard to the timing of the decision, particularly having regard to the pre-
vious course of dealings between the two parties. In particular, a sudden
termination without adequate warning or without previously making
known the exact nature of the complaint may prove to be a perilous course
of action, even if the complaint is fully justified.
ILLUSTRATIONS
4-214 (1) F. contracted to pull down some houses for W. within 42 days, and was
to pay so much a working day by way of liquidated damages for d~lay. F.
delayed beyond the fixed time, and being asked if he could complete ~n one,
two or three months said that he could not say. There was no other evidence
of renunciation or abandonment of the work by the builder. W. entered
into occupation after 13 days and refused to let F. complete. Held, that the
termination was wrongful. IfW. wished to treatF.'s reply as an abandonment
of the contract, he should so have informed him at once and not waited 13
days and then acted without warning: Felton v. Wharrie (1906). 3
(2) After disagreements with the engineer, a contract?r remove~ men and
equipment and stated he would only resume work 1f the engineer. was
removed, and if he received a payment on account. Toe town gave a wi:i,tten
warning that unless he returned within two days, the town would tenmnate
the contract. On the final day, a further meeting took place, at which there was
no agreement, and the meeting broke up with the town's officers saying that
they would have to consider the matter further. The tow? then placed a con-
tract for the remaining work with another contractor without further warn-
ing. Held, by the Supreme Court of Canada, by a majori~y, that the town had
been entitled to rescind since the letter had been a vahd acceptance of the
contractor's breach whe~ the contractor did not resume work on the day indi-
cated in the letter, but by the dissenting minority (Locke and Cartwright JJ.),
the meeting had treated the contract as still subsisting, and the town had aban-
doned its position that the contractor must resume that day, and should have
given a further warning before rescinding: Kamlee Construction v. Town of
Oakville (1961).'
4-215 (3) A contract in New Zealand by Clause 19(a) entitled the county toter-
minate within seven days of the engineer's certificate that the contractor was
not proceeding with due diligence. Ther~ was no provision requiring p~or
notice to the contractor. There were considerable delays over a long penod
and many meetings, and the engineer threatened in very strong terms t? issue
the certificate on a number of occasions. Later there were more meehngs at
which a new programme submitted by the contractor, which still involved
delay, was discussed, although nothing was agreed, but further thre~ts to
invoke the termination clause were not specifically made. Toe engineer
finally certified without any further warning and the county termin-
2
See Chap. 1, ante, Section 2(5). . . post, Chap. 12, para. 12·007.
J Hudson, Building Contracts (4th ed.), Vol.2,p. 398, and see post, Chap.12, where th1scase
is further discussed. _"
• (1961) 26 D.L.R. (2d) 166. See also, for somewhat similar facts, Pigott Construction v. W.J.
Crowe Ltd., illustrated supra, para. 4· 158.
SECT. 3] DISCHARGE FROM FURTHER PERFORMANCE 619
ated. Held, by Smellie J., although the engineer sought to discharge his duties
fairly, viewed objectively it was neither fair nor impartial to recommend
termination without giving a clear and unambiguous warning, and for that
reason the termination was invalid: Brown & Docherty v. Whangarei County
(1988).'
[Note: While concerned with an express term and certification, the above
case, perhaps a lucky one for the contractor on the facts, is an application of
the same principles which will govern a common law rescission.]
By the same token, a party will not be entitled to treat a contract as
repudiated in a doubtful situation if a manifest intention not to be bound
has not been sufficiently indicated by the guilty party.
ILLUSTRATIONS
(1) R. agreed for a lump sum to build a house for L. R. asked for an advance. 4-216
L. said he would never pay a farthing. R. brought an action against L. alleging
that L. 's statement amounted to an abandonment of the contract. Held, that
nothing was due from L. at the time of L. 's statement, and his statement did
not amount to an abandonment of the contract: Rees v. Lines (1837). 6
(2) C. agreed withM. to erect a house on M.'sland. While C. was engaged
on the work, he alleged that unnecessary delay had been caused by M., and
that M. had said "If you won't go on with your work, go away". Held, that this
did not amount to a repudiation by M., and C. was not entitled to rescind the
agreement: Clayton v. McConnell (1888). 7
(3) Owners gave three days' notice, under a termination clause entitling
them to take possession of plant and materials, without vitiating the contract,
upon the voluntary liquidation of the contractor. Before t~e three days had
expired, they entered on the site and took certain measures in relation to the
plant, including stencilling their name on it and controlling the movement of
vehicles. Held, by Elwes J., that their premature action under the forfeiture
notice did not ipso facto amount to repudiation, and on the facts the owners
had not by their conduct shown an intention to repudiate: Earth & General
Contracts Ltd. v. Manchester Corporation (1958).8
(4) A prospective lessee under a contract to grant a lease entered into pos-
session and paid rent. This created a specifically enforceable equitable lease.
It had been agreed that the lease should be non-assignable, but in negotia-
tions to draw up the formal lease, the landlords required the lessee to agree to
a prohibition against underletting or parting with possession of any part of the
premises. Toe lessee refused by letter to accept the prohibition, and this was
treated as a repudiation by the landlords. Held, by the Court of Appeal, that
the requirement was more than the landlords were entitled·to under the con-
.tract, but even if the lessee had not been entitled to refus1;:: the proposed cov-
.s [1988] 1 N.Z.L.R. 33. Contrast Bysouth v. Shire of Blackburn [1928] V.L.R. 562, illustrated
6
8 C.&P. 126. Contrast Pontifex v. Wilkinson (1845) 2 C.B. 349.
1: 15 A.R. 500, Canada,.
8
108 L.J. 665. See also Hawthorne v. Newcastle, etc. Railway (1840) 3 Q.B. 734, illustrated
post, Chap. 11, para. 11·022.
 620 PERFORMANCE [CHAP.4
errant, putting forward an erroneous but bona fide view of the construction of
the agreement, which in a dispute could be settled by litigation in the last
resort, did not amount to a repudiation of the agreement: Sweet & Maxwell
Ltd. v. Universal News Services (1964). 9
4-217 (5) Ship-owners were entitled to be paid hire from the charte~ers oft~ree
ships prior to the charterers receiving bills of lading, less certam permitted
deductions under the terms of the contract by way of set-off. When the char-
terers made deductions, the ship-owners contended that, under the charter-
party, only agreed deductions could be made, and that disputed. on~s must b.e
referred to arbitration and the full hire paid. The charterers mamta1ned their
deductions from their payments, whereupon the owners, after taking legal
advice instructed the masters to refuse to sign bills of lading which did not
concede the owner's interpretation. The charterers, after requesting the own-
ers to reconsider the matter, treated the owners as having repudiated and
rescinded the charterparty. The owners relied on the fact of their having ta~-
en legal advice, and of their desire to continue with the charterl:'a~ty, e_ve'?-if
their interpretation was wrong. Held, by the Court of Appeal, d1stlngu1sh1ng
the Sweet & Maxwell case, that the owner's interpretation was wrong, and the
contract permitted the charterers to d_educt by way _of set-o~ not only the
permitted deductions but any other available set-offs, 1rrespect1ve of~he own-
ers' agreement. The owner's instruction to the masters was commen~1ally c_at-
astrophic for the charterers, who could not be expected to pay for hire which
was not due and a bona fide desire to continue with the agreement and the
obtaining ot'favourable legal advice was irrelevant if the result was to commit
a repudiatory breach, which the instructions to the masters had clearly been:
Federal Commerce Ltd. v. Molena Alpha Inc. (1978). 10
(6) Purchasers of land purported to rescin~ the agreement for s_ale, relying
on a provision in the agreement which pernntted them to do so if a defined
event should occur before completion. The vendors disputed that the rel-
evant event had occurred, and called on the purchasers to complete. The pur-
chaser's solicitors refused to do so, and in a formal letter, written before legal
proceedings were started to decide the matter, indicated that, in the event of
the court's decision going against them, the purchasers would complete. The
vendors brought proceedings for a declaration that the purchasers were not
entitled to rescind. In a second action, they also claimed damages based on
the resale value. The trial judge and Court of Appeal awarded damages to the
vendors. Held, by the House of Lords, allowing the appeal, a person taking
action relying simply on a term in the contract and showing no other ulterior
intention of refusing future performance or abandonment could not be
treated as having repudiated it: Woodar v. Wimpey (1980)_.11 . Cartwright J., on the point that it was asking too much of a party in a case of
[Note: This on the facts seems a difficult case, and in a?y event, O? the basis
of the House of Lords' reasoning, damages for delay in completion would
appear to have been recoverable.]
(d) Wrong interpretation of contract
4-218 The above cases show that differences of interpretation as to a party's
obligations under the contract, should they come to a head, will render a
9 [1964] 2 Q.B. 699.See alsolamesShaffer Ltd. v. Findlay [1953] 1 W.L.R.106; but see these.
two cases explained by Goff L.J. in Federal Commerce Ltd. v. Molena Alpha Inc. [1978] 1
12
Q.B. 927, at p. 992. . [1960] S.C.R. 361. Further illustrated and discussed post, para. 7·069.
13
10 [1978] Q.B. 927, C.A. See particularly, per Lord Denning M.R., at p. 97i,}pr the irrel-
evance of legal advice. ' ~olumbia Hydro & Power Authority (1978) 85 D.L.R. (3d) 186; (1991) 7 Const. L.J. 227.,
11 [1980] 1 W.L.R. 277.
SECT. 3] DISCHARGE FROM FURTHER PERFORMANCE 621
party in real peril of a successful adverse rescission should his interpreta-
tion prove to be incorrect, assuming that he has, as a result of acting on that
interpretation, prejudiced the further performance of the contract, quite
apart from the obvious cases where he may have been led into prema-
turely rescinding or terminating or abandoning the contract himself. This
background is particularly true of construction contract disputes, and can
create a very real practical dilemma for either party-whether to risk a
~o~gful ~epudiation, with all its consequences, or play for safety by con-
tmwng with performance of the contract and relying only on the right for
damages. Sometimes contracts can be so worded that the contractor can-
not even obtain an advantage by abstaining from rescission and relying on
his right to dam.ages or to payment under the contract.
ILLUSTRATION
A se".ere main contract, incorporated into a pile-driving sub-contract, gave 4·219
the engineer power to order variations, his decision as to what constituted a
variation being fina.l, and his order in writing a condition precedent to pay-
men~..Befc:,re sta~g .wo!k, the sub-contractor received amended plans
requ1nnghim to drive his piles to greater depths. He contended that this was a
variation, but the engineer contended that it was not, and the main contractor
stat~d that he could only conform to the engineer's view. The sub-contractor
carried out the work under protest and the British Columbia Court of
Appeal, apparently holding that the main contract did not apply to the work
as done, award.ed p~yment for the work done in quasi-contract by him on a
q~antu':1' merutt ?as1s. f!eld, bf the S~preme Court of Canada (Cartwright J.
dissentu:~g), ~~t 1t was 1mposs1?~e to imply a new contract when both parties
were mruntarmng contrary positions while the work was carried out· that nei-
ther quasi-contract nor frustration could assist the sub-Contractor-' and that
hi~ proper remedy was to refuse performance except on his own interpret-
ation :1f the sub-contract and, if this was rejected, elect to treat the contract as
repud1ated:.Pe~er Kiewit & Sons v. Eakins Construction Ltd. (1960). 12
[Note: It 1s difficult not to agree with the vigorous dissenting judgment of
dou~tful interpre~ation to risk a wrongful repudiation by ceasing work.
Unhke the precedmg cases, where an erroneous but honest view of the con-
tract did not constitute a repudiation, in the present case the contractor was
un~ble to ma_int~n his view without a repudiatory act, namely ceasing work,
which would 1nev1ta~ly involve repudiation if he was in the wrong. n However,
there was clearly a difference between the majority of the Supreme Court and
Cartwright J. on the one hand, and the Court of Appeal on the other, as to
w~ether the main contract provisions applied to the sub-contract, and that
p~1nt .does not seem to have been finally decided. If effectively incorporated,
1t 1s difficult to see how the sub-contractor could have succeeded.}
See, however, this case followed and explained in Morrison-Knudsen Ltd. v. British
illustrated infra, para. 4·231.
 622 PERFORMANCE [CHAP.4
4•220 The last of the above cases is an almost exact replica of the English
House of Lords case of Brodie v. Cardiff Corporation. 14 There, the House
of Lords' solution of the contractor's dilemma lay in a generous interpreta-
tion extending the arbitrator's powers under the arbitration clause in the
contract. Again, in a very similar situation the Privy Council, in the Aus-
tralian case of Molloy v. Liebe, applied an "implied promise to pay" solu-
tion.15 Contracts of this type create a real injustice and problem for
contractors. In British Columbia itself, the legislature, by way of amend-
ment in 1987, added a new section 58 of that Province's Law and Equity
Act which provides that where a dispute arises respecting the parties'
obli~ations, a party who elects to perform in accordance with the require-
ments of the other party, after giving notice of performance under protest,
is entitled to compensation.
This particular anomaly is no longer present in modern English and
Commonwealth standard forms, where variation valuation is almost
invariably "open-ended", and the A/E's decisions in regard to variations
are seldom expressed to be binding, so that Brodie-style solutions are not
required. Kiewit-style variation clauses are, however, still found in some
oil industry contracts in England and the Commonwealth, which often use
"in-house" United States forms of contract. In the United States, the
dilemma has been avoided in the Court of Claims, and at least in some
States, by the artificial "constructive change order" (CCO) doctrines,
which appear to be jurisdictional in origin and have little or no consensual
basis. 16 More sensible drafting will, of course, avoid the problem.
(e) Payment obligations and set~off
4-221 Mere breach of a payment obligation does not constitute a common law
repudiation. 11 The principle is to consider whether the circumstances of
the non-payment show an intention not to be bound: "The principle to be
applied in these cases is whether the non-delivery or the non-payment
amounts to an abandonment of the contract or a refusal to perform it on
the ·part of the person making the default. " 18 Thus in Mersey Steel & Iron v.
Naylor19 where a supplier of steel to be delivered by instalments was not
entitled to refuse to deliver a later delivery on the ground of non-payment
of the instalment for an earlier delivery, Lord Blackburn said:
''There was a statement that for reasons which they thought sufficient, they
were not willing to pay for the iron at present, and if that statement ~ad been
an absolute refusal to pay ... I will not say it might not have been evidence to
14 [1919] A.C. 337, illustrated and discussed post, Chap. 7, para. 7·068. . 20
15 (1910) 102 L.T. 616. See post, Chap. 7, para. 7·067, and the discussion ante, Chap. 1, Section
11, paras.1·263-1.Z64. . Robert GoffL.J., at p. 981.
16 For the origin of this doctrine, see Len Co & Associates v. U.S. 385 F ..(2d) ~38 \1967), and
see C.C.P.P., para. 8-52. There is a vast literature and case law on thts subJect m the U.S.
works on government procurement contracts.
17
Cornwall v. Henson [1900] 2 Ch. 298.
1a Freeth v. Burr (1874) L.R. 9 C.P. 208,perLord Coleridge LJ.
19
(1884) 9 App. Cas. 434.
SECT. 3] DISCHARGE FROM FURTHER PERFORMANCE 623
go to.the jury, for them to say whe.ther it would not amount to a refusal to go
on w.1th the contract, for a man might reasonably so consider it. But there is
nothing of that kind here.20
So a clear indication of refusal or inability to pay future instalments will
be a ~epu~iati??· as al~o a repeated failure to. pay on time in response to
warn11:3-gs, if raising the inference of an intention to pay late habitually so as
to denve ~ancia~ advantage, it is submitted. Generally, delay in making
pa~ents, 1f s~ffic1~ntly serious and persisted in after warnings, may, after
a. s.u1table ?otlce, Justify rescission, the more so in the absence of pro-
v1s1ons for interest on late payment in the contract.
. Payment obligations are, in many international and some producer- 4·222
influenced domestic construction contracts, enforceable by express con-
~actor:s te~ination provisions, usually conditioned upon AfE certifica-
tion ~f 1n~enm pa~e~ts due. Even in those cases, however, a fortiori if no
tenrunatlon provision 1s present, the possibility of valid deductions or set-
o~, whether expressly contemplated or permitted by the contract or not
must be borne in mind by a party contemplating termination or rescission'.
Only express wording can serve to exclude the right to set-off, and this will
apply equally whether the remedy sought is a common law rescission21 or a
contractual termination for non-payment of certified sums,22 so that even
con.tract1:1al terminati?ns by contractors supported by certificates may be
perilous if the owner is able to establish a set-off against sums certified or
due.
However, in these cases, set-off will need to represent a bona fide
known present los~ or entitleme~t by the deducting party, it is submitted,
~nd. not some possible or even likely future loss, if non-payment is to be
~us.tl~ed and ter~ination avoided in these situations.23 It will certainly not
myalidate a termination for non-payment, whether at common law or un-
der- a contrac~ual p~ovision, if the set-off was unknown to the defaulting
payer at the time, since such a set-off could not displace the intention not
to ?~ bound by the contract, which is the essential test in deciding the
validity of such a common law rescission or interpreting a contractual ter-
lllination power, it is submitted. Nor will it justify a deduction for antici-
pated futu~e liquidated or other damages for delay made by an owner
before exprry of the contract or extended contract period, it is submitted. 24
( f) Whether power to suspend
Contractors may often wish to respond to actual or alleged breaches of 4-223
contract by owners by suspending work or deliberately going slow, and
Atp.443.
21
Federal Commerce and Navigation v. Molena Alpha Inc. [1978] Q.B. 927, in particular per
21
Gilbert-Ash v. Modern Engineering [1974] A.C. 689; Pillings v. Kent Investments (1985) 30
:,, BLRSO,atp.94,perKerrJ.
23
·\- See, e.g. Hill v. Camden London Borough Council (1980) 18 BLR 1. C.A., and see also
R~dp~th Dorman Long v. Cummins Engine Company [1982] S.L.T. 489, Ct. of Sess., for
24
th!s difficult subject, illustrated and discussed post, paras. 12·055-12·058.
Hill v. Camden London Borough Counci~ supra, illustrated post, para. 12·058.
 PERFORMANCE
624
conversely owners may wish to respond by suspending payment~ or ~a!::i_
ing or threatening to make deductions in the face of actu_al or rmagi?
defaults by the contractor. Both courses are extremely per1lous-part1cu-
larly any element of suspension or "go slow'' on the part of the co:trac~-
or-since it seems clear that in England and the Commonwealth. ere is
recognised right to suspend work, or indeed of payment otherwise d:e,
O
on a breach by .the other party ( although in the case ~f payment, as as
p a Jegi'timate deduction for damage previously suffered or
b een seen supr , · · b 'tt ct
other valid set-offs will, in the absence of express provts1on,_ e perm1 e
from sums otherwise due ).zs This question has 1:>een considered by the
Court of Appeal of New Zealand in an exceptionally well-researched
judgment26:
"Obviously the argument which failed in the Mersey Steel case ciuld have
been advanced with no less force bby a buildinf co~\~~~1~r ~ :
gress certificates or payments had een wrong YW1 • • . •
decision goes far to explain the apparent absence in English bu1ld1ng contr~c
law of any recognition of a common law right to suspe~~ work for w~n~ ~o
withholding of a progress certificate or payment, as distinct from a ~ d
rescind for a breach going to the root of the cont;act. If the ~ontracht p~ov1 e~
a ment on interim certificates from an architect or engineer, t e tssue o
~ ~rrt1ficate will normally give rise to a debt p~yabl~-~y :~:~~~~y~rati~
0
Apart from suing for interim payments, or requtnng ar t ~a h. ch the con-
rovided for, the remedy-and apparently the oi:ity ren:ie. y-_w 1
p ctor is reco ised as having at common law 1s re~c1ss1~n tf a s~cte~tly
!~~ous breach~as occurred. If he chooses not to resthetnd, h: ~rn;bg1hfs~
ti e He is bound to go on with the work. All e ava a e n .
~im:1o~wealth textbooks on building contracts state the law consistently
with this view ... " 27
Cook and Woodhouse JJ. also suggest that in th_e United States s~ch a
4-224
ri ht of suspension has been recognised by Amencan tex~ ~ook wnters,
cilfm Corbin on Contracts (1960), paras. 690, 692, 1253; W,llzston on Con-
tract; (3rd ed.), para. 848; and the Restatement o~ Contrac~, para. 27~,
Example 5 2s but they note only one clear authority tn the l]Uited ~tates 1~
su ort of' these propositions.29 Apart from cases where frustration_ ~n
nJbreach is in issue,29a there seems no doubt, however, about the pos1tton
in England.
ILLUSTRATION
A main contractor's bondsman continued with ~e completion of o~e of the
contractor's building contracts with a local autho~ty by ~greelil:ent ~1th th~~:
During the course of the work, the owner's architects issued 1ntenm cer t
25 See, e.g. the K_am!ee case, ill~strCahted shupDra, para. 4[~;17~] 2 N.Z.L.R. 347, illustrated post,
26 Canterbury Pipelmes v. Chnst urc rainage
Chap. 6, para. 6· 134.
21 Jbid.,perCooke and Woodhouse JJ. at p. 351.
lS At PP· 353-354. . (2d) 924 (1956·~>
29 CC Smith Co. Inc. v. Frankini Constructwn Co. 135 N.E.
29, As to which see infra, para. 4·223.
[CHAP.4 SECT. 3] DISCHARGE FROM FURTHER PERFORMANCE 625
cates under the RIBA/JCT standard form of main contract, in which they
mistakenly made a calculation for deducting retention which was too large,
and from which they also wrongly purported to deduct liquidated damages
for delay before the contract completion date had arrived, when no liability to
pay such damages could yet have arisen. After drawing these matters to the
attention of the owners, who took the position that they were not under any
obligation to interfere with the certifier, the bondsman then withdrew his sub-
contractors from the project, following which the owners and their architects
issued notices and determined the contract for failure to proceed 'Yith due
diligence under Gause 25 of the conditions. The bondsman then himself pur-
ported to determine the contract under Clause 26,for failure by the owners to
pay the sums which should have been certified by the architect. Held, by the
Court of Appeal, that Clause 26 did not permit termination for non-payment
of uncertified sums. The contractor's remedy had been to take the dispute to
arbitration, if it was not possible to secure an increase in the amount certified.
By suspending work, and by persisting with the suspension in the face of the
~r~;; J~~J
t
owner's notice under Gause 25, the main contractor had been in breach, and
the owner had been entitled to determine the contract: Lubenham Fidelities
Ltd. v. South Pembrokeshire District Council (1986). 30
I
It is submitted that it is no accident that the English and Commonwealth
courts have consistently refused to imply a right to suspend work (or of
non-payment by the owner) upon a breach of contract. The former would
. enable contractors to exert powerful tactical pressures on owners in pur-
suit of possibly unwarranted and inflated claims, without risk of losing the
1
~:J remaining work to a competitor, and with liability limited to such general
or liquidated damages as might be recoverable for delay, which in many
cases might for various reasons be comparatively small. It seems doubtful
if, even in the United States, the practicalities are likely to lead the courts
to decisions in favour of contractors or owners upholding a power likely to
be destructive of progress in long-term contracts, where each party is
dependent upon the co-operation of the other at so many points.
(g) Anticipatory breach
The principal to be applied in these cases, where the time for perform- 4-225
ance has not yet arrived when the breach occurs, was first defined by Cock-
burn E.J. in Frost v. Knight31 :
"The promisee, if he pleases, may treat the notice of intention as inoperative,
and await the time When the contract is to be executed, and then hold the
other party responsible for all the consequences of non-performance; but in
that sense he keeps the contract alive for the benefit of the other party as well
as his own; he remains subject to all his own obligations and liabilities under
it, .ind enables the other party not only to complete the contract, if so advised,
notwithstanding his previous repudiation of it, but also to take advantage of
any supervening circumstance which would justify him in declining to com-
plete it. On the other hand, the proniisee may, if he thinks proper, treat the
~·
3033BLR39.
J· 31
(1872) L.R. 7 Ex. 111, at p. 112.
 626 PERFORMANCE [CHAP. 4
repudiation of the other party as a wrongful putting an end to the contract,
and may at once bring his action as on a breach of it; and in such action he will
be entitled to such damages as would have arisen for the non-performance of
the contract at the appointed time, subject, however, to abatement in respect
of any circumstances which may have afforded him the means of mitigating
his loss."
However serious one party's original breach, if the other party, with full
knowledge of the breach, chooses not to exercise his right of rescission,
whether in a case of a continuing present breach or in a case of a future
anticipatory breach, he will be effectively affirming the contract, so that
should some event occur, or some breach on his own part of perhaps less
importance, which entitles the first party eithe"r to rescind at common law
or terminate contractually, that party's earlier breaches will not avail the
other party if he has not exercised his remedy first. This can even happen if
the ultimately rescinding party is, by reason of his own prior breach, no
longer capable of performing the contract.
ILLUSTRATION
Charterers were entitled to cancel the charter should the ship not arrive at
4·226 the designated port to take on their cargo by the agreed date. On being
requested to agree a later date for the arrival of the ship to load, the charterers
cancelled the charterparty prematurely, which was a repudiatory breach. The
owners, however, then stated that the ship would arrive on time. Meanwhile
the charterers, who had obtained information from the port authorities that,
even if the ship arrived on the promised date, it could not be ready for cargo
because of other cargoes which had priority for loading ahead of their own,
made arrangements for another ship to take their cargo. On the date for
arrival of the ship, the owners called on the charterers to accept the ship, but
the ship was in fact not ready due to the other priority cargoes, and when the
final contractual date for the ship's readiness had passed, the charterers gave a
second cancellation of the charterparty, although at that time their cargo was
already being loaded into the other ship. The ship-owners sued the charterers
for dead time. Held, by the Court of Appeal and the House of Lords, although
the charterers were initially guilty of a repudiatory breach, the ship-owners
had not acted on this repudiation, but had affirmed the contr~ct by tendering
their ship, and the second cancellation, now no longer premature, was a valid
acceptance of the ship-owner's repudiation: Fercometal S.a.r.l. v. Mediterra-
nean Shipping (The Simona) (1989).32
(h) Effects of rescission
4-227 It has been seen that the consequence of a repudiatory breach is that the
other party may either affirm the contract by continuing to perform, or call
for performance of the contract (without prejudicing any ultimate right to
damages for breach) or, in the case of continuing or anticipatory
32 [1989] A.C. 788. The judgment of Parker L.J. in the Court of Appeal, {1987] 2 i:JOyd's Rep.
236, is particularly valuable.
SECT. 3] DISCHARGE FROM FURTHER PERFORMANCE 627
breaches, may in practical terms postpone the right to rescind, while
retaining the right to damages. However, the contract must not have been
affirmed in any way,33 or the rights of third parties have intervened, or the
other party have altered his position on the basis that the contract still
subsi~ted. 34 Whe~e, however, the fundamental breach is a continuing one,
the nght to resctnd can be exercised at any time while the breach con-
tinues, and a renunciation by the other party which has not been with-
drawn may be evidence of a continuing refusal to perform the contract.3s
Furthermore, mere delay in acceptance of repl)..diation will not be a bar
unless there has ·been an alteration of position to his detriment by the
other party.36 It remains to consider the effect once the right to rescind is
exercised.
Prior to the leading case of Heyman v. Darwins31 it was sometimes
thought, and some judicial pronouncements, as well as the use of the word
"rescission", could be interpreted as suggesting, that the contract was at
an end for all purposes, and should be treated as if it had never existed. It is
now clear that the primary dual consequences of a rescission or termin-
ation for breach will be, first, to release the innocent party from all further
performance of his obligations and, secondly, to entitle him to full dam-
ages, including loss of the contract, resulting from the termination. 38 For
any other possible consequences, the terms of the contract need to be
~xamined to see if any of them should, as a matter of interpretation, con-
tmue to govern the position between the parties after the termination.39
. ~~s, arbitra~on clauses will continue to apply,40 and clauses limiting
hab1lity for negligence will apply, 41 and in a case where a main contractor's
delays were so prolonged that a sub-contractor successfully rescinded the
sub-contract, a "no-damage" clause operated so as to eliminate altogether
the sub-contractor's claim for damages against the main contractor.42
On the other hand, a provision in a construction contract for the pay-
ment _of interest on unpaid swns payable under the contract was held,
applymg Heyman's case, not to survive a successful rescission by the
contractor.43
33
See, for a good example where advantage was taken of the work done by the party in
br~ach, so that the latter was entitled to sue, Tannenbaum Meadows Ltd. v. Wright &
Winston Ltd. (1965) 49 D.L.R. (2d) 386, illustrated supra, para. 4·017.
34
Marsden v. Sambell (1880) 43 L.T. 120, illustrated post, Chap. 12, para. 12·052.
is Ripley v. McClure (1849) 4 Ex. 345.
3
ij Allen v. Robles [1969] 1 W.L.R.1193, following Clough v. L.N. W.R: (1871) L.R. 7 Ex. Ch.
26.
31
[1942] A.C. 356.
38
Bentsen v. Taylor Sons & Co. [1893] 2 Q.B. 274.
39
Heyman v. Darwins, see supra; Photo Production Ltd. v. Securicor Transport Ltd. [1980]
A.C. 827.
·~ Heyman's case, see supra.
41
Photo Productions case, see supra, overruling the so-called doctrine of "fundamental
breach" which had been used to eliminate the effect of exception clauses generally.
42
Woollatt Fuelv. Matthews Group (1979) 101 D.L.R (3d) 537, Ontario Divisional Court.
3
• Bloeman v. G_old Coast City Council {1973] A.C. 115, P.C. The reasoning as to why this
should be so is not very clear. The contractor had obtained an award from an arbitrator
and the claim was for contractual interest on the sum awarded by the arbitrator untii
payment.
 PERFORMANCE
[CHAP,4
628
(i) The right to damages
As stated, the innocent party will be entitled to damages, incl~din_g loss
4·228
of the contract, calculated on normal principles.44 Upon the termma_tion of
a construction·contract, however, problems frequently arise following the
termination because there may often be unpaid moneys or other con-
tractors' claims already due under the contract prior to the rescissi~n,
possibly entirely unconnected with it and: in t~e case of an own~r's ternnn-
ation there may be unpaid moneys due 1n hts favour at that time but not
'
yet deducted, such as liquidated damage_s for delay, or other " cont ra-
claims" or set-offs, for example for defective work. . course, a successfully rescinding contractor, with no liability to bring dam-
In such cases it was submitted in the tenth edition, and it 1s now con-
firmed that su~ already accrued due prior to a rescission will be recover-
able in'their own right, whether or not the rescinding party chooses to sue
for damages as well.
ILLUSTRATION
The purchase price of a ship was payable in five in~talments, with a right ~n
non-payment of any instalment to cancel or rescmd the contract, retain
money already paid, and sell the ship at auction. The buyers defaulted on the
second payment and the ship-builders cancelled the con~ract. They then sued
guarantors of the buyer for the second instal~ent plus interest. The guar~n-
tors contended that, following the cance~a~on of the _contract, the ship-
builder's remedy against the buyers was hm1ted to a clann for damages for
breach of contract, which it was contended were not recoverable under the
particular terms of the guarantee. Held, by the ~~use ';'f 1:,,ords ~Lords ~~ssell
and Keith doubting but not dissenting), and d1stmgu1s~1ng J?ies v. British. &
International Mining & Finance,45 th~t the buye~ rema1n~d ~~ble to the ship-
builders for payment of the second instalment, since that liability ~rose befo~e
the rescission; so that the guarantors were liable on the. wording of their46
guarantee in any event: Hyundai Heavy Industries v. Papadopoulos (1980),
The leading judgment of Viscount Dilhome in the Hyundai case47
expressly approved the passage in the tenth edition of Huds~n, a_t p. 25~·
Although the case is concerned with instalments of the pn~e, tt appltes
equally, it is submitted, in a case where an owner has deternuned th~ con-
tract and liquidated damages for delay have already accrued due pnor to
the rescission-a not uncommon feature in construction contracts. It
seems that the principle will apply whether the party claiming to be
48
entitled is the rescinding or repudiating party.
44 For these, see post, Chap. 9, Section 2.
•S [1939) 1 K.B. 724. ,· t ·
4,\ {1980] 1 W.L.R.1129. The House of Lords also dismissed the guarantors 1nterpre at1on o
the guarantee. ,· _.,
•1 Now supra, paras. 4·025-4·027. ·.;. th
•~ Dies v. International Mining and Finance [1939] 1 K.B. 724, where the claim was by e
repudiating party.
SECT. 3] DISCHARGE FROM FURTHER PERFORMANCE 629
The practical significance of this rule is that, depending on the profit- 4-229
ability or otherwise of the instalments in question or of the contract prices
generally, it may well suit a rescinding contractor to obtain payment of
sums due rather than proceed to recover damages for breach of contract;
conversely, an owner, depending on the state of payments, may content
himself with obtaining liquidated damages for delay accrued due at the
date of termination. Thus, in the case of a repudiating contractor, for ex-
ample, there might be such a financing or pre-payment element in any
unpaid instalments already due that, allowing for his liability to pay dam-
ages, it would still be profitable for him to claim the sums due; a fortiori, of
ages calculations into account, would be under a strong compulsion so to
limit his claim and abstain from claiming damages. This will be particu-
larly true in international contracts, where it is not uncommon to find
initial instalments of the price with a very substantial financing element
payable in the early stages greatly in excess of the value of work likely to
be done at that time. In such a case, an owner conSidering whether or not
to repudiate may also find himself very effectively deterred by this
consideration.48a
In the case of sale of goods contracts with express provisions for pay-
ment or part-payment in advance, a repudiating buyer of a substantial
consignment of rifles, who subsequently refused to take delivery, was held
by Stable J. to be entitled to recovery of the very substantial payment he
had made on signing the contract.49 That case was considered and, while
neither approved nor disapproved, distinguished by the House of Lords in
the Hyundai case, on the ground that such a contract was not like a con-
struction contract, where at least some services would probably have been
performed by the contractor in return for the instalments, and the Dies
case has since .been explained in the Court of Appeal as being based on a
total failure of consideration, no services having been performed by the
seller at the time of the payment.50 Indeed, it is hard to see on what other
basis a guilty party could seek to recover sums paid under a contract which
he had subsequently repudiated. Otherwise, if more widely applied, the
Dies case could be a strong encouragement to parties contemplating
repudiation of a contract for commercial reasons, for example.
(j) Quantum meruit: a remedy on rescission
It has long been held both in England and the Commonwealth that a 4,230
rescinding party who has performed services or carried out work under a
c9ntract repudiated by the other party may exercise a choice between, on
the one hand, suing for damages for loss of the contract on general prin-
ciples (where he will have to give credit for the cost to himself of complet-
f
ing the work and compare that, together with sums already received,
4
Bo See infra, Ferguson v. Sohl.
"The Dies case, supra.
511
Rover Internationalv. Cannon Films [1989] 1 W.L.R. 912, C.A.
 630 PERFORMANCE [CHAP. 4
51
against the sum payable under the contract_ f~r the whole of the_ work~,
or, on the other hand confine himself to obtarmng a reasonable price_, qmte
independently of the contract prices, for all ~ark done up to the time of
termination. s2 It is immediately apparent that if the c?ntract has be:n sub-
stantially underpriced, or if there has been a substantial eleme~t of front-
loading" in favour of the contractor in the earlier contract pnces, loss of
the contract in a "mid-stream" repudiation can be expected to produce no
claim at all since either the whole of the work, or in the second case the
remaining ~ark, will be unprofitable, producing in extreme ca~es_ a n~ga-
tive figure. In such cases, payment for work already done at reahs~1c pnces
can be expected to produce a far more favourable result !n financial terms
than damages calculated on the basis of the contract prices.
The precise juridical basis for this rule is not clear, and has provok~d a
very considerable literature. 53 It also represents the pr~p~nderant Um~ed
States view-in one fairly early United States case, its implementation
produced a vastly greater remuneration for the contractor than would
have been the case had the contract been fully performed. 54
However this alternative remedy will not be available to a contractor
who unaw~e that fundamental breaches were being committed, con-
tinu;d working until completion before suing the owner.
ILLUSTRATION
4·231 Public owners were themselves responsible for a number of ~~lays on a
project and called on the contractor to recover the delays, P!omtsing exten-
sions of time and consideration of a claim for corrwensat1on. Later th~y
refused to pay any compensation, and after completio? the contractor dis-
covered that during meetings with government_ officials the owners _had
agreed that no extensions of time should be pe:1111tted for any reason, since
the need for the electricity produced by the pro1ect was so great, and th8:t !10
additional payments would be made to the contractor. f!eld, by the British
Columbia Court of Appeal, that the owners ~ad b~en guilty ~{fundamental
breaches of contract in interfering and colluding with the certifier to prevent
extensions being granted, and had their actions been known to the contrac~or,
he would have been entitled to rescind; but having completed the proJect
without rescinding, he was limited to his remedy of damag~s for breach of
contract and quantum meruit could not be allowed: Morrison-Knudsen v.
British Columbia Hydro & Power Authority (1978).55
51 See post Chap. 8, Section 2. A I
s2 Lodder ;_ Slowey [1904} A.C. 442, P.C. (illustrated in the New Zealand Court of ppea,
sub-nom. Slowey v. Lodder, supra, para. 4-049 and post, paras. 8·175 and 12-083), and see
also Rover International v. Cannon Film Sales [1989] 1 W.L.R. 912, C.A.
53 Reviewed in Chitty on Contracts (26thed), para. 2142 ..
s4 Boomer v. Muir 24 P. (2d) 570 (1933). See the English and (!nited Stat~s authontles
exhaustively reviewed by the British Columbia Court of Appeal 10 the Morrison-Knudsen
case; illustrated infra. . · · f
si 85 DLR (3d) 186· (1991) 7 Const. L.J. 228. The judgment contams a fulle~~mation o
the Co~~onwealth and U.S. jurisprudence on the subject:-- see, for Engiisll readers, 7
Const. L.J. 228, at pp.230-237. Fraud had not been alleged, 1t seems.
SECT. 3] DISCHARGE FROM FURTHER PERFORMANCE
631
There seems no doubt that, in the particular context of an accepted
repudiation, this remedy is quasi-contractual, and is in effect a right to
reasonable remuneration based on the concept of unjust enrichment,56 So
far as a policy or other basis for this alternative remedy is concerned, per-
haps the best justification is that the owner should not be allowed to obtain
the benefit of a highly profitable contract (from his point of view) due to
underpricing should he decide for his own reasons to repudiate it, but
should be required to pay the true worth of the work, at the option of the
contractor, rather than damages for breach, should he decide for any
reason to repudiate. Thus the rule would appear to be a deterrent against
irresponsible repudiation, rather than a protection for contractors, whom
such a repudiation must in reality benefit in any event.
Whether cost to the contractor or value to the owner should be the cor-
rect basis for quantifying this class of claim in quantum meruit is further
discussed ante, Chapter 1.s1
(k) Recovery of sums paid in quasi-contract
In cases where the contract price is unusually high, it may follow that the
4-231A
owner's head of damage represented by the additional cost of completing
by another contractor may be correspondingly reduced, or even, in an
exceptional case, eliminated altogether. This creates no undue anomaly in
those cases where at the time of termination the state of previous interim
payments between owner and contractor does not exceed the value of the
work carried out. If, however, the contractor has for any reason been paid
sums in excess of the contract value of the work at the time of termination,
which he would have had to bring into account upon completion, it will
follow that, in the absence of an available claim for damages, his profit for
the project will actually have been increased by the owner's rescission or
termination. In such a case the Court of Appeal has held that the owner, in
default of a claim for damages, is entitled to recover any such overpay-
ment in quasi-contract.
ILLUSTRA TJON
A contractor in breach of contract ceased work before completion. The
contract sum was £3~,000 and at that time the contractor had been paid more
. than £26,000, £4,6001n excess of the sum which the Judge found was in reality
?ue under the contract. The owner completed using another contractor, but
1n the event for less than the balance of the contract price still due. Held, by
the Court of Appeal, affinning the Judge, that the owner was entitled to be
repaid the amount of the £4,600 overpayment to the contractor as money had
and received. Ferguson v. Sohl (1992).57• '
56
See ante, Chap. 1, Section 11.
57
Chap. 1, Section 11, paras. 1·270-1-272.
51
• (1992) 62 BLR 95, C.A.
 632 PERFORMANCE [CHAP. 4
[Note: Toe exact classification by the Court of Appeal of the ~emedy (on
the basis that the consideration for the overpayment had wholly failed~ can be
"ti · d but retention of such an overpayment was clearly unconscionable
f~u~J~:t ~nrichment terms, .and th~ availability of a quasi-contractual.remedy
was clearly essential to achieve a Just result.]
(2) Release
4-232 Parties to a contract can be discharged from further per~ormanc_e b! a
mutual release or by entering into a fresh agreement 1n substitution
therefor. 58 • ,
Where the second agreement is express, it is a ques_non of construc~on
as to how far, if at all, the original agreement ts discharged or varied
thereby. 111e second agreement may be inferred from ~he acts of the p~r-
ties, but there must be something to justi~ the c?nclus1on that the parties
have entered into a fresh contract,59 and 1n particular there must be co~-
sideration for any express agreement which releases a party from his
obligations.60 • •
The only consideration which is likely to be present m such cases 1s the
foregoing of some claim. A surrender of a bona fide, ev~n tho~gh wrong,
claim for more in return for payment of less is good cons1derah~n. S~ too,
an agreement by the builder to a~ept 17ss tha~ the c_ontract pnce will be
enforceable notwithstanding that 1t was 1n cons1deration of so~~ honestly
held claim by the owner which later is held to have no validity· ~ese
agreements are usually referred to by lawyers as "acc~rd and satisfac-
tion". But there must be an honest, even if invalid, claim to found the
necessary consideration.
ILLUSTRATION
An owner told small builders, who she knew were presse~ for ~oney, that
unless they accepted a sum considerably less than the sum 1n th~1r account,
she would not pay them at all. They gave a receipt acknowledging t~at the
payment was in full settlement of their account. Subsequently they decided to_
bring an action for the balance. Held, by the Cou~ of ~ppeal, a mere t~reat
not to pay at all could not be a good accord and satisfaction: D. & C. Builders
Ltd. v. Rees (1965), 61
The subjects of accord and satisfaction and forebearance to sue are con-
sidered ante, Chapter 1.61 a
s,iSee ante, Chap. 1, Section 4, as to how far an agreement under seal or in writing can be
varied or discharged by a subsequent written or parol agreement.
so Per Blackburn J. in Appleby v. Myers (1867) L.R. 2 C.P. 651, at p. 661, and see Munr~v.
Butt (1858) 8 E. & B. 738; Whitakerv. Dunn (1887) 3 T.L.R. 602. See alsoHuntv. S.f; {°
(1875) L.J. 45 C.P. 87; ~ourtnay v. Waterford and Central Ireland Ry. (187J_), 4 L.R. · 1 ·
oo See ante, Chap. 1, Sect.loo 2(8). ,~.
a, [1966] 2 Q.B. 617.
01. See paras. 1·071-1 ·079.
SECT. 3] DISCHARGE FROM FURTHER PERFORMANCE 633
(3) Impossibility and Frustration
(a) Generally
Frustration is the legal term for a doctrine whereby in certain circum- 4-233
stances a contract is held no longer binding on the parties, and they are
released from further performance. Although it has sometimes been said
to arise by reason of facts unknown to the parties but existing at the time of
the contract, it is more probable that such situations are governed, and the
contract will be avoided if at all, by the very stringent requirements of the
law of mistake, which in cases of common mistake must relate to what is
usually described as the fundamental subject-matter of the contract.62
In construction projects, much the most common invocation of a frus-
tration claim predicated upon a pre-existing rather than a supervening
factor would involve a physical state of the site or sub-soil alleged to be
unknown at the time of contracting. Here, there is the special additional
difficulty for contractors advancing such claims that under nearly all con-
struction contracts they are regarded, in the absence of express provision,
as having warranted their ability to complete in the face of such difficulties
as may be presented by the physical condition of the site.63 As will be seen,
frustration is not available as a remedy in cases where a party has war-
ranted or contracted to do something which turns out to be impossible,64
or if the event causing the impossibility was or might have been antici-
pated and guarded against in the contract,65 and in construction contracts,
and in particular civil engineering contracts, it must be remembered that
the state of the site is a vital factor which the contractor must consider and
take into account when pricing the contract, with or without contractual
protection such as a "changed conditions" or Clause 12-type clause.
However, it is usually some supervening event or post-contract change
of circumstance which is the more usual basis of a frustration claim, such
as a change in the law preventing further performance; or the rare cases of
physical destruction of the site itself,66 so that rebuilding the contemplated
works is impossible or radically different; or an event causing a suspension
and indeterminate resulting delay of such a kind as to defeat the commer-
cial basis of the project. 67 Thus, in a recent leading case where frustration
61
Bellv. Lever Bros. Ltd. (1932] A.C. 161, at p. 217,per Lord Atkin; and see ante, Chap. 1,
paras. 1·094 et seq. But see the facts of and discussion in Codelfa Construction Pty. Ltd. v.
State Rail Authority of New South Wales- (1982) 149 C.L.R. 337 illustrated infra.
6
i See the Thorn and other cases illustrated supra, para. 4·050, and for a modern example the
case of Wilkins & Davies v. Geraldine Borough [1958] N.Z.L.R. 985 there illustrated, and
see the cases collected infra, paras. 4·249 et seq.
64
Hillsv. Sughrue (1846) 15 M.&W. 253; Lord Clifford & Watts (1870) LR. 5 C.P. 577, and
see the Jones and Smith Montgomery cases, illustrated infra, paras. 4·246 and 4·247.
65 Baily v. DeCres-pigny (1868) LR. 4 Q.B. 180.
66
Applyby v. Myers (1867) L.R. 1 C.P. 615, illustrated infra, para. 4·251, and see National
Carriers v. Panalpina [1981] A.C. 675.
11
See, e.g. Metropolitan Water Board v. Dick, Kerr & Co. Ltd. [1918] A.C. 119; Mertens v.
Home Freeholds Company (1921] 2K.B. 526; Wong Lai Yingv. Chinachem (1979) 13 BLR
81, P.C. illustrated infra, paras. 4·253, 4·254 and 4·258.
 634 PERFORMANCE [CHAP.4
of a 10-year lease was alleged, Lord Russell of Killowen, apart from cases
of frustration of some larger transaction of which a lease formed only a
subordinate part, considered that frustration of an executed lease could
only occur where there had been destruction of a flying freehold out of
which the lease was created, or the disappearance of the site into the sea.68
(b) Theory of frustration
4·234 Lord Diplock observed percipiently in 1958: "It would appear to be the
fate of frustration cases when they reach the highest tribunals that either
there should be agreement as to the principle but difference as to its appli-
cation, or differences as to the principle but agreement as to its appli-
cation".69 Rather more generally, Mason J. (as he then was) in the High
Court of Australia has stated that, in the context of a pre-existing factor
which was said to be the basis of the contract, "The doctrine of
frustration is closely related to mutual mistake" ,70 pointing out that frus-
tration had been permitted in a number of cases where a common assump-
tion as to a particular state of affairs essential to the performance of the
contract was later shown to be mistaken.71 One suggested basis which has
attracted a considerable following has been to attribute the doctrine to an
implied term or condition that, in the events which had happened, the
parties should be released. 72 Viscount Hailsham L.C. has indicated no
fewer than five different bases for the doctrine, including total failure of
consideration,73 pointing out that the "implied term" theory emerged as
early as 1863 in Blackbum J.'s judgment in the case of Taylor v. Caldwell 74
which is generally credited as the origin of the modem doctrine of
frustration.
It should perhaps be added that the doctrine, not only in regard to its
basis but also in regard to this practical effects, has many of the attributes
of unjust enrichment and quasi-contract: "It must be more than merely
onerous or expensive. It must be positively unjust to hold the parties
bound." 75
However, it is now widely accepted in the Commonwealth that the
definitive juridical basis for the doctrine is to be found in the speeches of
Lords Reid and Radcliffe in the construction case of Davis Contractors v.
Fareham Urban District Council,76 received and -accepted as definitive,
o8 National Carrier Company v. Panalpina [1981) AC 675, at p. 709B, infra, para. 4·259.
69 Port Linev. Ben Steamers [1958] 2 Q.B.146, at p. 162,cited by Stephen J. in Brisbane City
Councilv. Group Projects Ltd. (1979) 145 C.L.R. 143, 160. High Ct. of Australia.
70 Codelfa Construction v. State Railway Authority of New South Wales (1982) 149 C.L.R.
327, at p. 360 illustrated infra.
11
Jbid. at pp. 357-358.
12 Tamplin S.S. v. Anglo-Mexican Petroleum [1916) 2 A.C. 397, per Lord Loreburn, at
pp. 403-404; British Movietone News v. London & Distri'ct Cinemas [1952] AC 166.
73 See his well-researched judgment in the Panalpina case, supra, at n. 68, pp. 687---688.
74 [1863] 3 B. & S. 826, 32 L.J.Q.B. 164.
1s The Eugenia [1964] 2 Q.B. 226, at p. 239, cited by Lord Scarman in the Chinachem case iq
1979. See also per Viscount Simonds in Davis Contractors v. Fareho.m Urban D_~trict Cowi-
cil [1956} A.C. 696, at p. 714 and per Lord Radcliffe, at p. 729. , •.
76 Illustrated infra, para. 4·254.
SECT. 3] DISCHARGE F'ROM FURTHER PERFORMANCE 635
a~d implying rejection of the "implied term" test, by Stephen J. in the
High Court of Australia in the Brisbane City Council case in 1979n. and
affirmed by the High Court in 1982 in the Code/fa case; by the Privy Coun·
cII m 1979 in the Chinachem case; and in the highly-researched House of
Lords Panalpina case in 1981.
11;1 th~ Davis Contractors case ~rd Ree~ said that it was necessary to 4·235
deCid~ 'whether t~e c~ntra.ct_ ~hich they d~d make is ... wide enough to
app~y 1n the new situation: 1f 1t 1s not, then 1t is at an end'' and that frus-
tration was "the termination of the contract by operatio~ of law on the
emergence of a fundamentally different situation".18
.It is Lord Radcliffe's formulation in the case which at the present day is
wtdely regarded as the locus clossicus on this subject:
": · · frustration occurs whenever the law recognises that without default of
either party, a contr~ctual obliga~on h~ become incapable of being per-
fonned_beca~se the 71rcums_tances m which performance is called for would
render it a thing radically different .from that which was undertaken by the
contrac! ' ... It was not this that I promised to do'. There is, however no
uncert~1:1ty as to the materials upon which the court must proceed. 'The data
for d~cis1on ~re, on the one hand, the terms and construction of the contract
read in the lr~t of the then-existing circumstances and, on the other hanci
the events which have occurred.' In the nature of things there is often no need
for a~y elaborate _inq~. The court must act upon a general impression of
w~at its rule requires. It 1s for that reason that special importance is necess-
arily attached to the _occurrence of any unexpected event that as it were
chang~s the f~ce of th1~gs. But even so, it is not hardship or incon'venience 0 ;
matenal loss itself which calls the principle of frustration into play. "79
In the special context of an unexpected supervening event Lord
~a~cliffe then went on _to s~y: "There must be as well such a chang; in the
significance of the obligation that the thing undertaken would if per-
form~d, be a different thing than that contracted.for."so '
This may perhaps be described as the "radically different contract"
theory.
In_ any particular case, the question of frustration falls to be decided at
4-236
~he trme w~en the frustrating event becomes known to the parties. s1 What
is relev~nt is not the pa_rtie~· own view, or even their knowledge of the
frustratmg event at the time it occurs, but the notional view at that time of
what have been described as "informed and experienced minds"82 with a
full knowledge of all the facts. Thus Lord Wright said in 1944: "Whether
there is fru.stration. or not in any case depends on the view taken of the
event and its relation to the express contract by 'informed and experi-
17
(1979) 145 CLR. 143, 160.
78
[1956] A.C. 675, at pp. 720-721, and 723.
19
[1956] A.C. 696, at p. 729.
80
Ibid. at p. 729..
: Per Lord Sumner i? Ba':~.Line L_~d. v. Arthur Capel [1919] A.C. 435, at p. 454.
Per Lord Sumner in H1rp MulJt v. Cheong Yue Steamship Co. Ltd. [1936] Ac 497 t
p.509. · · ,a
 [CHAP.4
PERFORMANCE
636
enced minds'. "83 Frustration operates automatically and not at the will of
the partie#4:
"Frustration if it occurs operates automatic~y. Its ';>peration does n~t
de end on the action or inaction of the parties. It is to be invoked or not to e
in!oked by reference only to the particular c~ntract ~efor~ ~e
facts of the particular case said to justify the tnvocat1on o t e oc
~ou!::d,!e
. It should be noted, however, that in the context of repudiation, as
In man cases, the question will be largely one of degree and o! fact.u
Thu?construction contracts have been frustrated by destr~ctton of the
site (not of the works themselves),s7by delay caused to.theproJect byoper-
f n of law ss by delay caused by physical destruct.Ion a~d subs~quent
a ,bolie law ~certainties,89 and by impossibility of completion dunng the
pu 90
available season by reason of forces of nature.
In construction projects, particularly in cases where an even~ ca.uses an
initial suspension or delay, it frequently happens that the full ~1gn~ta~~e
or consequences of the event cannot be immediately ascertatne . ~ e
. ( . deed by "informed and experienced minds"), so that itis not
parhes or 1n , f fr f
necessarily inconsistent with a subsequent successful plea o ustra. ion
that, for perhaps a considerable period, attempts were made to cont1nue
with the project:
" in some cases ... it is possible to determine at once whether or not the
d~~trine can be legitimately invoked. But in others, where th~;ff~t of\~~~
SECT. 3] DISCHARGE FROM FURTHER PERFORMANCE 637
"Temporary impossibility does not discharge-the other party can require
the party affected to continue ready and willing to perform. Only if impossi-
bility persists for a length of time sufficient to go to the essence of the contract
will non-performance justify the other party in rescinding. If the perform-
ance then is substantially different from what is contracted for the promisor
will be permanently excused. " 92
opposed to frustration, no power of temporary suspension of work is con-
ceded by the law in England and the Commonwealth.93
Many of the English judgments emphasise that more onerous or
expensive performance does not justify a claim for frustration. 94 In the
United States, a doctrine of "commercial impracticability" has long been
more openly recognised (for example, as early as the 1932 Restatement of
Contracts) both by text book writers and the courts, in cases where the
additional expense of performance due to the event can be shown to be
both "excessive and unreasonable". 95 However, the principle appears to
have been conservatively applied by the United States courts.% No doubt,
again, these matters are a question of fact and degree, and there seems
little reason, particularly if the Code/fa case is ultimately followed or
approved on similar facts in other jurisdictions, for suggesting any real
difference of approach in the United States.
(c) Leases

~;~U: ~~:~s~:;: '!:~![ui; ~=v~:: !::~~:t~fs~~:~~~:e: t~e ~ia;:!~e:!~

0 1
0 0
suffered and the prospects of further delay from that_ ca~se, ';1 1?-a e .
ultimate performance of the relevant contractual obhg~t1ons radically i1f-
ferent', to borrow Lord Radcliffe's phrase, from that which was underta en
by the contract. " 91
Prior to this statement there was little authority in the United Kin~d;~
4·237
on this particular point, but it accords with a relatively long-estabhs e
position in the United States:
·Leases (as opposed to unexecuted agreements for a lease) may well be 4-238
regarded as a special category of contract less susceptible to supervening
frustration ("hardly ever" although not "never", in Viscount Hailsham's
exposition of the law in the Panalpina case). The significance of leases in
the construction context is that they are sometimes a subsidiary part of an
overall development or other type of construction project, and in such a
case a lease might be frustrated by events having the effect of frustrating
the wider transaction of which it formed part.97 The law on the frustration
of leases, including the United States authorities is exhaustively
researched and analysed in the judgments of the Panalpina case.

6.1Denny Mott & Dickson v.James Fraser [1944] A.C. 265, at p. 276, cited by Lord Scarman in !11.·Williston & Thompson, Law of Contracts (1938 revised ed.), para. 1957, at pp. 548-590,
the Chinachem case, supra, at p. 93. . cited by the Supreme Court of Alaska in the Chugach Electric case, supra and illustrated
64 Panalpina case, supra, at p. 7120,per Lord Roskill. infra, para. 4·257.
93 Discussed supra, paras. 4·223-4·224.
85 Jbid. ,

81 Appleby v. Myers, 1 ustrate m;ra.

Ped~!~:~
a,; Panalpina case, pe,:llLord Hadtl.s~amS~~ Panalpina case illustrated infra,per Lord '14 See, e.g. The Eugenia, supra, and see per Lord Radcliffe, supra.
95 See Transatlantic Financing Corporation v. U.S. 363 F. (2d) 316 (1966), which reviews the

Russell ofKillowen. . U.S. authorities.

88 Metropolitan Water Boardv. Dick~err[l
918] AC
· ·
119. Mertensv.Home Freeholds [1921]
' (1979) 13 BLR 81 all illustrated
96 .The Transatlantic case, supra, and see Natus Corporation v. U.S. 371 F. (2d) 450 (1967);

2 K.B. 526; Wong Lai Ying v. Chmachem Investments ' Wegematicv. U.S. 360F. (2d) 674 (1964); Clark Grave Vaultv. U.S. 371 F. (2d) 459 (1967);
infra. Jennie 0-Foodsv. U.S. 580F. (2d)400 (1978); EasternAirlinesv. Gulf0il415F. Supp.429
g9 Wong v. Chinachem [l9?9J 13 BLR
81 , . 562 p, (2d) 1053 (19.?.7). (1979).
97
90 Chugach Electric Association v ..No.rthern Corpora.tlOf!de (The Nema) [1982fA.C. 724, at Per Lord Russell of.Killowen in theParwlpinacase,supra, at p. 707H, and see the two other
"'Per Lord Roskill in Pioneer Shipping v. B.T.P. Twxi extreme examples suggested by him, at p. 709B, and the case illustrated infra, para. 4·259.
p. 752C.
 638 PERFORMANCE [CHAP. 4
( d) Effect of frustration
(i) Before the English Act of 1943
4-239 There is little evidence of any coherent policy by the English Courts in
the latter half of the nineteenth century to deal with the financial conse-
quences, as between the parties, of a frustrated contract, except the essen-
tially negative position that the l(!SS should lie where it fell at the time of
frustration, and that the contract was to be treated as void, that is, as if it
had never existed. In many commercial contracts, there might, of course,
already have been payment or part-payment, not necessarily in any way
commensurate to the value of goods supplied or services rendered (if any)
up to that time; or, on the other hand, there might have been very substan-
tial work done without, so far, either payment or entitlement to payment.
The earliest sign of any considered response to this problem was to be
found in 1872 in the Indian Contracts Act which, by Section 56, provided
that in cases of supervening impossibility the contract was to be void and,
by Section 65, that in this situation there was to be mutual restoration of
any advantage received-"any person who has received an advantage
under such [a void] agreement is bound to restore it or to make compen-
sation for it to the person from whom he received it"-a logical attempt to
achieve some fairness by applying unjust enrichment principles. In the
case of a construction contract, this would involve return to the owner of
moneys paid to the contractor, but a countervailing entitlement to the
value of any advantage received by the owner. In view of developments of
the law in England, it was not clear, until it was finally settled in 1954 by the
Supreme Court of India, that these two sections were an exhaustive state-
ment of the law of supervening frustration in India. 98
4·240 The Indian Contract Act involved one principal anomaly, namely that
the frustrating event might in many cases, for various reasons, render the
services or goods supplied prior to frustration virtually valueless as an
"advantage" in the hands of the owner. 99 So where a contract to supply
machinery from Poland was interrupted by the 1939 outbreak of hostil-
ities, with substantial quantities already shipped to India before the out-
break of war but with essential parts not yet delivered and awaiting later
shipment, the Privy Council ruled that the sellers were only entitled to
minimal compensation at greatly reduced value for the parts delivered. 1
The Indian law meant, of course, that all payments already received must
be returned by a contractor or seller, subject to the value of any advantage
received by the owner or purchaser.
In England the law diverged even more dramatically in 1904, when in
the "Coronation" case of Chandler v. Webster 2 the courts not only con-
~s Satyabrata Ghose v. Mujneeran Bangur & Co. [1954] A.S.C. 44, S.C.R. 310, India. .
99 There are other anomalies: see infra, subpara. (ii)-which also emerged under the English
Act of 1943. ~· '
1 Govindram Seksaria v. Edward Radbone (1947) 74 la. 295.
2 [1904] 1 K.B. 493.
SECT. 3] DISCHARGE FROM FuRTHER PERFORMANCE 639
firmed that money ~eady paid (in that case, an advance in respect of
future accommodation for the Coronation) was not only not recoverable
back, but that _a balance of money already due, butnotyetpaid, at the time
of the frustratmg event must be paid to the owner. The obvious harshness
of this policy was not mitigated by the English courts until 1943, when the
House of Lords ruled that money paid under a frustrated contract could
be ~e~overed, but only where the consideration had wholly failed. 3 That
dec1s1on left unremedied, however, the very many cases where there had
been a partial consideration for the moneys paid.
(ii) The Frustrated Contracts Act 1943
Br~adiy speaking, this Act attempted an Indian Contracts Act solution 4·241
but.witho~t, apparently, wishing to cure the anomalies arising from th~
Indian policy of balancing payments on the one hand against benefit or
adv~ntage to the owner or purchaser, rather than balancing payments
agamst the reasonable cost ofproviding the goods or services in question.4
The compensatory provisions of the 1943 Act (Section 1(2) governing
the return of moneys paid, and Section 1(3) governing sums recoverable
for benefits conferred) were the subject of an exhaustive and seminal anaw
lysis by Robert Goff J. in B.P. Exploration Co. v. Hunt.s
It i~ generally believed in the construction industry that the 1943 Act
penruts a ~ontractor to obtain, and obliges an owner to pay, reasonable
rem~eration for ~ork d~ne up to the time of frustration. In very many
ca15es 1~ most certainly will not do so, since it is clearly not designed to
appo:11on the loss between the parties. Apart from the anomaly already
mentioned, another source of anomaly is that the Act is unclear as to the
extent that contract prices ~hould be disregarded in assessing a "just sum"
for work done where reqmred by Subsection 1(3) of the Act.
Subsection 1(2) is as follows:
"(2) All sums paid or payable to any party in pursuance of the contract before
th~ time when the parties were so discharged ... shall, in the case of sums so
paid, be recoverable from him as money received by him for the use of the
party by whom the sui:ns were P?id, and in the case of sums so payable, cease
to be so l;'ayable: Provided that, 1f the party to whom the sums were so paid or
payable mcurred expenses before the time of discharge in. or for the purpose
of, the_performance of the contract, the court may, if it considers it just to do
so having regard to all the circumstances of the case, allow him to retain or, as
the cas_e may be, reco~erthe whole or any part of the sums so paid or payable,
not being an amowit 1n excess of the expenses so incurred."
Thi~ subsection will prima facie apply in many .. mid-stream" frustration 4·242
case~ m the c~nstr~ction field, since the contractor will usually have
received some mtenm payments from the owner, and additional interim
; Fibrosa Spolka, etc. v. Fa~H!o/rn Lawson, etc. [1943] A.C. 75.
See the Act powerfully cntic1sed by Robert Goff J. on this ground in B.P. Exploration Co
v. Hunt [1979] 1 W.L.R. 783, at p. 802E. .
5 Ibid.
 640 PERFORMANCE [CHAP. 4
payment may also be due, although still unpaid, at the time of frustration.
The immediate effect of the subsection is that the owner can recover all
payments made, and will cease to be liable for unpaid although payable
sums, subject, however, to the contractor being entitled to deduct (or
recover) "expenses" incurred by him in performing the contract, up to the
total of the sums paid or payable. This suggests a cost assessment, what-
ever the contractual valuation of the work done may be-so if the contract
prices were very profitable, or involve, as they frequently do, any substan-
tial element of "front-loading" in the early construction rates or in the
initial "preliminaries" payments made under the contract, the contractor
may have to return a sometimes substantial element of the sums paid, or
fail to recover sums payable. On the other hand, the concept of benefit to
the owner does not enter into the calculations in this subsection.6
However, a contractor may wish to claim for additional work for which
payment is not yet due at the time of frustration. Even where interim pay-
ment is provided for, this can be very substantial as where, for instance, a
contract using stage instalment payments has been used, rather than one
based on interim valuation at relatively frequent intervals. Indeed in
extreme cases, or in smaller projects, no interim payment whatever may
be provided for, so that nothing will be due until completion. In all these
situations, the contractor will have to rely not on Subsection 1(2) but on
Subsection 1(3) of the Act, which provides as follows:
"(3) Where any party to the contract has, by reason of anything done by any
other party thereto in, or for the purpose of, the performance of the contract,
obtained a valuable benefit (other than a payment of money to which the last
foregoing subsection applies) before the time of discharge, there shall be
recoverable from him by the said other party suc;h sum (if any) not exceeding
the value of the said benefit to the party obtaining it, as the court considers
just, having regard to all the circumstances of the case and, in particular,-
(a) the amount of any expenses incurred before the time of discharge
by the benefited party in, or for the purpose of, the performance of
the contract, including any sums paid or payable by him to any
other party in pursuance of the contract and retained or recover-
able by that party under the last foregoing subsection, and (b) the
effect, in relation to the said benefit, of the circumstances giving
rise to the frustration of the contract)."
4-243 It will be seen that in a construction contract setting the contractor will
be entitled to a "just sum" ,7 but subject to a top limit equal to the value of
the (net) "benefit" to the owner. 8 As already s_tated, this can be a severe
limitation for construction contractors. First, the partly-completed work
may be of no value whatever to the owner by reason of the frustrating
event, for example, in the case of a partial consignment ofmachinery, 9 or
in a case where planning permission is withdrawn or completion of the
6 For a detailed comment on this subsection, see the Hunt case, at p. SOOE.
7 Robert Goff J.'s expression.
a Compare the Indian Contracts Act and the Seksaria case, supra.
9 1
See the Seksaria case, supra.
SECT. 3] DISCHARGE FROM FUR'IHER PERFORMANCE 641
project prohibited for local or public law reasons, or where the work done
has been destroyed or damaged by the frustrating event. 10 Secondly if the
Act intends an objective value to be placed on the benefit, great value to
the owner and great cost to the contractor may be irrelevant if the work
cal~ed for is i~iosyncratic and of little or no objective market value. n
'!hi.rdly, the~e is a problem, in cases where the benefit does not operate to
hnnt the claim, whether the "just sum" for the work done should be com-
puted on a ~ontractual basis or on a cost basis, which might be very di:ffer-
e°:t depending on the profitability ( or the reverse) of the contractor's
pnces.12
The Act, therefore, envisages, in the sort of situation likely to occur in a
pa1;11y.-comp~eted construction contract, an exchange of clallll and cross-
clrum in relation to moneys paid or payable at the date of frustration under
Section 1(2) (either of which may exceed that of the other) and a claim by
the contractor only ( except in very rare cases where an owner may have a
"co~tra-claim" for work done on behalf of the contractor) which will be
subject only to set-off or reduction, but not to counterclaim, in the case of
work ~ot yet eith~r-~a.id for or payable at the date of frustration.13 Many
complicated poss1b1lities of valuation and its correct baSis arise under
Section_1(3) in particular, which are examined in great detail by Robert
Goff J. m the Hunt case. 14 This case is clearly destined to become a focus
classicus on the subject of compensation under the 1943 Act.
The Act ~lso, as Robert Goff J. pointed out, fails to deal with the prob- 4.244
lem of the tllile value of money, on both sides of the equation whether in
regard to expenses incurred or to pre-frustration payments.15
Insurance by the parties is expressly to be disregarded under Subsection
1(3), but not if the insurance is a contractual obligation. 16 Combined with
s~:tion 2(3), which requires the court to have regard to any express pro-
vision of the contract intended to have effect in the events which have
h~ppened, Robert Goff J. suggested that a contractual obligation to insure
might be a 1;11.atter to be taken into account in deciding what was a just sum
under Section 1(3),17 perhaps overriding the overall benefit limit under
that subsection. The exact effect of Section 2(3) is considered at length in
the Hunt case.ts
Final~y, it would _seem ~at damages for breach of contract prior to the
frustrating event will survive to be taken into account alongside proceed-
·mgs under Section 1.19
10
See t.he Hunt case, at P· 801G, but s~e Robert Goff J. 's interesting suggestion, in a case of
u:re~urred contractuaj. insurance agamst the e_vent, infra.
Ibid., at p. 803B, where Robert Goff J. considers that an objective valuation of benefit is
called for by the Act.
12
Ibid. at p. 806A
13
- Ibid. at pp. 807-808.
14
/bid. at pp. 801-806.
u Ibid. at pp. 803G-804C; and see ibid. at pp. 853--886.
16
Section 1(5).
11./bid. at p. 805A.
is Ibid. at pp. 806-807.
" Ibid. at p. 808C.
 PERFORMANCE
642
(e) Incidence of frustration in construction contracts
4-245 Enough has been said to show that frustrati~n can o~ly very rarely c?me
about in building and engineering contracts, since ~etr performanc~ is,. as
a matter of reasonable foresight, hedged about with many uncertamtles
and far more likely to be prevented by physical difficulties and external
events than in the case of other types of contract. In gener~, ~e contr~ct-
or is taken to have assumed the risk of the many uncertatnt:J.es and diffi-
20
culties associated with his work. Thus it h~ already been seen that the
difficulty of the work is not in general a valid excus~ for non-performance
of a contract to execute it, nor is a contractor ent:J.tled to aban~on ~ark
which proves unexpectedly onerous. A building owner ~oes not 1mphedl!
warrant that the plans or methods specified by him or his ag~nt are practi-
cable 21 and a contractor who undertakes to carry out work in accordance
with P1ans and a specification must do it or pay ~ama~es. Thus a per~on
may be liable in damages for failing to do somethI.ng ~h1ch was at the ~me
of his contract impossible. 21a "Certainly if h~ does Ill direct terms e_nter into
a contract to perform an impossiblity, subJect to a penal!Y, he ~~l not be
excuse db ecause 1·1 1s
· an 'nnpossibility·" 22 "Where there ts a positive con-.
tract to do a thing, not in itself unlawful, the contractor must perform It ~r
pay damages for not doing it, although in consequence of unforeseen ace1-
dents the performance of his contract has become unexpectedly burden-
, ven ,·mposs,.ble "23 The test is whether the party charged
some, ore · · h. hh h
expressly or impliedly warrants the possibility of doing that w 1c e as
contracted to do. 24 • • • 'bl
Damages for breach of a contract to do something which 1s rmposs1 e
may in some situations be nominal only. Thus the breach of a contract t?
construct a building which, if constructed, would be so unstable t~a~ it
would inevitably fall down would not result in any loss to the buildmg
owner. On the other hand, substantial damages would flow from the
breach of a contract to erect a structure which would be perfect~y sound
when erected, but which could not be erected by the methods specified, f?r
example, a bridge or dock requiring temporary or ?~rmanent work~ dif-
ferent from those envisaged in the contract. In addition to the ~ase_s illus-
trated below those illustrated in Section 1(1), "The Obhgat1on to
25
Complete", should also be considered in this context.
20 See supra, paras. 4.043 et s~q. ~e cases il.lustrated there should be borne in mind as well as
the cases illustrated infra 1n this subsection. ..
21 See ante, Chap.1,paras.1·295-1·296, andsupra,Section l(l)(b)(u),paras.4·
also supra, paras. 4·003-4·005(b). . ... · · "
21. This passage in the tenth edition '°'."~s approved ma? ~n~lus1~e
Divisional Court in A-lac Demolmon (London) Limlte v. rm en
rnc; ~~~c!r
74 OR 2nd 474 illustrated supra, para. 4·041.
n PerHa~nen J. j~ Jones v. St. John's College (1870) L.R. 6 Q.B. 115.
3
23 Per Blackburn J. in Taylor v. Caldwell (1863) 3 B. & S. 826;t p. 8({8'70) L 1t· 5 C p 577
z,i Hills v. Sughrue (1846) 15 M. & W. 253; Clifford (Lord) v. atts
ts See supra, paras. 4·046 et seq.
[CHAP. 4 DISCHARGE FROM FURTHER PERFORMANCE 643
ILLUSTRATIONS
(1) A contract provided that: "the contractors shall and will duly execute 4°246
and complete the works hereby contracted for, with such alterations,
additions, deductions, or deviations respectively as shall be respectively
directed by every and any such alteration order, in the same manner and sub-
ject to the same conditions, stipulations, and provisions, to all intents and
purposes as if such alteration, addition, deduction, or deviation directed by
any such order had been originally comprised in the works of the contract,
and in the specification hereunder written, and the plans, elevations and sec-
tions so signed as aforesaid. And, further, that the periods for completing all
such alterations or extra works shall not exceed the period limited by these
presents for the completion of the works hereby contracted for, unless an
extensiop. of time also be allowed by order, specifying the limit of extension,
signed by the clerk of works and bursar, within twenty-one days after the
delivery of the alteration order." The defendants averred that the plaintiff
ordered alterations and additions, etc., which it was impossible to execute in
the time. Held, by the Court of Queen's Bench (Miller, Lush and Hamen JJ .),
on demurrer, that the contractors were bound to do the work, including alter-
ations, within the time, although it might involve an impossibility: Jones v. St.
John's College, Oxford (1870). 26
(2) A main contract in Ontario contained a provision27 whereby the engin- 4-247
eer reserved the right to stop the excavation and require the contractor to
complete the trench and backfill the excavation before continuing. The main
contractor had entered into a sub-contract with tunnelling sub-contractors,
and these latter, through no fault of their own, had their work suspended
when the engineer exercised this power. They sued the main contractor for
damages, but he contended that the engineer's instruction was an event which
frustrated the contract. Held, by Schroeder J ., that there was an implied term
in the sub-contract that the main contractor should permit the sub-contract-
ors to proceed in a reasonable manner without any undue or unreasonable
delay or suspension of their obligations, and that the impossibility of complet-
ing th~ sub-contract work was not a natural or legal one such as might give rise
to frustration but was merely a relative impossibility arising out of the main
contractor's own agreement with the employers, and it was their fault if in the
sub-contract thi: main contractors ran the risk of undertaking to perlonn an
impossibility: Smith & Montgomery v. Johnson Bros. (1954). 28
The cases illustrated below show that the destruction by fire of the place 4-248
where the work is to be done can be a frustrating event, if the effect is that
the contract can never thereafter be performed in the sense of producing
.the permanent result originally intended, but in general the destruction by
fire, storm or other natural agencies of that which is being built before it is
completed is a risk assumed by the builder, and the builder will remain
043 et seq. see
b the Ontario
Inc. (1990) 26
L.R. 6 Q.B. 115. This case concerned the finality of the bursar's decision, and what had
become a stereotyped plea to avoid it, and is also illustrated post, paras. fr038 and 10·031,
but it shows that there is nothing legally offensive in undertaking a task not in fact capable
,· _., of.being performed.
TI Set out more fully ante, para. 4·157.
· · · · · 28 [1904J 1 D.L.R. 392, High Court of Ontario, see also supra, para. 4· 157.
 PERFORMANCE [CHAP. 4
644
under an obligation to complete the work by doing it over again: hence the
29
fire insurance provisions in most modern forms of contract. An indefinite
stoppage of work pursuant to a government order coupled with a: compul-
30
sory sale of plant has been held sufficient to cause frustration. An indefi-
nite delay resulting from a serious landslip and subsequent building
permit uncertainties was also held sufficient.31 On the other hand, the
Davis Contractors case32 decided that where, owing to an unexpected lack
of labour, a contract took 22 months instead of eight, but there was never
any actual interruption of work, the contract was not frustrated. In the
light of this decision of the House of Lords, it would appear difficult to
sustain a quantum meruit claim based on frustration where the work was
never stopped but merely proceeded much more slowly than was
expected, or where the cost to the contractor of completing the project has
increased for such a reason. 33
4.249 If a contract is frustrated, but subsequently the work is started up again
or proceeded with under protest, then, in the absence of any express
agreement, the contractor would on general principles be entitled to pay-
ment for the work done after the frustration on a quantum meruit. (fhe
Act of 1943 would presumably apply to the pre-frustration work in the
absence of agreement tp the contrary.) Express agreement will usually
regulate this situation, of course.
Where the frustration results from deliberate delay by one of the parties
with the intention that frustration shall take place, that party will not be
relieved from liability under the contract, even though the state of affairs
brought about by the delay might otherwise have amounted to frus-
tration.34 When frustration occurs, it avoids the contract itself and dis-
charges both parties automatically. In this situation, a plaintiff suing upon
the contract can only succeed if he can show that, the event which would
otherwise have frustrated the contract was due to the defendant's default.
It is for the plaintiff who seeks to avoid the legal result of an otherwise
frustrating event to establish that the destruction of the subject-matter of
35
the contract was due to the neglect or default of the defendant. In
addition to the cases illustrated below, those illustrated in Section 1(1),
36
"The Obligation to Complete", should also be considered.
2• See also the maintenance provisions in some older contracts, post, Chap. 5, paras. 5·039 et
seq., which may have the effect of keeping the work at the contractor's risk for a fixed
period after completion.
30 Metropolitan Water Board v. Dick, Kerr & Co. [1918] A.C. 119, illustrated infra.
>1 See Wong Lai Yingv. Chinachem Investment (1979) 13 BLR 81, P.C., illustrated infra.
32 See infra.
» But see the Codelfa case, illustrated infra, and the U.S. position supra, para. 4·237.
>4 Mertens v. Home Freeholds Co. [1921] 2 K.B. 526.
3 ~ See, per Lord Simon L.C. in Joseph Constantine Steamship Line Ltd. v. lmP.,:/rial Smelting
Corporation Ltd. [1942] A.C. 154. ' Panalpma case, mfra.
:l6 See supra, paras. 4-046 et seq.
SECT. 3] DISCHARGE FROM FURTHER PERFORMANCE 645
lLLUSTRATIO NS
(1_) P. under!ook to b~ild a bridge foz: a company and to keep it in repair. 4-250
Dunng the penod of maintenance the bndge was swept away by an extraordi-
nary flood. Held, by Kenyon C.J., that P. was not released from his obligation
un?erthe contract, and must rebuild the bridge: Brecknock Navigation Co
Pritchard (1796).37 · v.
(2) A contra~t was made to erect hustings for a certain sum on receiving the
wood back again. The mob carried the wood away. Held, by Patteson and Erle
Ii
sl~f~sthe owner was bound to return or pay for the wood: Fuller v. Pattrick
_(3) A. covenanted with B. to build a bridge, both parties treating it as cer-
ta~n that a stream would be diverted. The stream was not diverted and the
bn?ge was not ?uilt. Held, by the Court of Common Pleas (Maule J ) that n
cf~i0.:ould he for not building it: Rashleigh v. South Easter;, Railwa;
(4). ~nan acti?n on a p~licy of insurance against fire, which contained a
condition by which the society reserved to itself the right of reinstatement in
preference t~ the payment of claims, the defendants pleaded that having
el~cted to reinstate the insured premises, they were proceeding with the
remstat~m~nt thereof, when, by order of the Commissioners of Sewers law-
fully act11;1~ 10 that behalf, the premises were taken down as being in a d~ger-
ous C<;1nd1tton, such a condition not being caused by the fire; and that if the said
pr~nuses had not so been taken down, they would have proceeded with the
reinstatement, and would have restored them to the condition they were in
b~fore the fire. Held, on demurrer, by Lord Campbell C.J., Crompton and
Hdl JJ., that the ~lea wa~ bad on the ground that performance in the preferred
way w~s merely unposs1ble and not illegal; and that as the defendants could
{f is~)~~state they must pay damages: Brown v. Royal Insurance Society
. (5)_ T~e plaintiff co1:1tracted with the defendant to erect certain machinery 4-251
10 buildings and premises of the defendant, and in his occupation, for a speci-
fied sum, and to keep the whole in order, fair wear and tear excepted for two
year~. When 1?e.machinery ~as only partly erected a fire accidentally broke
out 10 the bml~m~s, and, without any fault of either party, destroyed the
.whole of the buildings and the machinery then erected thereon. Held, by the
Court of Exchequer Chamber, reversing the Court of Common Pleas that as
the premises w~re entirely destroyed without the fault of either, bo!h were
excused and neither had a cause of action, although if the accidental fire had
left the d~fendant's. pr_emises untouched and only injured the part of the
works w?t<:h the plaintiff had already finished, he must have done that part
over agarnm ord_ert? complete; but that as it was, the plaintiff was not entitled
to recover anyth1ngm respect of any portion of the machinery which had been
erected and destroyed, as the whole work contracted to be done by him had
not been completed: Appleby v. Myers (1867).41
37
6 T.R. 750.
38 18 L.J.Q.B. 236.
39
10 C.B. 612.
4028 L.J.Q.B. 275.
·tR.
41
2 C.~. ~51. See. also the fuller illustration
ante, paras. 4·010. Compare Lord Russell of
llow~n s illus1:at10n of the destruction of a flying freehold in the case of leases · th
m e
 646 PERFORMANCE [CHAP.4
(6) The defendant contracted to make, supply and install new boiler~ in a
ship, and to make alterations in the existing machinery to receive the boilers.
The price was to be £5,800, payable as to £2,000 when the boilers ·were plated,
£2,000 when the work was ready for fixing on board, and the balance on com-
pletion. One instalment of £2,000 had been paid, and the work was ready for
fixing, when the ship was lost at sea. Subsequently the plaintiffs paid the fur-
ther £2,000 at a time when they, but not the defendant, knew of the loss of the
ship. The plaintiffs claimed delivery of the boilers and machinery, or, alterna-
tively, to recover back the £4,000 as upon a consideration t~at had _wh_o~ly
failed. Held, by Lord Coleridge C.J., that the contract was entire and mdivis-
ible, and the parties were released from further performance by the loss of the
ship. On its true construction, the property in the materials was not to pas~ till
fixing in the ship. Consequently the plaintiffs could not recover the materials,
nor could the consideration be said to have failed so as to entitle them to
recover the £4,000: Anglo-Egyptian Navigation Co. v. Rennie (1875). 42
[Note: This case was taken to the Exchequer Chamber43 which seems to
have been disposed to differ from the Court of Common Pleas on the first
point, but decided nothing and referred the dispute to arbitration. The
decision of the court below is therefore of doubtful authority, but it is submit-
ted that, in so far as it decides that the instalments paid to the contractors
could not be recovered back, it would appear to be correct within the rule laid
down in Appleby v. Myers. 44 ]
4-252 (7) J. entered into a contract to erect a sea-w:an for the E. local boar~. The
local board were bound by a special Act of Parliament to protect the ad1acent
shore from the action of the winds and the seas. By the action of the sea the
shingle was swept away and the wall fell. Held, by the House of Lords, that J.
took the risk of interference with the work while in progress by the action of
the winds and seas, and there was no implied covenant on the part of the
board that the seashore on which the works were to be executed should
remain in the same state as at the date of the contract: Jackson v. Eastbourne
Local Board (1886). 45
(8) A. had been contractor with a colonial government for the construction
of works, but the government was dissatisfied, and had taken the works out of
A's hands. A. believed that the restoration of the contract might be effected,
and agreed with B. that B. should complete the work and receive 90 p~r cen~.
of the profits, the agreement reciting that A. had agreed to take B. into his
service for the purpose of completing the contract. B. was aware of the loss o~
the contract, but believed he could obtain its restoration. The government
refused to restore the contract. B. brought an action claiming damages for
breach of contract to take him into A. 's service, and for moneys expended on
the work. Held, by the Supreme Court of Canada, that as from circumstances
known to and in the contemplation of both parties at the date of the agree-
ment it was and continued to be beyond the power of A. to carry out the work,
no agreement would be implied on the part of A. to supply B. with the work to
do: McKenna v. McNam_ee (1877). 46
•2 L.R. 10 C.P. 271.
43 L.R. 10 C.P. 571.
44
See supra.
•s Hudson, Building Contracts (4th ed.), Vol. 2, p. 81. See the fuller illustration ante, para.
4·047.
-1<1 15 Can.S.C. 311. Cf Compagnie Algerienne v. Katona Societa etc. {1960] 2 Q;B. 115; Set~ia
(1944) Ltd. v. Ramesh war [1951] 2 All E.R. 352n., H.L., referred to ante, Chap. 3, Secuon
3(2), para. 3·060.
SECT. 3] DISCHARGE FROM FUR'IHER PERFORMANCE 647
(9)_ A contra~tor tendered in June to lay certain water mains and divert
certain streams 1n Cumberland within four months, on the understanding that
":or~ would commence at once. In fact he was not given full possession of the
site till Octob_er, and t~e contract became a winter one. Express terms in the
contract provided that 1n the event ofdelay in giving possession the contractor
should not be entitled to a~y increased allowances of money or time, except
only to the extent that h': nnght b~ allowed an extension of time by the engin-
eer. In response to specific questions, the jury found that the circumstances
contemplated by the contract had so changed that the provisions of the con-
tract ceased to be applicable, and that the damage suffered was £600 over the
contract s_um. Held, by the Divisional Court, that the plaintiff was entitled to
succeed either. by "'.ay of quantum meruit or as damages. Held, by the Court of
Ap_Peal, that sin~ 1t was.not con~ended that the jury's finding was against the
weig~t of the evidence, 1t gave nse to payment on the principle of quantum
merult: Bus~ v. Whitehaven Trustees (1888).47
[Note: Lindley L.J.'s judgment indicated that trying the case alone he
w:ould have ~ad great difficulty coming to the same conclusion, the principal
d~culty b~mg. ~at the con.tract provisions showed that the parties had in
mind delay 10 ~?:'mg possession. It should be noted that the judgment was in
fact for.the additional ~xpense, and not for quantwn meruit in substitution for
~he entire :ontract pnce, as was pointed out in the Morrison Knudsen case,
illustrated mfra. The case was disapproved by the House of Lords in the Davis
Contra~to,:s c~se, infra, and regarded as overruled by Judson J. on behalf of
the 1:°aJonty m the Supreme Court of Canada in Peter Kiewit, etc. Ltd. v.
Ea~1ns (!onstruction Ltd. in 1960.411 It can be assumed it would today be
decided 10 the opposite sense.]
(10) The defendants, who had undertaken to erect a house for a fixed sum 4·253
engaged the plaintiffs as sub-contractors to do the plumbing and tinsmithing
w~rk.for 500 dollars. Before the completion of the plaintiffs' contract, the
.bwldmg was destroyed by fire without fault on the part of the plaintiffs the
defendants or the building owner. Although they had done work to the v~lue
of 48~ dollars before the _fire, the plaintiffs did not allege that th~y had sub-
stanti~lly completed thelf. contract, but brought an action on a quantum
merutt. Held, by th~ Ontario Court of Appeal, following Appleby v. Myers,49
th~t t?e house ha_vmg been ~estroyed without any fault of the parties or the
building owner, 1t was a misfortune equally affecting both plaintiffs and
d~~endants, and ex~using ea~h from further performance of the contract, but
g1vmg a cause of action to neither, and the plaintiffs could not recover Kingv
Low (1901).50 · ·
'· (11) The defendant contractors, in July 1914, entered into a contract to
. construct for the plaintiffs at an agreed price certain reservoirs and by con-
diti_on 32 of th~ c?ntract _the wh?le of the works were to be co~pleted and
, . .~Ielivered up within ~ penod of six years from the engineer's written order to
· c_om~e?ce. !he ~n~1neer had power, under the same condition, to extend the
time _1f ~ his opm1on the contractors were unduly delayed or impeded by
reason, mter alia, of any "difficulties, impediments, obstructions oppositions
... whatsoever and howsoever occasioned". The works were commenced in
July 1914, and a substantial amount of work had been done when the work
was stopped by the Minister of Munitions in February 1916, and the contract-
47
H~dson, Buil~!ng Contracts (4th ~d.), Vol. 2, p. 122. This seems to have been an example of
a no damage clause-as to which see post, para. 8·217.
.;s [1960] S.C.R. 361.
4
?·(1867) L.R.· 2 C.P. 660.
·.~ 3 Ont.L.R. 234.
 648 PERFORMANCE [CHAP.4
ors' plant and materials sold and removed under the M0~ster'~ direction. The
plaintiffs claimed a declaration that the contract was strll m existence and that
the defendants were bound to perform it. Held, by the House of Lords, that
condition 32 did not cover the case in which the interruption was of s~~h a
character and duration as vitally and fundamentally to change the c?nd1t1ons
of the contract, and could not possibly have been in the contemp~at1on of the
parties when the contract was made, and the defendants v.:ere entltled to treat
the contract as at an end: Metropolitan Water Boardv. Dick, Kerr & Co. Ltd.
(1918)."
(12) Plans for certain building work were passed on July 10, 1916. On July
4·254
14 an order was made by the Minister of Munitions that after July 20, no-one
sh~uld commence or carry on building work without a licence. On July 21, the
contractor applied for a licence and worked f~irly well unt~l August 12,_ when
he deliberately slowed down work with the obJect of ensunn~ that the hce~ce
was refused so that he could put an end to the contract. While under notice
from the architect to proceed with due diligence, it was intima~e~ that the
licence had been refused. Held, by the Court of Appeal, that a plaintiff cannot
take advantage of circumstances as frustrating the contract if he has himself
brought those circumstances about, and the damages payable bf t~e c?ntract-
or must be the higher cost of completing the work after the M1n1ster s order
was cancelled: Mertens v. Home Freeholds Co. (1921). 52
(13) D. entered into a contract to build 78 houses for F. withi~ a perio?
of eight months. D. attached to its form of te~der a l~tter stating that it
was subject to adequate supplies of labour being av~dable as and ~hen
required.52• Owing to unexpected circumstances, and wtthout fault of either
party, adequate supplies of labour were no~ available and D. t~ok 22 months
to complete and incurred extra expense owmg to the prolongation of the con-
tract period. D. contended: (1~ that t~e contrac! price was conditional upon
adequate supplies of labour bemg available by vutue of the letter att~ch~d to
the tender; (2) that the contract had been frustrate?; and (3) that tn either
event D. was entitled to recover on a quantum meru1t. Held, by the House of
Lords, (1) that the letter was not incorporated in the contract; and (2) that the
contract had not been frustrated but had merely been rendered more onero~s
than had been expected, and D. took the risk of lack of labour: Davis
Contractors Ltd. v. Fareham Urban District Council (1956). 53
(14) Construction of a tank ~nd pump cha~be:b~low ground level in com-
pliance with the engineer's design, namely usmg ''! ~itu concrete, pr~ved to be
impossible because of the water and ground conditions, and the design ha? to
be modified by using pre-cast concrete rings lowered by crane and settled into
position under water with the aid of a diver. The contra~~or contended that
the contract was frustrated when the groundwater conditions were encoun-
tered. Held, by Henry J., whether applying Lord Rad_cli~e's definiti?n of a
radically different change in the contractor's obhga1:on, _or _V1s~ount
Simonds' test of it being unjust to hold the contrac!or_ to hts_obliga~1on m the
changed circumstances, or on the implied term basis, 1t was nnpo~stble to say
that the contract had been frustrated: Wilkins & Davies v. Geraldine Borough
(1958)."
SI [1918] A.C. 119.
S2 [1921] 2 K.B. 526. . "Set out more fully, ante, para. 4· 158.
si.. See the interpretation of the letter discussed ante, Chap. 3, para. 3·062.
SJ [1956] A.C. 696. .. "..( .
s4 [1958} N.Z.L.R. 985, illustrated on other aspects of the dectston sup,:a, Sectton 1, para.
4·051.
SECT. 3) DISCHARGE FROM FUR'IHER PERFORMANCE 649
(15) A contract for the deck of a bridge in Canada55 stated that the work was 4-255
expected to be completed in the summer, and that no payment would be made
fo_r an~ heating"'.'hich might be necessary. The deck contractor was to proceed
with his work pnor to completion of steel erection, which would not be com-
pleted before August 15. The steel erector did not in fact leave till October,
and the deck contractor's contract became a winter one. Held, by the Mani-
!oba Court of Appeal, following the Davis Contractors case, delays on build-
1n~ contracts were not abnormal circumstances, and the contract could not be
sard to be frustrated: Swanson Construction v. Government of Manitoba
(1963).'"
~1~) A plu~bing contractor had not completed the work of enlarging an
ex1strng heating system and moving its furnace in a hotel in Newfoundland
when the building was destroyed by fire. Payment was not due until com-
pletion. Newfoundland's 1956 Act was similar to the English 1943 Act. The
co1:1tractor sued for the value of the work done, alleging that it was effectively
finished before the fire, and in the alternative that the owner had had some
benefit from heating. Held, by Furlong C.J., nothing was due to the contractor
prior to the fire sjnce the work had not been completed and, following
Appleby v. Myers, the contract had qeen frustrated, but nothing was due to
the contractor under the Newfoundland Act, like the English Act, since the
owner had received no benefit from the work: Parsons Bros. Ltd. v. Shea
(1965).~
(17) A business was sold whose only asset was the annual task of preparing
the voters' register for the City of Regina. The two parties did discuss the
possibility of losing the the city's contract and did agree that the whole agree-
m~nt should be reconsidered ?r altered in that event. Subsequently legis-
lation was passed for the entrre province, making annual lists no longer
necessary at all. Held, by Sirois J., applying the Davis Contractors case, the
~ontract was frustrated and the purchaser released from making further
instalment I?ayments of the rrlce. The parties having contemplated a possible
loss of the city contract was urelevant: Industrial Overload Ltd. v. Mc Watters
(1972).'"
(18) An owner defended a contractor's action for moneys due under a con- 4·256
tract in Victoria, claiming liquidated damages for delay in completion. The
contractor repl~ed by saying that certain strikes in the building industry which
were beyond his control had caused the delay, and that the provisions of the
contract relating to liquidated damages had been frustrated. He further
asserted that an alleged failure by the owner to give possession invalidated
the li9-uidated da~ages provisions. Held, By Menhennitt J., considering and
applying the Davts Contractors case, that there could not be frustration of one
particular obligation in a contract while leaving the remainder in being and
that the frustration plea should be struck out: Aurel Forras v. Karp (197'5).s9
(19) Two out of three arbitrators held that a sewerage contract had been
frustrated by reason of substantial groundwater. A report attached to the
contra':1 had stated that the rock subsoil appeared generally sound and that a
heavy 1~~ow of water was probably not to be expected, although it warned
that cav~ties were encountered and that limestone could be very permeable.
The arbitrators awarded a sum of some $50,000 against a contract sum of a
1
~ 40 D.L.R. (2d) 162, Canada. See also the Smith and Montgomery case supra para. 4-157.
SJ 53 D.L.R. {2d) 86. ' '
:<1124 D.L.R. (3d) 231, Saskatchewan Q.B.
59
[1975J V.R. 202, Victoria.
 650 PERFORMANCE [CHAP.4
little over $1,000,000, the majority holding that there had been a "fundamen-
tal breach" on the part of the owners, and that the conditions actually encoun-
tered by the contractor were totally different from those contemplated by the
parties at the time of the execution of the contract, so as to constitute a fund~-
mental breach going to the root of the contract. Held, by the Ontano
Divisional Court, fundamental breach had nothing to do with the question,
and that, applying the Davis Contractors case, the award was founded on a
basic error of law and must be set aside: Re Baldasaro & McGregor Ltd. v. The
Queen (1975).ro
(20) A major part of a contract for the repair of_a dam req~ired.the con-
4-257
tractor to transport rock across the ice of a lake dunng successive winters. In
the first season the contractor informed the owner that he thought the ice was
not sufficiently thick, but was told to continue until March 31, when ~e gave
notice of the impossibility of proceeding further, following loss of equipment
in the lake. In the second season, under threat of termination unless he fin-
ished by April 1, he attempted to continue, but finally gave notice of impossi-
bility and terminated on February 1, after losing two men drowned. The
owner contended that the contractor was not entitled to any compensation
for the period after his notification of suspension on the ground of 0-1-possibil-
ity in the first season. Held, by the Supreme Court of Alaska, applying the law
of temporary impossibility as stated in Williston and Thompson on Con-
tracts 61 that the contractor was entitled to first season compensation for work
done 'atter giving notice of impossibility, since he had been told to continue,
and it was legitimate to see if completion was possible. In the sec?nd s~ason
the weather had appeared better, and it was reasonable to conttnu~ 1n the
improved conditions under threat of termination, so that he was entitled to
compensation for that season also: Chugach Electric Association v. Northern
Corporation (1977). 62
(21) Contractors alleged a number of different breaches by the owners,
including failures of administration, late delivery of instruct10!1s and con-
struction drawings, failures of design, failures to correct the design or make
provision for emergency measures during a time of flood, and instructing but
then refusing to pay for expensive acceleration measures to overcome delays
which had been caused by the owners, and interfering with the certifier's
decisions. (Had they known of these last at the time, they would have justified
a rescission). The contractors completed the project as planned, but sub-
sequently contended that the work had been .car~ed ou~ in ~uch different
circumstances that a new agreement was to be nnphed which, in the absence
of an agreed new price, should be on the basis of a quantum meruit. Held, by
the Court of Appeal of British Columbia, applying the Davis Contractors case
and disapproving and distinguishing Bush v. Whitehaven Trustees, that the
contractors must show that the cumulative effect of the breaches was to frus-
trate the contract if a new contract was to be implied. The works had been
completed as planned; on the evidence the contract was not frustrated;, and in
the absence of an accepted repudiation the contractor must be left to his rem-
edies for compensation under the contract or in damages: Morrison-Knudsen
Ltd. v. British Columbia Hydro & Power Authority (1978). 63
4-258 (22) Purchasers contracted with an owner, who was constructing flats in
two blocks on the "University Heights" in Hong Kong, to buy flats when the
buildings were completed. The price was paid upon signature of the contract
and in advance of completion. The date for completion of the buildings was
00
48 D.L.R. (3d) 517.
61 Quoted supra, paras. 4-236-4·237:
~ 562 P. (2d) 1053.
63 85 D.L.R. (3d) 186.
SECT. 3] DISCHARGE FROM FURTIIER PERFORMANCE 651
May 1973, although it could be extended for up to one year until May 1974. In
June 1972 a serious landslip took place above the blocks, carrying away a
block of flats of 13 storeys, the debris of which, together with hundreds of tons
of earth, Janded on the site obl!terating the partly-completed building works
and causing 67 deaths. At the time of the landslip the parties could not know
how soon the vendor would be allowed to re-enter the site, how long the delay
would he:, whether he 'Yould be granted a new buildingpennit at all, or, if one
was apphed for, when 1t would be approved. In September 1972 the building
permit expired, and it was not until November 1975 that the owner was able to
obtain a permit to resume work to the original design, but on new foundation
plans. October 1976 was the earliest date upon which it would be possible as a
result of the landslip, to complete the works. Clause 22 of the contracts 'pro-
vided ~hat "should any unforeseen circumstances beyond the vendor's con-
trol anse whereby the vendor becomes unable to sell the said ... apartment to
the Purchaser, the Vendor shall be at liberty to rescind the agreeement and to
refun~ to the Pl!rchaser all instalments of purchase price paid ... " Held, by
the Pnvy Council, that clause 22 could not be construed as making provision
~or the possibility of this particular contingency. The clause was plainly
intended to confer on the vendor a remedy of rescission if a dispute arose or it
b~came clear he could not complete in accordance with the contract, pro-
vided he acted "forthwith" to terminate the contract. It did not follow from
this that the parties must have agreed that their contract would continue after
an unforeseen natural disaster having the consequences which it did. The
landslip was a major interruption fundamentally changing the character and
the duration of the contract performance, and the contract had been frus-
trated: Wong Lai Ying v. Chinachem Investment Ltd. (1979). 64
[Note: Under the English Frustrated Contracts Act the purchasers might
n~t have received all their money back,65 but the Privy Council appeared to
thmk that they would under the Hong Kong legislation.]
(23) A warehouse was leased for a period of 10 years, the tenants covenant- 4-259
ing not to use it otherwise than for the purpose of a warehouse without the
landlord'~ consent. The onlr vehicular access to the warehouse was by a
street, which the local authonty closed five years into the lease because of the
dangerous condition of another derelict warehouse in the same street. The
period of closure was likely to be for about 20 months. During that period, the
warehouse would be useless for the tenant's purposes. The landlords claimed
rent and the defendant~ c~aimed that the lease had been frustrated. Held, by
the House of Lords, while 1n theory an executed lease could be frustrated, this
must. be very rare. (PerV!scount Hailsham, "hardly ever".) Having regard to
the likely length of continuance of the lease after the interruption of user
ended, and its relationship to the entire tenn granted, there was not even a
t?able issue as to frust~ation. Pe: Lord Simon of Glaisdale, while put to con-
siderable expense and 1nconvemence, at the time of interruption the tenants
coul? anti~ipate full enjoym~nt of two-thirds of the remaining term, the inter-
ruption being equal to one-sixth of the whole lease. That was not so significant
a cha~ge in the nature of the parties' remaining rights and obligations for it to
be un1ust to hold them both to the lease. Per Lord Russell of Killowen, while a
lease whic~ was a subsidiarr: part of a larger commercial venture might be
frustrated if that venture was itself frustrated, the only circumstances he could
see for frustra~ing_ an executed lease would be the destruction of a flying free-
hold out of which it was created, or the total disappearance of the site into the
sea: National Carriers v. Panalpina (1981).66
"'13 BLR 86.
65
See Section 1(2) of the English Act, supra, paras. 4-241-4·242.
66
[1981] A.C. 675.
 652 PEru,ORMANCE [CHAP. 4
(24) A charterparty contemplated the hiring ?f the ship in t~o successive
years between April and December at a port 1n Cana.da, which would be
closed due to ice in the winter months. In the first year strikes at the port led to
the ship being continuously diverted for other voyages and in August of th~
first year, when the further duration of the strike was still unknown, an arbi-
trator held that the charterparty for that year had been frustrated. Robert
Goff J. held that the charterparty for the two years was indivisible and had not
been frustrated. Held, by the House of Lords, that the charterparties for the
two seasons were separate and independent adventures, and the arbitrator
had rightly considered the first season frustrated: Pioneer Shipping v. B. T.P.
Tioxide (1982). 67 • • • •
[Note: This case ("The Nema") was pnmanly concerned with the questl?n
of leave to appeal to the High Court from an arbitrator's award, and the pnn-
ciples governing that leave, and it is not really clear from the report whether
frustration of a part of a contract is in law a possibility and whether Lord
Ros kill, who alOne dealt with this aspect of the case, was intending to lay down
a substantive principle of contract law in that regard.]
4·260 (25) A tunnelling contract with a railway authority public owner was
entered into by both parties in the belief, which was repre~ented by the <:1wner
to the contractor in response to enquiry and accepted by him, that no claim for
nuisance could, by reason of the owner's controll~ng legislation, be brought
against the authority or its co~tractors. ~oth pa.rties knew that the co~tract-
or's price was based upon cont1nuous-shiftwork1ng, and the contractor s pro-
gramme, a contract document, also showed thi~ clearlr, The~e w~s a
stipulated contract date, but provisions for extension o!
tune. InJunctions
were obtained by neighbouring members of the public, after work had
started which restricted the contractor to two-shift daytime working and no
work o~ Sundays. The contractors brought an action for compensatio_n alleg-
ing breach of an implied term. Alternatively, the_Y 3?-eged frustration and
quantum meruit based upon the conn:actor continu"?-g the w~rk to com-
pletion at the request of the owner. ~e issue of frustration was withdrawn, as
a matter of jurisdiction, from the arbitrator, and he then h_eld that there had
been a breach of the implied term and that the owner was h~ble for damages.
In so doing he found that there was a common understanding that the work
would be carried out on a three-shift continuous basis six days per week and
without restrictions on Sunday, and that, although the work would be
unavoidably noisy and disturbing and close to neighbouring residenti~ a_reas,
it was represented by the owner and accepted by the.contractor that 1n1unc-
tions or restraining orders could not be granted agamst the contractor. He
also found that completion of the works by the stipulated time for perfoi:m-
ance, except on the agreed shift basis, was impossible. Held, by th~ High
Court of Australia, that there was no implied term,68 but that the arb1trat?r
did have jurisdiction to deal with the plea of frustration, and ~Bren~an J. d1~-
senting) on the facts found by the arbitrator he should have httle difficulty .1n
holding that the contract had been frustrated, and the matter sh?uld be r~mit-
ted to him for that purpose: Codelfa Construction v. State Rall Authority of
New South Wales (1982). 69 • ~een rea~ as Jim!ted ~o ~onnal, moderate delay, and not as extending to an
4-261 [Note: this is not a very satisfactory case, and the Court did not have the
benefit of a reasoned award or findings of fact which might have been made
had the issue of frustration been fought before the arbitrator. In particular
there were no findings as to the extent of the delay caused relative t.o the
whole contract period, or of the additional expenditure involved relative to
70
61 [1982] A.C. 724. . . \;'.
68 See the case illustrated and doubted on thts pmnt supra, paras. 4· 166-4· 170.
71
69149 C.L.R. 337.
SECT. 3] DISCHARGE FROM FURTHER PERFORMANCE 653
the contract sum, or of the particular changes of method (if any) which
resulted from the change to two-shift working. Moreover, the contract
appears to .h~ve proc~eded to cc:,mpletion without change of design. The loss
of prod.ucb.vtty resultmg from disturbance of any repetitive contract, such as
tunnelling, roadworks or pipelines, is relatively the easiest to calculate of all
disturbance claims in the construction field. 70 In tunnelling contracts them-
selv~~· the red~ced produ~tivity due to a two-shift working, involving
additional pumping and mamtenance measures, loss of productive time due
!o mo~ilising a~d de-mobilisirig crews, and the earnings differences of crews,
is :eiatively easily calculated and not difficult for an experienced tunneller to
pnce. Progress before and after the restricting factor is also available for com-
parison and confirmation. The facts found by the arbitrator would appear to
amount to no more than a ~nding of some inevitable delay, and some inevi-
table and no·d.oubt substant~al additional cost, both an invariable accompani-
ment to any disturbance claim for breach of contract. Without evidence as to
t~e amount of those costs, or of differences of working method {if any), it is
difficult to see how an appellate court could reach a frustration finding with
any confidence, and it seems highly doubtful if, after full evidence, a suf-
fic1ent_Iy fund~me~tal cha~ge in the contract obligation could have been
~stabhshe_d to Justify a finding of frustration. The proportion of delay claims
1n tun.nelling contra~ts is probably higher than in any other part of the con-
struction field, and 1s usually associated with subsoil or water conditions
whi~h may be far harder to deal with in practice, and may entail the most
radt<:31 change~ of working met~ods, such as compressed air and special geo-
physical techniques, ?Y com~anson with "".hich a mere reduction of working
hours from three-~h1f~ working to two-shift working might be very simply
acC?mmodated. It is difficult to escape the conclusion that the finding on frus-
tration followed from the Court's inability to reach a basis for the claim
through an "ad hoc" implied term, for which the case seems ideally suited.)
The Chinachem case, supra, illustrates a perennial problem in frus- 4·262
tration cases which involve construction contracts, since it will frequently
be found that the contract does contain express provisions which prima
fac~e regulate a situation, for example, in regard to delay or suspension, or
which ~ontemplate a particular eventuality in general terms, although
cl~arly m the context of a delay of normal or acceptable severity or dur-
a~?n. Th~re are many judicial pronouncements to the effect that such pro-
visions will not necessarily be interpreted as applying to a situation of
different degree or kind from that contemplated by the contractual pro-
visions so as to prevent a finding of frustration:
"In other wor?s,. 'delay', though literally describing what has occurred, has
interruption so d1ffenng 1n degree and magnitude from anything which could
have been contemplated as to differ from it in kind. "71
"A contingency may be provided for, but not in such terms as to show that the
provision is meant to be all the provision for it. A contingency may be pro-
See C.C.P.P.,para. 8-42 (p.139). See also the U.S. caseofBoyajianv. U.S. 423 F. (2d) 1231
(1970), discussed at length in C.C.P.P., para. 8--44.
Sir Linds~y Parkinson & Co. Ltd. v. Commissioners of Works- [1949] 2K.B. 632, at p. 665,
per Asqmth L.J.
 654 PERFORMANCE [CHAP. 4
vided for but in such a way as shows that it is provided for only for the pur-
poses of dealing with one of its effects and not all. " 72
"But where the event is of such a character that it cannot be reasonably be
supposed to have been in the contemplation of the contracting parties w~en
the contract was made, they will not be held bound to general words which,
though Ia:rge enough to include, were not used with reference to the possi-
bility of the particular contingency which afterwards happens. " 73
Thus while nearly all construction contracts make express provision for
delay, "It is obvious that the whole character of such a contract for con-
struction may be revolutionised by indefinite delay". 74
4·263 Contractors' advisers, in cases where the works have not been rendered
impossible, but have been completed in the face, for example, of multiple
variations or multiple breaches of contract or of considerable physical dif-
ficulties, have frequently sought to argue that the contract has been frus-
trated as a basis for claiming new prices, in the past relying in particular on
the Court of Appeal's decision in Bush v. Whitehaven Trustees, supra.
The principle of that case (an implied agreement on a new contract for a
reasonable price) as well as its application to the particular facts before the
Court, have, as stated, been expressly disapproved in both the House of
Lords and the Supreme Court of Canada.75 Mere changes of circumstance
rendering the contract more expensive or difficult but not rendering com-
pletion impossible, a fortiori in the absence of any stand taken by th~ con-
tractor or any specific request or conduct of the owner concedmg or
recognising the position, will not generally warrant a finding of frus-
tration, or the implication of a new contract to depart from the contract
price or prices, it is submitted. 76
Because a provision in a contract which contemplates what might other-
wise be held to be a frustrating event may have the effect of keeping the
contract in being and lead to rejection of a plea of frustration,n and also
because by subsection 2(3) of the English Frustrated Contracts Act 1943,78
such a provision will, if relevant, prevail over the compensatory rules
regulating the position between the parties after frustration which are
contained in subsections 1(2) and 1(3) of the Act,79 it may be useful to
identify some of the provisions in the English standard forms which may
have some relevance in such a situation.
12 Bank Line Ltd. v. Capel [1919] A.C. 435, at p. 456,perLord Sumner.
n Baily v. De Crespigny (1868) L.R. 4 Q.B. 180, at p. 185,per Hannen J., ~pproved ?Y Lord
Parmoor in the Metropolitan Water Board case and by Lord Scannan m the Chmachem
case.
14 Metropolitan Water Board v. Dick Kerr Ltd. [1919] A.C. 119, at p. 126,per Lord Finley L.C.
'·' See supra, para. 4·252, and see also the discussion in the British Columbia Court of Appeal
in the Morrison-Knudsen case, supra.
'" See also the "multiple variation" cases considered post, Chap. 7, par11S, 7·087-7·091.
n See, e.g. clause 22 in the China.chem case, illustrated supra.
TIC Discussed at length by Robert GoffJ. in BP Exploration Co. v. Hunt [1979] 1 Vf;.L.R. 783, at
pp. 806-807.
,. Discussed supra, paras. 4·241-4·244.
SECT. 3] DISCHARGE FROM FURTHER PERFORMANCE 655
Thus Clauses 64 and 65 of the ICE conditions secure for the contractor 4·264
far greater compensatory protection for the "Special Risks" than would
b~ _afforded by the ~ct of 1943 in the event of frustration. 80 Similar pro-
v1s1ons are present m Clauses 65 and 66 of the FIDIC group of inter-
natio~al civil engineeri~g contracts and in Clause 48 of the same group's
electncal and mechamcal contract. Additionally, the "accepted risks"
under Clause 22 of the FIDIC contracts require insurance of the works
against damage due to "the operation of the forces of nature". In the case
of building contracts, one particularly egregious clause in the English
RIB A/JCT group of contracts entitles the contractor only to determine the
contract should the work be suspended for one month due to "force
majeure", 61 There is also a suspension and contractor's determination
right in Clause 40 of both the ICE and FIDIC civil engineering contracts,
and a bla~ket provision apparently limiting, the contractor's obligation to
perform in cases of "legal or physical impossibility" and entitling him to
compensa~ion,and on which there is little or no authority. 82 The precise
~ype and ctrcu°:1s~ances of contractor's claim envisaged by such provisions
~s u~cle_ar, an~ it is hard to understand why governments and professional
1nstitutJ.ons alike have permitted their inclusion in the fOrms.
(4) Act of God and Force Majeure
(a) Act of God
The expression "Act of God" has been variously defined as a circum- 4·265
stance "which no human foresight can provide against, and of which
human_ prudence is not bound to recognise the possibility"83 ; as "such an
operation of the forces of nature as reasonable foresight and ab.ility could
not foresee or reasonably provide against" 84; and as "events which cannot
be_ foreseen, or which if they can be foreseen cannot be guarded against" .ss
It 1s not uncommonly found as part of an exception clause in contracts of
carriage, and has there been applied to frost, snow, and sto.rm.86 It seems
doubtful, however, if the cases dealing with liability of carriers will be
regarded as of much relevance in construction contracts.s1
The exact relevance of the concept when not the subject of an express
te:m (~hich wi~ often give a sufficient indication of its intended oper-
ation) 1s not entirely clear. It is usually considered as a sufficient defence, if
80
See The I.C.E. Conditions of Contract (5th ed.), pp. 265 et seq.
ai Clause 26, pre-1980 fonns; Clause 28.1.3.1, post-1980 forms. See this remarkable provision
commented on in C.C.P.P., para. 29-22.
Bl Clause 13, ICE and FIDIC forms, particularly Clause 13(3) in the former case.
s.i Per Lor? Westbury in Tennentv. Earl of Glasgow (1864) 2 Macph. (H.L.) 22.
84
Per Atkm J. in Baldwin's Ltd. v. Halifax Corporation (1916) 85 LJ.K.B. 1769, at p. 1774.
85
Per Lord Coleridge C.J. in R. v. Commissioners of Sewers for Essex (1885) 14 Q.B.D. 561,
at p. 574.
06
See the cases cited in Chitty on Contracts (26th ed.), para. 3161.
7
B ,Per MiddletonJ. in Mc Quillan v. Ryan (1922) 64 D.L.R. 482, at pp. 492-493, Ontario High
Court.
 656 PERFORMANCE [CHAP.4
established, to cases of strict or absolute liability in the law of tOrt, such as
claims in nuisance, or under the rule in Rylands v. Fletcher, or some cases
of breach of statutory duty. In contract, it would seem that it may absolve a
person from the performance of an obligation, or of part of an obligation,
and was so held in principle by the Court of Appeal of East Africa.88 It has
been held to avoid the liability of a frontager under a prescriptive obli-
gation to repair a sea wall which had been breached due to the concur-
rence of the highest tide ever recorded with an exceptional storm.89
However, it may be important to distinguish between release from obli-
gations which are, on analysis, only obligations of due care (in which event
a finding of Act of God will amount to little more than a finding of no
negligence and so of no liability) from the many obligations in contract
which may be unqualified and not dependent on due care. Foremost
amongst these in the construction field will be the unqualified obligation
of the contractor to bring the works to completion. 90 There would appear
to be no case in which a contractor has been released from this obligation
unless the consequences of the event in question are such as to avoid the
contract by frustration. 91
4·266 In any event, to a successful plea the event must be due exclusively to
natural causes of so extraordinary a nature that it could not have been
foreseen and its results not avoided by any action which could reasonably
have been taken by the person setting up the plea. Where the doctrine
does apply, as in cases of strict liability in tort, examples which might qual-
ify in the United Kingdom could include earthquake, or floods from the
breaching of sea defences due to a wholly exceptional combination of
wind and tide. Exceptional rainfall has been so held in the United King-
dom,92 but the qualification as to the impossibility of avoiding the results is
important, and Mocatta J. held that a fall of rain at Barnsley of at least 2.7
inches in one hour, which on the meteorological evidence was likely to
occur at any one place in the United Kingdom once in 800 years, was not
an Act of God absolving an occupier from his obligations under the Occu-
pier's Liability Acts or a contractor from an express obligation to protect
the works during construction. 93 High winds have also been rejected as
Acts of God when put forward as a defence by contractors in Canada in
construction cases (in which, however, the distinction between a liability
based upon contractual negligence and on a strict duty tended to be over-
looked).94 Thus in a case where newly constructed roads had collapsed in
the face of exceptional rainfall, damaging adjoining property, Atkin J.
said:
~~ Ryde v. Bushell [1967] E.A. 817.
""R. v. Commissioners of Sewers for Essex. see supra.
901 See supra, Section 1(1).
"' See supra, Section 3(3).
ii Nichols v. Marsland (1876) 2 Ex. D. 1, C.A., but see Greenock Corporation v. Caledonian
Railway [1917] A.C. 556 and Sedleigh-Denfield v. O'Callaghan [1940] A.C. 880..
•·' AMF (International) Ltd. v. Magnet Bowling [1968] 1 W.L.R. 1028 (ex rel the editor, the
evidence not being reported on this point). \;'.
"'Kenlee Lands Inc. v. Northumberland Construction Ltd. (1973) 36 D.L.R. (3d) 270;
McQuillan v. Ryan (1922) 64 D.L.R. 482.
SECT. 3] DISCHARGE FROM FURTHER PERFORMANCE 657
"I ~o not think that in a case of this kind it is strictly correct to introduce the
~oti.o_ns ~onnoted by t~e phrase 'Act of God'. The term is appropriate where
hab1ht~ 1s sought to be imposed upon a person who, by reason of his calling or
otherwise, such as that of a common carrier, has assumed an absolute liability
to see that the plaintiffs' property is left free from harm. Such absolute liabil-
ity ~ay be subject .to a"? exception in respect of damage caused by Act of God,
which would ord1nanly be defined as such an operation of the forces of
natu~e as r~asonable foresight .an~ .ability could not foresee or reasonably
pro".1de ag~1nst. But where the habihty sought to be imposed arises only from
neghgence 1t becomes unnecessary to consider whether all the requirements
of the above definition have been fulfilled. All that is necessary for the
defendants is to negative the plaintiffs' allegation that there has been an
absence of reasonable care and skill on the part of the defendants. "9s
(b) Force majeure
The term force majeure does not have any precise meaning, nor does it 4·267
give rise to any special legal doctrine or consequences in English law, al-
though it is a well-known expression and a considerably more developed
concept in French and other civil law systems. Its only significance in
English law will depend on its use in an express contractual term, and its
intended effect and operation must be found within the express or implied
terms or the matrix of the particular contract. Thus the use of the term
"subject to force majeure conditions" in a clause contemplating possible
import restrictions was held to prevent a contract coming into being on
grounds of uncertainty.96
Potentially the expression covers a wider class of events than Act of
God, since it will include man-made events or interventions, such as
strikes or wars or legislation. The one minimum and common factor is that
the event in question must be beyond the control of the party relying on it,
and the contractual purpose of an express clause may be variously to
release or excuse a party from performance of one or more obligations in
the contract either temporarily or permanently, or even to avoid the con-
tract completely. Whether an ev~nt qualifies for the intended purpose can
only be ascertained in the light of the general background and terms of the
contract using the expression, so that differing decisions may well be
reached on different contracts. 97 The expression does not appear to have
received judicial interpretation in a construction contract in England.
ILLUSTRATIONS
(1) The liquidated damages clause in a ship-building contract excepted 4-268
delays caused by force majeure and/or strikes at the yard or machinery
workshops or steelworks supplying the ship, or at sub-contractors'
.:; Baldwin's Ltd. v. Halifax Corporation (1916) 85 L.J.K.B. 1769, at p. 1774.
96
British Electrical Industries Ltd. v. Patley Pressings [1953] 1 W.L.R. 280.
1
" For a seminal review of the cases up to that date, see McCardie J. 's judgment in Lebeaupin
v. Crispin [1920] 2 K.B. 714.
 658 PERFORMANCE
~.
[ ~P. 4 SECT. 3]
works. Held, by Bailhache J., that the universal coal strike of 1912, and (sem-
ble) a breakdown of machinery, but not bad weather, constituted force
majeure: Matsoukis v. Priestman (1915). 98
(2) The appellants were liable to penalty for failing to supj:,ly electricity, but
subject to inevitable accident or force majeure. Two of the appellants' work-
men had refused to do the work necessary to maintain the supply. The appel-
lants contended that had they dismissed the men it would probably have
resulted in all their employees terminating their engagements. Held, by the
Court of Appeal, force majeure applied only to physical or material con-
straint, and although it might apply to strikes actually proceeding, it did not
apply to fear; however reasonable, of the consequences of threatened action.
Per Bankes L.J.: "The appellants yielded to a threat, and so failed to persist in
an attempt to do the work which might have been successful": Hackney
Borough Council v. Dore (1922). 99
4·269 It has been suggested that the term "force majeure clause" is sometimes
used in a wider sense to denote any contractual provision excusing per-
formance, whether or not the words force majeure are actually used in the
clause, but instead some such expression as "causes beyond our control" .1
These latter words are occasionally found in extension of time clauses in
construction contracts. It is submitted, that in such a case they could not be
construed so as to cover delays or defaults by nominated or other sub-
contractors. 2 However, in a contract expressly allowing monetary compen-
sation to the contractor for "exceptional dislocation and delay due to
alterations, suspensions or any other cause beyond the contractor's con-
trol", the House of Lords' interpretation permitted a main contractor to
obtain compensation for delay to construction caused by the necessity to
replace defective materials installed by a nominated sub-contractor (for
stated reasons, incidentally, which would have applied equally to dom-
estic sub-contractors or even employees of the main contractor, it would
seem) and where the sub-contractor had avowedly been contractually
liable for the same loss to the main contractor.3
In the English RIBA/JCT contracts the force majeure expression has
been used for many years as a ground for extension of time,4 and also,
however anomalously, for an exclusively contractor's right to determine
the contract (with attendant remedies as for breach of contract by the
owner) following a stipulated period of suspension of susbstantially the
whole of the works.5 This has been confirmed as a contractor's entitlement
not to be found anywhere else in the world, whatever the individual or
,M[1915] 1 K.B. 681.
w [1922] 1 K.B. 431.
I See Chitty on Contracts (26th ed.), para. 1036.
1 See the severe strictures on the policy of the RIB A/JCT express Clause 23(g) (now Clause
25.4.7) granting an extension of time on that ground in Westminster Corporation v.Jarvis
[1970] 1 W.LR 637, quoted and discussed in C.C.P.P.• paras. 21-06 to 21-07.
' Scott Lithgow Ltd. v. Secretary of State for Defence (1989) 45 BLR 6, analysed and doubted
by the editor in "Beyond the Contractor's Control" (1990) 4 Const. L.J.
4 See Clauses 23(a) and 25.4.1 of the pre- and post-1980 contracts respectively.
I Clauses 26(l){c)(i) and 28.3.1 of the pre- and post-1980 contracts respective)y.
DISCHARGE FROM T,~...,THER PERFORMANCE 659
collective bargaining power of contractors in other countries, by Professor
Lorenz in the International Encyclopaedia of Comparative Law.6 What
the courts will make of this latter provision, particularly in the case of
strikes, is not clear, since strikes and combinations of workmen are listed
as grounds for extension, in addition to the separate ground of force
majeure, in the extension of time clause, but not in the RIBA/JCT deter-
mination clause.
(5) Death or fflness of a Party
Where a contract is not "personal" in character, the death of a party 4·270
merely has the effect of transferring its benefit and burden to the execu-
tors or administrators,7 while the illness of a party in such a case will afford
no excuse, since it is always open to the party concerned to arrange for
vicarious performance of his liabilities.
While it has somewhat readily been assumed in the past that construc-
tion contracts are not personal in character in this special sense, it is sug-
gested8 that this is in fact not invariably so, and that in certain building and
engineering contracts, at any rate, the personality of the contractor may
be of vital importance to the owner. In the case of contracts of employ-
ment of individual architects and engineers their personality will normally
be essential to the contract, it is submitted, but this may be less certain in
the case of a partnership.9
In personal contracts the effect of the death of the party whose person-
ality is involved 10 will be to frustrate the contract from the date of death so
that, while itis null and void as to the future, any rights accrued due at ~he
date of death, whether to payment or otherwise would enure to or be
enforceable against the estate prior to the Frustrated Contracts Act
1943. 11 The same result will come about in the case of illness or disability of
sufficient gravity to prevent further performance of the contract.
ILLUSTRATIONS
(1) An apprenticeship deed contained a covenant, absolute in terms, that 4-271
the apprentice would remain with and serve his master for a certain term.
Held, by the Court of Common Pleas (Montague Smith and Brett JJ.), that
the ~ove11:ant was subje~ Jo an implied condition that the apprentice should
continue ma state of ability to perform his contract, and that permanent ill-
6
Vol. VIII, Chap. 8, para. 8-23, confirming a view expressed by the editor.
1
See Chap. 14, Section 8(2) "Assignment",post, and see Section 1(1) of the Law Reform
(Miscellaneous Provisions) Act 1934.
s See Chap. 14, "Assignment",post, Section 2(4).
9
See post, Chap. 16, Section 8.
JO But not the other party; see Philipps v. Alhambra Palace Co. [1901] 1 K.B. 59, post,
Chap. 14, Section 2(4).
11
See Stubbs v. Holywell Ry. (1867) LR 2 Ex. 311, post, Chap 14, Section 8.
 660 PERFORMANCE [CHAP. 4
ness, arising after the making of the deed, was an answer to an action by the
master for breach of the covenant: Boast v. Firth (1868). 12
(2) The plaintiff contracted with the defendant ( as his wife's agent) that she
should play at a concert on a specified day. On the day she was too ill to per-
form, and the plaintiff brought an action against the husband for damages for
breach of the contract. Held, by the Court of Exchequer (Kelly C.B.), that the
incapacity of the wife consequer.it upon her illness excused him , the contract
not being absolute but conditional, and being one which could not be per-
formed by a deputy: Robinson v. Davison (1871). 13
(3) In an action against the sureties of a cess-collectorin Ireland, on a bond
for the due performance of his duties, the defendants pleaded that, immedi-
ately after the delivery of the warrant to the collector, and before he had
collected any money, he became insane, and that the defendants were thereby
discharged. Held, by the Irish Court of Queen's Bench, on demurrer, that the
plea was good: Grove v. Johnstone (1899). 14
4·272 Whether an illness is sufficiently grave to have this frustrating effect
upon a personal contract is a question of fact which must be decided in the
light of all the circumstances. There does not appear to be any direct auth-
ority on building and engineering contracts. It is submitted that the per-
sonality of a small builder may be vital to a building contract where the
quality of the workmanship is of relatively great importance-as in the
case of a private dwelling-house. On the other hand, very many modern
contracts are made with limited companies where questions of death and
illness cannot arise, and where the effects of a liquidation will be governed
by the relevant insolvency legislation. 15 The personality of the owner will
usually not, it is submitted, be of serious relevance in this context. 15a
Where, however, the contract has been frustrated through death or ill-
ness, the provisions of the Frustrated Act 1943 will presumably now apply,
in particular those permitting recovery back of any moneys paid on the
one hand, while giving credit for expenses incurred and any benefit
received on the other, pursuant to section 1 of the Act, which replaced the
cruder "accrued due" entitlements, and allocation of loss wherever it
might fall, which had resulted from the Chandler v. Webster rules. 16
(6) Illegality
4·273 A building contract, like any other contract, if it is affected by illegality
known to the parties when it is made, is void ab initio and unenforceable.
This will be so whether the contract itself or its proposed performance is
12 L.R. 4 C.P. 1.
1> L.R. 6 Ex. 269.
14 24 L.R.lr. 352.
,, See post, Chap. 16.
1s, But see the views expressed on this in the House of Lords in the Linden Gardens case,post,
Chap. 14, Section 1(2), and the view taken by Staughton L.J. in the Court of Appeal in that
case.
16 See supra, Sub-section (3)( d), para. 4·240.
SECT. 3] DISCHARGE FROM FURTHER PERFORMANCE 661
prohibited or illegal. Thus neither party is ever under any obligation to
perform such a contract, and the question of a party being discharged from
performance does not arise. Where, however, it is the performance or fur-
ther pe:fo~mance of a lawful contract which later becomes illegal, the con-
tract will either be frustrated or at the least the parties will be discharged
fr~m further performance until such performance again becomes lawful.
It 1s therefore convenient to deal with the whole topic of illegality in this
chapter.
A distinction needs to be made, however, between illegality in the for-
m~tio~ of the contract itself and illegality in its performance. In both cases,
this will be a matter for analysis and interpretation. Thus a contract made
~n disobedi~nce to a statute or statutory regulation forbidding it is plainly
illegal and 1t matters not whether the contract is expressly declared to be
void, or whether the making of the contract is merely subject to a penalty:
"Every contract made for or about any matter or thing which is prohibited
and mad~ unlawfu.I by statute is a void contract, though the statute itself does
not mention that it.shall be so, but only inflicts a penalty on the offender,
becaus.e a penalty implies a prohibition though there are no prohibiting
words 10 the statute."11
Equally, a contract involving the commission of a criminal offence at
common law would also be plainly illegal, and the doctrine extends to
contracts for immoral purposes or which are contrary to public policy:
"Nor ca!-1 a~y disti~ction be made between an illegal or immoral purpose; the
rule which is apphcable to the matter is, ex turpi causa non oritur actio and
wheth~r it is an immoral ~r i~legal purpose in which the plaintiff has pa~tici-
pated, it comes equally within the terms of that maxim and the effect is the
same; no cause of action can arise out of one or other." 1B
. However, not every act prohibited or penalised by statute will render 4·274
~legal ~he cbntract under which it was performed. This will require con-
~1de:at:1on of the statute and of its purpose and objectives. "The sole quest-
ion 1s whether the statute means to prohibit the contract." 19 For this
reason, a contract may be enforceable in spite of incidental illegality in the
course of its performance. 20 Equally, an apparently legal contract will be
enforceable where t~e illegality of its purpose is known to only one party. 21
On the other hand, ignorance of a law prohibiting the making of the con-
tract will not avail a person seeking to enforce it, and his intent in such a
?e
case will irrelevant. However, a statute which expressly provides that a
contract is not to be enforceable may not intend to deprive a party who has
conferred a benefit on the other of restitutionary remedies.22
17
Per Holt C.J. in Bartlett v. Vinor (1692) Carth. 251, at p. 252.
1
" Per Pollock C.B. in Pearcev. Brooks (1866) LR. 1 Ex. 213, at p. 217.
19
Cope v. Rowlands (1836) 2 M. & W. 149.
111
St. John Shipping Corporation v. Joseph Rank Ltd. {1957] 1 Q.B. 267.
11
Mason v. Clarke {1955] A.C. 778.
21
Pavey & Matthews v. Paul (1987) 162 C.L.R. 221, High Court of Australia, illustrated infra,
para. 4·282, and see ante, para. 1·268.
 662 PERFORMANCE [CHAP. 4
As already indicated, however, the contract may not be illegal in itself
or tainted with illegality but the performance of it without some further
authority or licence may be illegal. This situation has arisen in regard to
building contracts at times when the carrying out of works in excess of a
certain limit of cost without a licence has been prohibited by regulations.
Here, unless the parties intended at the time the contract was made to do
work without a licence orin excess of the licensed amount without obtain-
ing a further licence, the contract itself would not be illegal, and the value
of work done within the limit prescribed by the regulations or, where there
was an actual licence, within the licensed amount, is recoverable. 23
Another example of this kind of case arises from the by-law control
(now effected by the Building Regulations in nearly all instances), exer-
cised in the interest of public safety and health, which governs nearly all
building operations in the United Kingdom. 24 By-laws or building regu-
lations in the United Kingdom require the submission of all plans of pro-
posed work for acceptance or rejection by the by-law author~ty, prior to
work commencing, and prohibit the carrying out of work without such
approval, or, in more general terms, which does not comply with t~e .by-
laws. Illegality of this latter kind might be visible on the face of the ong1nal
contract-as in the comparatively rare cases where the contract drawings
or specification plainly infringe the provisions of an applicable by-law-or
may only supervene at a later stage when detailed drawings are issued or
the purpose of the work becomes clear,25 or because failure to serve
notices and secure approval occurs at a later stage, or simply because the
work in the event fails to perform its required function (a generalised
requirement in most of the individual regulations). . possession as a result of an illegal hiring agreement,32 since the plaintiff
4-275 In spite of the fact that it is the invariable custom for architects and
engineers to assume inter partes the responsibility for seeing that at least
the original design of the work complies with the by-laws,26 the modern
standard forms contain express undertakings by the contractor to do
everything necessary to secure compliance with the by-laws,27 includin~, if
necessary, to vary the work. 28 However, in a number of respec~s the build-
er may of necessity be in closer touch with the local authonty than the
architect during the progress of construction when day-to-day by-law
problems may arise, and it may be inferred that it is these situations at
which the contractual provisions are primarily targeted.
It is submitted that, except in the case of a deliberate intention by both
parties to breach the by-laws and deceive the by-law aut~orities, or to
carry out work without obtaining by-law approval, the Public Health Acts
z.1 Dennis& Co. Ltd. v. Munn [1949} 2 K.B. 231;Frank W. Cliffordv. Garth [1956} 1 W.L.R.
570.
2• For the scheme of the English by-laws, see ante, Chap. 2, Section 6(2), paras. 2·146 et seq.,
and supra, Section 1(2)(a)(vi), para. 4·115. . wright 195 F. (2d) 80 (C.A. Ninth Circuit, 1952).
i., Cf Townsends Ltd. v. Cinema News [1959] 1 W.L.R. 119, mfra.
io See the cases illustrated infra. See also ante, Chap. 1, paras. 1·206-1 ·207.
27 See supra, Section 1(2)(a)(vi), para. 4·115.
l!I See the RIBA forms, Clause 4; ICE conditions, Clause 26.
SECT. 3] DISCHARGE FROM FURTHER PERFORMANCE 663
in England do not, in accordance with the principles stated above, require
to be interpreted so as to invalidate and render unenforceable construc-
tion contracts which may incidentally involve unintended breaches of the
by-laws, and there would appear to be no authority which has so held.
Lastly,.the.furth~r performance of a contract may become illegal by
supervernng 11legahty, as when emergency legislation is brought into
force. The effect of such supervening illegality will in general be to frus-
trate the contract, unless it is an event for which provision has been made
in the contract.29
Where a contract is void for illegality, or after the time when further 4-276
performance of a valid contract becomes illegal, nothing done under it can
found any rights; instalments paid under it are irrecoverable and work
done under it can found no claim for payment. 30 In general, the test as to
w~ether a demand connected with an illegal transaction is capable of
bemg enforced is whethe~ the plaintiff requires to set up and rely upon
th.at transaction in order to establish his case.
.This rule follows from the principle laid down by Fry L.J. in Kearley v.
Thomson 31 :
"As a general rule where the plaintiff cannot get at the money which he seeks
to recover without showing the illegal contract, he cannot succeed. In such a
case the usual rule is potior est condition defendentis."
Thus, where the plaintiff's goods are being detained by the defendant
without any claim of right, the plaintiff's right to the goods will be
enforced notwithstanding that they originally came into the defendant's
need only allege his ownership and the wrongful detention in order to
found his claim. Again, if fraud by the defendant is present it may not be
nece.ssary to prove the illegal contract, and a plaintiff, after balancing the
graVIty of the defendant's wrongdoing against the plaintiff's own deliber-
ate but minor illegality, has been held entitled to succeed.33
: It is no ground for resisting the application of the general rule that the 4·277
d.e.fendant is gaining an unfair advantage. In Holman v. Johnson34 Lord
Mansfield said:
"The objection that a contract is immoral or illegal as between plaintiff and
defendant sounds at all times very ill in the mouth of the defendant. It is not
for his sake, however, that the objection is ever allowed; but it is founded in
general principl~s o.f policy which the defendant has the advantage of, con-
trary to the real Justice, as between him and the plaintiff by accident, if I may
9
< Cf Metropolitan Water Board v. Dick, Kerr & Co. Ltd. [1918} A.C. 119, illustrated supra,
para. 4·253.
l<lFo~ the same position in U.S. jurisdictions, see Comet Theatre Enterprises Inc. v. Cart-
)I (1890) 24 Q.B.D. 742.
32
Bowmakers Ltd. v. Barnet Instruments Ltd. [1945] 1 K.B. 65, C.A.
33
Saunders v. Edwards [1987} 1 W.L.R. 1116.
34
(1775) 1 Cowp. 341, at p. 343.
 664 PERFORMANCE [CHAP.4
so say. The principle of public policy is this: Ex dolo malo non oritur actio. No
court will lend its aid to a man who founds his cause of action upon an
immoral or illegal act."
Thus a builder cannot recover the value of work done in excess of the
limit permitted by licences issued under Defence Regulations.35 A
"licence" will generally be construed as a written licence, but the question
whether a licence granted retrospectively is valid is a matter of the con-
struction of the particular regulation, 36 as is the question of circumstances
in which work done in excess of the amount of the licence can be covered
by the licence-free Iimit.37 It has been held that architects' fees were not
included in the "cost" of the work for the purpose of regulation 56A of the
Defence (General) Regulations 1939,38 and that the person at whose
expense the work is carried out need not be named in the licence.39 Where
legal and illegal work has been done, a building owner who has paid instal-
ments generally under the contract and has not consented to their appro-
priation by the builder to illegal work is entitled to appropriate to the cost
of the legal work instalments paid before any licence had been granted. 40
4-278 In an action to recover damages for refusal by the defendant to accept
goods sold to him, it is immaterial that the plaintiff was induced by a mis-
representation of the defendant to believe that the transaction was lawful,
whereas it was in fact unlawful,41 although if the misrepresentation were
fraudulent, the plaintiff would be entitled to recover damages for fraud. 42
It also appears that if the representation amounts to a warranty which is
not fulfilled, the plaintiff, provided he had not been culpably negligent in
not discovering the illegality, could recover damages for breach of the
warranty which induced him to do the illegal acts. 43-44 Further, lack of
reasonable grounds for belief in the truth of an innocent misrepresen-
tation will now give a right to damages under section 2 of the Misrepresen-
tation Act 1967 in such a case.
If the plaintiff's case discloses that the transaction on which his claim is
based is illegal, the court cannot ignore the illegality even if the point is not
raised by the defendant, 45 but if the transaction is not prima facie illegal,
then the court will not entertain any question of illegality unless it is prop-
erly raised in the pleadings.46
» Brightman & Co. Ltd. v. Tate [1919] 1 K.B. 463; Bostel Bros. v. Hurlock [1949] 1 K.B. 74.
~ See Jackson Stansfield & Sons v. Butterworth [1948] 2 All E.R. 558; Howell v. Falmouth
Boat Co. [1951] A.C. 837.
i1 J. Dennis & Co. Ltd. v. Munn [1949] 2 K.B. 332; Muirv. James [1953] 1 Q.B. 454; Brewer St.
Investments Ltd. v. Barclays Woollen Co. Ltd. [1954] 1 Q.B. 428.
3s Young v. Buckles [1952] 1 K.B. 220.
39 Woolfe v. Wexler [1951] 2 K.B. 154.
40 A. Smith & Son (Bognor Regis) Ltd. v. Walker [1952] 2 Q.B. 319.
41 Re Mahmoud and Ispahani [1921] 2 K.B. 716.
42 Cf Saunders v. Edwards [1957] l"W.L.R. 116, C.A.
4JM Strongman (1945) Ltd. v. Sincock [1955] 2 Q.B. 525, infra. ·-;.
4S Gedge v. Royal Exchange Assurance Corporation (1900] 2 Q.B. 214. ' " [1949] 1 K.B. 74.
46 North Western Salt Co. Ltd. v. Electrolytic Alkali Co. Ltd. [1914] A.C. 461.
SECT. 3] DISCHARGE FROM FURTHER PERFORMANCE 665
ILLUSTRATIONS
(1) The Act 17 Geo. 3, c. 42 required bricks for sale to be of certain dimen- 4-279
sions, and imposed a penalty for the breach of that regulation to protect the
buyer against the fraud of the seller. Held, by Ellenborough C.J., that the
seller could not recover the value of bricks sold under the statutory size: Law
v. Hodson (1809).47
(2) A tenant of a house emPtoyed S. to rebuild a party wall, without refer-
ence to the Fires Prevention (Metropolis) Act 1774. Held, by Gibbs C.J., that
the builder was entitled to payment without observing the requisites pre-
scribed by the Act for obtaining payment: Stuart v. Smith (1816).48
(3) It is unlawful to lease a building in a manner forbidden by a Building
Act: Gas Light and Coke Co. v. Turner (1840). 49
(4) A contract to erect a wooden structure contravened the provisions of
the Metropolitan Building Act 1855. Held, by Erle C.J., the contract was
illegal, and the builder could not enforce it: Stevens v. Gourley (1859).50
(5) A contract by a surveyor of highways to perform work and supply
materials was in violation of the Highway Act 1835, s. 46. Held, by Blackburn,
Mellor and Archibald JJ ., that the contract was unlawful, and the justices had
no power to allow payment under it: Barton v. Piggott (1874).51
(6) The plaintiffs contracted to do certain work for the defendants. A 4-280
licence was necessary under the Defence of the Realm Regulations, and was
obtained for work not exceeding£1,350. The plaintiffs did work of the value
of £2,671 and had been paid £1,500. Held, that they could not recover the
balance: Brightman & Co. Ltd. v. Tate (1919). 52
(7) B. did work for H. to an amount of £98 in excess of the limit of cost
prescribed by two building licences. Held, by the Court of Appeal, that work
done in excess of the cost prescribed by a building licence issued under the
relevant defence regulation was work done without a licence and thereby
prima facie unlawful. As B. could not establish any of the defences set out in
the regulation which would entitle him to be acquitted, he could not recover
the amount of £98. Held, further, that if the cost of work for which a licence is
issued includes the cost of providing and fixing a given article, it is not per-
missible to disregard the cost of the article: Bostel Bros. v. Hurlock (1949).53
(8) Before any licence had been granted S. carried out, under a contract
with W. providing fdr demolition and construction, certain demolition work
for which a licence was required under defence regulations, and W. paid two
instalments. The receipts but not the payments referred in terms to the
unlicensed work. Later licences for construction work were granted. In an
action for a balance due in respect of both legal and illegal work, held, by the
Court of Appeal, that W. had paid the first two instalments generally under
the contract and had not consented to their appropriation to the illegal work,
and he was therefore entitled to appropriate them to the lawful work done
under the contract: A. Smith & Son (Bognar Regis) Ltd. v. Walker (1952).54
47
11 East 300.
4 s7Taunt.158.
'
9
6 Bing.N.C. 324, Ex.Ch.
so7 C.B.(N.S.) 99.
SI L.R. 10 Q.B. 86.
si (1919] 1 K.B. 463.
5
' [1952] 2 Q.B. 319.
 666 PERFORMANCE [CHAP.4
(9) The defendant, an architect-owner, contracted with the plaintiff build-
ers for work at his premises and promised orally that he would obtain all the
licences necessary under defence regulations. He did not do so and work con-
siderably in excess of the licensed amount was carried out. Held, by the Court
of Appeal, that (i) the builders could not recover the balance under the con-
tract, since the doing of the relevant work was illegal; (ii) the architect's prom-
ise amounted to a collateral warranty that he would obtain a supplementary
licence or stop the work, if he could not obtain it; (iii) in the absence of culp-
able negligence on the part of the builders in relation to a supp.lem~ntary
licence a civil action for damages for breach of warranty would lie; (1v) the
builders had not been culpably negligent in relying upon the architect to get a
supplementary licence, since it was admitted to be the universal practice for
the architect to obtain the necessary licences: Strongman (1945) Ltd. v.
Sincock (1955). 55
4·281 (10) By-laws for bad the construction of a water-closet entered from a room
used for human habitation, unless used exclusively with a bedroom or
dressing-room, and also required the service of notices with reference to such
work before its commencement. A builder constructed two bathrooms con-
taining toilets in accordance with the design of an architect. At the time of the
contract the plans showed the adjoining rooms as bedrooms or dressing-
rooms, and not till the work was far advanced was the builder in a position to
know that the work would in fact infringe the by-law. The architect had
informed the builder in correspondence that he (the architect) would be
responsible for serving all necessary notices ..% The contract was in the then
standard RIBA form, by Clause 3 of which the builder expressly undertook to
comply with all by-laws, and before making any variations necessitated
thereby to apply to the architect for instructions. After the work was finished
the architect served a notice out of time on the local authority, who then con-
demned the work in the bathrooms, but allowed it to remain unaltered on the
undertaking of the building owner to cure the defects, when his wife gave up
occupation, by erecting a partition within the bathroom. Held, by the Court of
Appeal, (1) that the contract was on its face a lawful one, and that as the local
authority had allowed the works to remain it could not be said that, at the date
of their compromise with the owner, the work was illegal work, and conse-
quently the builder could recover the price of the work; but (2) that the owner
was entitled to recover from the builder, as damages for breach of Clause 3,
the cost of rebuilding the bathroom so as to conform with the by-laws not-
withstanding the practice in building operations for the architect to see that
work complied with the by-laws57: Townsends Ltd. v. Cinema News (1959). 5s
(11) An error in the contract design of a building meant that it contravened
the by-laws. The building contract in terms required compliance with the by-
laws. The building collapsed during construction, and the owners sued the
builders and their engineering consultant for breach of their contracts. Held,
by the Ontario Court of Appeal, that since the work could have been altered
under the tenns of the contract to comply with the by-law, and since there was
no intention to violate the by-law and the illegality was unkn.own to the o:,vn-
ers, the contracts were not illegal. Held, also, bondsmen with the drawings
annexed to their bond were also liable: One Hundred Simcoe Street v. Frank
Burger Contractors Ltd. (1968). 59
lS [1955] 2 Q.B. 525.
56 This fact ex rel D. H. Gardam Q.C.
s7 For the finding as between builder and architect, see ante, paras.1·283 and 2·146, and the
tenth edition, pp. 65-66. For the practice, see supra, Section 1(2), and ante, Chap. 2, para.
2·146.
58
[1959] 1 W.L.R. 119. See also 20 BLR 118.
l9 [1968] 1 Ont.L.R. 452.
SECT. 3) DISCHARGE FROM FURTHER PERFORMANCE 667
(12) The seller Of a flat fraudulently represented that a roof terrace was part 4-282
of the flat. At the request of the buyer the total price, which included fixtures
and fittings and chattels, was sub-divided so as to place an excessive value on
the chattels, thus saving stamp duty. The defendant seller pleaded that the
transaction had been tainted with illegality by inflating the value of the chat-
tels. Held, by the Court of Appeal, that it was a matter of public policy
whether the quality of illegality was such that the buyers should not be per-
mitted to succeed; the Court would consider the parties' relative conduct and
moral culpability; in the circumstances, including the fact the buyers were not
relying on the contract but on fraudulent misrepresentaton by the seller, the
defence should not succeed so as to allow the defendant the advantage arising
from his fraud: Saunders v. Edwards (1987). 60
(13) Section 45 of the New South Wales Licensing Act 1971 provided that a
contract by a licensed builder for building work "is not enforceable against
the other party to the ~on tract unless the contract is in writing signed by each
of the parties". The contractor completed the house and the owner went into
occupation. When sued for the balance of the price, the owner pleaded that
the contract was a verbal one and so unenforceable. The New South Wales
Court of Appeal held that the cause of action in quantum meruit required
proof of a special contract, and so was defeated by the statute. Held, by the
High Court of Australia (Brennan J. dissenting), that the action in quantwn
meruit did not rest on implied contract, but on restitution or unjust enrich-
ment arising from the acceptance of the benefits accruing from its perform-
ance, in this case when the owner went into occupation. There was no
legislative intention to deprive a builder who had completed work which had
been accepted by the owner of any remuneration for his work: Pavey & Mat-
thews Pty. Ltd. v. Paul (1987).fj1
[Note: This statutory provision was clearly designed to protect purchasers
by rendering the contract unenforceable rather than illegal, like the earlier
English Statute of Frauds (where the courts had evolved a doctrine of part
performance). The case is illustrated with citations from DeaneJ. 's judgment,
ante, Chapter 1, Section 11.]
(7) Limitation of Actions
Although not strictly a form of discharge from the performance of con- 4·283
tractual obligations, it is proposed to discuss at this point the principle of
limitation of actions whereby the right to enforce a legal remedy, such as a
claim for money due under a contract or for damages for its breach, may
be barred by the passage of time.
(a) Summary of current legislation in England
In the case of construction projects, the limitation periods likely to be of 4·284
most relevance are the basic six-year periods relating to causes of action
ar:ising from a simple contract,62 or from negligence in tort,63 and the 12-
year period where the cause of action is a specialty ( that is, a contract or
d9cument under seal). 64
60
[1987] 1 W.L.R. 116.
M 162 C.L.R. 221. Illustrated more fully ante, Chap. I, paras. 1·268-1·269.
62
See Section 5 of the 1980 Act.
63
See Section 2 of the 1980 Act.
61
See Section 8 of the 1980 Act.
 668 PERFORMANCE
These periods commence, using the traditional statutor~ langua~e,
upon "the accrual of the cause of action". This date was farrly readily
ascertainable in the case of negligence in tort while it remained limited to
physical damage to person or property, since in negligence "damage was
the gist of the action", but obviously less readily in cases of contract, where
the cause of action would accrue at the date of breach and not of damage,
or in the newly emerging "economic loss only" areas of liability in negli-
gence under the Hedley Byrne and Anns doctrines,65 where it might be
very difficult to identify the moment of first economic loss on which the
right of action would accrue. In any event, it had been an inevitable conse-
quence of the traditional statutory wording that in cases of contract the
limitation period could be substantially consumed, or even expire, before
a plaintiff either knew of a breach, or had as yet suffered any damage
which might draw attention to it. By contrast in cases of physical damage
in tort while it was theoretically possible, it was in most cases very unlikely
that a 'plaintiff would not be aware of the physical damage on which his
action depended. In both cases, it was a cardinal feature of the law up to
and including the 1939 Act that, in the absence of "fraudulent conceal-
ment" of the cause of action within the terms of the Act, which gave rise to
a special statutory exception, 66 the "discoverability" of the cause of action
was irrelevant.
4-285 The famous pneumoconiosis case of Cartledge v. Jopling, 67 where a per-
sonal injuries plaintiff was held barred in the politically sensitive case of a
steelworkers' occupational illness which he had been unaware he had con-
tracted led to the first breach in this position, although in the case of per-
sonal i~juries only, resulting from the ear~y enactment o~ the Limit~~i~n
Act 1963 which introduced for the first time an alternative test of dis-
coverability". This and later Acts concerned with personal Jnjuries were
consolidated into the 1980 Act.68 Later the Anns liability for .defective
buildings, somewhat ironically soon to be abrogated four years later in
1990 by the House of Lords in Murphy v. Brentwood District Council, 69 led
to the Latent Damage Act 1986, section 1 of which applied a similar
alternative "discoverability" extension of the period to claims for "dam-
ages for negligence" in tort. 70
There are many other causes of action, which will not usually be of rel-
evance in construction projects, where differing limitation rules m~y
apply, for example, actions in conversion for recovery of chattels or their
value, or for the recovery of land, or of trust property, or of loans, or of
money secured by mortgage, or for sums recoverable by statute. All these
and more are separately dealt with in England under f:1e 1980 A~t.
The current position in regard to the causes of action more likely to
arise in construction contracts and projects is, for the above reasons, con-
M See ante, Chap. 1, Section 12(2) and (5).
~~ Now Section 32 of the 1980 Act, see infra, para. (f), paras. 4·294-4·295.
67
[1963] A.C 758.
6!l Sections 11 to 13.
69 [1990} 3 W.L.R. 944.
11, See ante, Chap. 1, Section 12(8).
[CHAP. 4 SECT. 3] DISCHARGE FROM FURTHER PERFORMANCE
669
si~e~ably m~re complicated than was the case at the time of the tenth
edi~on of this book. The most relevant statutory provisions may be sum-
mar1Sed as follows:
(a) in t?e case of personal injuries claims, a shorter initial three-year 4-286
period bas~d as before on the traditional accrual of a cause of action
is ??w,,subJ~ct, where relevant, to a further three-year "discover-
abihty penod dating from first "knowledge", as defined by the
198? Act, of the facts relevant to the cause of action.11 To these
penods a furth~r and additional discretionary extension of time
may be granted if statutory criteria are satisfied72·
(b) ~n the case of negligence in tort, other than claims f~r personal injur-
ies, the Latent Damage Act 198673 now provides a further three-
year "di_scoverability" period dating from first "knowledge" as an
alter~ative to t~,e basic six-yea.r period, but subJect to a special 15-
year long-stop , the latter dating, however, not from accrual of the
cau.se. of action. (that is, first damage) but from any earlier act or
Omiss1on on which the action was based 14.
(c} in the case of claims under the Consum;r Protection Act 1987 (for
perso~al injuri~~ or da~~ge to other property caused by a manufac-
75
tured product ), a similar three-year "discoverability" period is
provided, but subject to a very differently defined 10-year "long
stop"16;
(d) in the case of claims by occupiers under the Defective Premises Act
1972 (applying to dwelling-houses not covered by an "approved
sche~e ), a six-year penod dating from completion of the house
apphes. 77
h may be added that the Latent Damage Act 1986 was undoubtedly 4-287
direct~d to confer a discoverability extension for present or subsequent
o_ccup1ers of prop~rty suing for the repair of defects under the Anns prin-
ciple (see the special new cause of action conferred on later purchasers of
the property ~y section 3 o_f the Act). However, the House of Lords in the
M~rphy case m 19?0 abo~1shed that liability, effectively leaving little on
which ~he Act,_and m partJ.cularsection 3, could operate, save only that, by
a poss1~l~ acc1de~t~l consequence of the wording of section 1, the dis-
cove~a~1hty prov1s1ons would seem to survive for the benefit of the
re:1Ila1rung area o~ tortious negligence where a discoverability extension
nu~ht be o~ p~~ctical value to a plaintiff, namely the Hedley Byrne econ-
onuc loss hability . 78 Unless the Limitation Act 1980 is further amended,
71
72
Act of 1980, Sections 11 to 14.
Act of 1980, Section 33.
73
See ante, Chap. 1, Section 12(8) for the Act in more detail
74
See the 1980 Act as amended Sections 14A and 14B .
: For this Act see ante, Chap. 1: Section 12(9), paras. 1:370--1·371.
Act of 1980 as amended, Section llA.
11
For t~is_A~t .see .ante, Chap. 1, Section 12(7). The Latent Damage Act 1986 does not apply
to this habihty, 1t would seem: see ante, Chap. 1, paras. 1·363 and 1·366--1·367.
73
See ante, Chap. 1, paras. l ·366--l ·367(b).
 [CHAP.4
670 PERFORMANCE
therefore the valuable discoverability extensions remain somewhat
anomalo~sly available to Hedley Byrne plaintiffs, who by defi~ition will be
relying on situations approaching but_ not ~ctually. reaching c?ntract,
whereas parties in full contractual relations ~11 be w1thou! the d1scover-
ability advantages of the Act, unless in a pos1t1on to establish concurrent
liability in contract and tort. 79
Limitation has already been discussed in this book in the context of
Hedley Byrne liability,80 the Anns liability in tort,81 and the liability ~f the
A/E to the owner or to third persons in contract and tort.82 It remams to
consider its application in contract as between owner and contractor.
(b) Accmal of cause of action in contract
4-288 For historical reasons, as stated supra, in England the cause of action in
contract has been held to arise immediately upon breach, so that the
absence of any damage at all, whether immediate or even prospective, is
not relevant to the cause of action itself. There is, therefore, a far greater
possibility of hardship, and of any prescribed period of limitati~n in co~-
tract based on accrual affording a plaintiff inadequate protection of bis
rights, than in the case of negligence in tort, where the limi:ation pe~od
will start to run only on damage being suffered. In~eed, ~~e nght of actJ.~n
can be lost altogether before the plaintiff can with dihgence have d.1s-
covered it.83 For this reason, it is of the highest importance from the point
of view of construction owners that their contracts should be under seal,
thus preserving the right to sue for undiscovered defects in the work for
the longer 12 year specialty period under section 8 of the 1980 Act.
In some other jurisdictions, particularly Canada, the case law ( as
opposed to statute) appears to have moved more strongly than in England
towards discoverability, even in the case of contract.
84
(c) Contractual indemnities
4·289 One important exception in contract, ho:'1ever, .will arise if a contractual
obligation is expressed in terms ofindemmty agrunst th~ co~se~uences of
a particular breach. Here, the essential nature of the obhgat1on is a prom-
ise on the part of the indemnitor that the indemnitee will not suffer dam-
19 For this latter, see Chap. 1, Section 12(10).
so See ante, Chap. 1, Section 12(2)(e), para. 1·307.
s1 See ante, Chap. 1, Section 12(6)(b), para. 1·347.
1r1 See ante, Chap. 2, Section 6(1)(a), (2)(a) and 6(5), paras. 2·083-2-084, 2-110--2·111 and
!ll~;;;he powerful criticism in the analogous case of the "first damage" te~t adopt_ed br
Pirelli case for Anns economic loss cases in England, developed by Wilson J. 1n City of
Kamloops v. Nielson [1984] 2 S.C.R. 2, at p. 40.
84 See the early Ontario Court of Appeal case of McBride v. Vach_e,: [1~51] 2 D.L.R. (2d) 274,
a case of defective work; but see the same court's contrar_y dec1S1on m Schwebe_l v. Telekes
(1967) 61 o.L.R. (2d) 470 (a solicitor's negligence case), 1tselflater overrul':t!:!?Y the same
court in the case of a construction contractor's contractual duty of care (with concurrent
liability in tort) in Consumer Glass Co. v. Foundation Co. (1985) 20 D.L.R. (4th) 126.
SECT. 3] DISCHARGE FROM FURTHER PERFORMANCE 671
age for the reasons or in the circwnstances envisaged by the indemnity,
and will be held indemnified in that event.85 For this reason, the cause of
action on the indemnity will not accrue until the contemplated loss or
damage occurs, which in the case of claims made by third parties against
the indemnitee will be on receipt and payment of the claim or in some
cases "when the fact and extent of the liability has been ascertained or
established".86 The proposition has been succinctly put:
"~ter all, ~n ind~mnity against a breach or an act or an omission can only be
an 1ndemn1ty against the harmful consequences that may flow from it, and I
take the law to be that the indemnity does not give rise to a cause of action
until the consequences are ascertained. "87
Such indemnity provisions may take the form of indemnifying the 4-290
indemnitee against the consequences of a breach of some contractual obli-
gation or group of obligations on the part of the indemnitor, in which
event it might be thought strongly arguable that the provision, although
expressed as an indemnity, represents little more than an affinnation or
repetition of the contractual obligation itself. In other cases, the indem-
nity may relate to a defined class of third party claim or loss, damage or
expense, sometimes failing to distinguish clearly between third party
liabilities or claims against the indemnitee on the one hand and loss or
damage suffered by him directly. Thus in one not untypical case the clause
read: "You will be responsible for and release and indemnify the Board
from and against all liability for loss or damage to property and any other
loss damage costs and expenses which may arise. "&8
Nevertheless, the argument that, in a case where the indemnity is in
respect of a breach of contract, the cause of action arises on the indem-
nitor's earlier breach of his contractual obligation giving rise to the later
damage or third party claim, whereas, where no breach is involved, or
where the indemnity is expressly against third party claims only, the
action does not accrue until damage in the contemplated form has
occurred, has been rejected.89 (In a case where a main c.ontractor had
received a claim for defective work from the owner just before expiry of
the limitation period, and successfully joined the sub-contractors
involved, outside the period, by invoking the various indemnity clauses in
their sub-contracts.)
ss Collinge v. Heywood (1839) 2 A.E. 633. For indemnities generally, see post, Chap. 15.
86
Per Swanwick J. in County & District Properties v. Jenner [1976] 2 Lloyd's Rep. 728, at
p. 734, applying Collinge v. Heywood (1839) 2 A. & E. 633, and not following Bosma v.
the
Larsen [1966} 1 Lloyd's Rep. 22; see also Green & Silley Weir Ltd. v. British Railways
Board (1980) 17 BLR 94,per DillonJ, and Telfair Shipping Corporation v. lnersea Carriers
[1984] 2 Lloyd's Rep. 466,per Neill J.
87
Per Swanwick J. in the Jenner case, supra, at p. 735, illustrated post, para. 18· 107.
M. Green & Silley Weir Ltd. v. British Railways Board, see supra.
s9 1t app~aled to ~cNair J. in the Bosma case, supra, but was expressly rejected by Swanwick
~nd D1llon JJ. m the County & District and Green & Silley Weir cases, see supra, respect-
ively: see also the Telfair case, see supra.
 672 PERFORMANCE [CHAP.4
(d) Contractor and owner
4-291 Apart from the special case of indemnities obligations, therefore, and in
the absence of a concurrent liability for negligence in tort, plaintiffs'
advisers in construction contracts in England will search for the latest
possible date on which it can be argued that the particu_lar breach of con-
tract occurred. This may not always be easy to determine. In the case of
the payment obligations of the owner, the date on which payment is due is
usually fairly precisely defined in formal contracts, and relatively easily
ascertainable even in less formal contracts. In the case of the owner's
other obligations of a continuing nature, the latest date of breach will be
sought; for instance, it seems strongly arguable that where there has been
a late issue of necessary instructions, or a late affording of possession to
the contractor (the commonest bases for contractors' claims), the last
moment of time before the instructions or possession were finally pro-
vided can be relied on.90 Equally, while undermost contracts varying pro-
visions for interim payment on account may be present, the last definitive
obligation win ·usually, it is submitted, arise under the contractual pro-
visions to be found in most contracts for final payment of all sums due.
(e) Defective work
4·292 Previously undiscovered defective work is an obviously important area
of contractual breach where limitation may be of prime importance. It has
already been seen in a different context that the basic obligation of the
contractor, whether express or implied, is a dual one both to carry out and
then to complete the work in accordance with the contractrequirements.91
In the context of defective work, this will mean an obligation both to com-
ply with the contract descriptions while carrying out the work and then to
band over the completed work for occupation by the owner in a state
which, so far as is known at that time, complies with the contract descrip-
tions in all respects. In the many more sophisticated contracts which con-
tain express provision for a subsequent "maintenance" ( or more properly
"defects liability") period after completion, during which the contractor
will be bound to return to remedy any subsequent defects which may be
discovered, the basic completion obligation will usually, under the terms
of the contract, have been discharged on completion and occupation by
the owner and hence be the last date of breach in respect of any
undetected' defective work then present, subject to an additional repair
obligation during the;;_subsequent period, which in most cases will be lim-
ited to such defects 3s, may "appear" (depending on the wording), or
90 See the analogous case of an A/E's breaches of his contract of employment, ante, Chap. 2,
Sections 6(1)(a) and (2)(a), paras. 2·083-2·084, 2·110--2·111 and 2·222. . ,· _·'
91 See supra, Chap. 4, Section 1, paras. 4·003-4·005. See also post, Chap. 5, Sect.tons 1(6) and
2(2).
SECT. 3] DISCHARGE FROM FURTHER PERFORMANCE 673
be notified to the contractor, within or at the end of that period. In those
cases, there will be a separate and later breach, therefore, if the notified
defect is not then repaired. On the other hand, some now rare "mainten-
ance" clauses in an archaic form deriving from repairing covenants in
92
leases may, depending on the wording, have the effect of extending the
basic contractual "completion" to the end ·of the maintenance period
itself, if the repair obligation is not, as in modern defects liability clauses,
dependent on fault or breach of the contractor.
Mention should, perhaps, be made of a theory of "temporary discon- 4-293
formity" advanced in some recent judgments in England,93 to the effect
that where a contractor does defective work during the construction
period no breach of contract will occur, in the absence of express pro-
vision, until purported completion and handover at the end of the period.
For a number of reasons, this view seems not only impractical in a con-
struction context ( as opposed to some other contracts for services) but
wrong in principle (and indeed quite contrary to the law in civil code coun-
tries). However, if correct this would be an additional reason for the limi-
tation period in respect of defective work to run from completion and
handover and not from the earlier date when the defective work, however
unrepairable after covering up, was carried out.
( f) Deliberate concealment
While rejecting concepts of discoverability as relevant to the start of the 4-294
limitation period in contract, Section 26(b) of the English 1939 Act had
the effect of preventing the start of the period if the "facts giving rise to the
cause of the action" were "concealed by the fraud" of the defendant, until
s~ch time as the facts were, or with reasonable diligence could be,
discovered.
It is an inescapable feature of construction contracts that a very large
and important proportion of the work must in any event be covered up,
and so concealed, by the contractor simply in order to comply with his
ordinary contractual obligations, so that special problems of interpret-
ation of this section of the Act were certain to arise when considering
owners' post-completion complaints of previously undiscovered defective
work. Earlier cases under this particular section of the 1939 Act in other
fields had rapidly established that fraudulent intent in the normal sense
was not required, but rather conduct which, depending on the relationship
between the parties, could be regarded as unconscionable.94 These were
followed by Lawton J. in a building case, where a builder faced with a
92
See post, Chap. 5, Section 2(6).
93
Most notably by Lord Diplock in Kaye v. Hosier & Dickinson [1972J 1 W.L.R. 146, at
pp. 164H-166, and particularly the passage at 165G, which may have been taken out of
context and misunderstood: see infra, Chap. 5, Section 2(2). For a recent discussion of the
authorities, see William Tomkinson & Sons Ltd. v, Parochial Council ofSt. Michael (1990)
6 Const. L.J. 319.
94
Beaman v. ARTS [1949] 1 K.B. 550, and see per Lord Evershed M.R. in Kitchen v. Royal
Air Force [1958] 1 W.L.R. 568, at pp. 572-573.
 674 PERFORMANCE [CHAP. 4
shortage had substituted an inferior brick without informing his client. 95 In
a subsequent foundations case where a concrete raft was provided without
any reinforcement at all, the fundamental nature of the breach was con-
sidered to show that it had been knowingly and deliberately committed,
and to raise an inference of fraud. 96 In a still later foundations case, the
knowledge of the defendant developers' builder that the site was filled
ground, and his use of unreinforced foundations in the face of an archi-
tect's contrary advice, was held to constitute sufficiently unconscionable
and reckless conduct to be treated as concealment by fraud. 97 However,
actual knowledge on the part of the builder or his supervisory staff was
probably necessary.98
4-295 While the absence of any adviser to the owner was certainly stressed as a
factor in some of the earlier cases,99 this was strongly discounted by Lord
Denning in the converse case of a construction contract where widespread
failure to provide proper fixings for cladding materials had occurred in
spite of the presence of professional supervision on behalf of the owner. 1
Moreover, on very similar facts the Court of Appeal came to an opposite
conclusion, in what seems a very doubtful case, having regard to the wide-
spread nature of fixing breaches strongly suggestive of a deliberate policy
of non-compliance.2 However, evidence by professi~nal advisers of their
presence on site without detecting apparently major breaches may lend
support to an inference of deliberate concealment.3
The position before the 1980 Act is perhaps best summed up by the
following statement:
"In order to show that he 'concealed' the right of action 'by fraud', it is not
necessary to show that he took active steps to conceal his wrongdoing or
breach of contract. It is sufficient that he knowingly committed it and did not
tell the owner anything about it. He did the wrong or committed the breach
secretly. By saying nothing he keeps it secret. He conceals the right of action.
He conceals it by 'fraud' as those words have been interpreted in the cases.
To this word 'knowingly' there must be added 'recklessly' ... It may be that he
has no dishonest motive; but that does not matter. He has kept a plaintiff out
of knowledge of his right of action: and that is enough ... If the defendant
was, however, quite unaware that he was committing a wrong or a breach of
contract, it would be different. So if by an honest blunder he unwittingly com-
mits ... a breach of contract (by putting in an insufficient foundation) then he
could avail himself of the statute ... "4
95 Clarkv. Woor [1965] 1 W.L.R. 650.
96 Per Edmund Davies L.J. in Applegate v. Moss [1971] 1 Q.B. 405, at p. 414.
91 Kingv. Victor Parsons [1973] 1 W.L.R. 29, C.A.
911 Per Megaw L.J., ibid. at p. 36E.
9~ As, e.g. in Clark v. Woor, see supra.
1 Lewisham London Borough Councilv. Leslie & Co. (1978) 12 BLR 22, at p. 28, and see the
very similar case of Gray v. T. P. Bennett (1987) 43 BLR 63.
2 William Hill v. Bernard Sunley (1982) 22 BLR 1.
J See,per Sir William Stabb Q.C. in Gray v. Bennett (1987) 43 BLR 63, at p. 89j explaining
and distinguishing the William Hill case on this ground. fr
4 Per Lord Denning M.R. in King v. Victor Parsons [1973] 1 W.L.R. 29, at pp. 33-34.
SECT. 3] DISCHARGE FROM FuRTHER PERFORMANCE 675
Section 32 of the 1980 Act is now, however, based (in addition to mis- 4·296
take or fraud) on "deliberate concealment from the plaintiff of any fact
relevant to the plaintiff's right of action5 and significantly provides
expressly that, for this purpose,"deliberate commission ofa breach ofduty
in circumstances in which it is unlikely to be discovered for some time
amounts to deliberate concealment of the facts involved in that breach of
duty". 6
It would seem that, on this language, defective work which from its
nature or extent suggests deliberate scamping by the employees directly
involved will bring the Act into play.oa Section 32(1) also provides
expressly that references to the defendant shall include his agent, which in
the case of a defendant main contractor would include sub-contractors.
Thus, even before the 1980 Act, in one of the earliest of the building cases,
a developer had been held liable for the state of knowledge of his builder.1
Questions may, however, be raised by the emphasis in section 32(2) of
the Acton "deliberate commission of a breach of duty", in the not uncom-
mon context of a contractor's supervisory staff failing to order correction
of defective work ( of employees or sub-contractors, for example) of which
the~ may later become aware. It is submitted that if the evidence supports
the mference of subsequent knowledge on their part, failure to order cor-
rection of the work would itself constitute a "deliberate breach of duty"
within section 32(2) (that is, by accepting and conniving at defective work
when in ultimate control of it, or alternatively as breach of an express or
implied term to provide adequate supervision).
SECTION 4. SPECIFIC PERFORMANCE
(1) Generally
Specific performance is in essence an order by the court requiring a party 4-297
to carry out a legally binding contractual obligation. The remedy of specif-
ic performance is only permitted by the courts in the comparatively rare
cases where damages will not be an adequate recompense to a wi:onged
party. The source of this remedy, and the vast majority of the examples of
its application, are to be found in the field of sale of land, where a vendor in
breach of his obligations can be compelled to convey the land to the pur-
chaser. The ultimate sanction for the remedy is committal for contempt.
There are very few instances of the remedy being granted to a party in a
situation similar to a building or engineering contract,8 aS opposed to
5
Section 32(1)(b).
6 Section 32(2).
6
' For 3: :ollection of !ecent reported cases in England showing defects too widespread and
~~~etlt1ve to be accidental see "Defective Work: The New Flavours", (1990) 6 Const. LJ.
1
King v. Victor Parsons, supra.
8
See the more likely converse case of removal of contractors from the site, post, Chap. 12,
paras. 12·084 et seq., and infra, Subsection (2).
 676 PERFORMANCE [CHAP. 4
building leases or other situations where 1;he claim ~o posses~ion of the
land is that of the person contractually obliged to bmld upon 1t.
This is because the courts do not normally grant decrees of specific per-
formance in the case of contracts that involve personal services, trust, or
skill, or in cases where it would not be able adequately to supervise per-
formance, if it should order it: "Now, it is settled that, as a general rule, the
court will not compel the building of houses. "9 Nor will the court compel
the building of ships. 10
ILLUSTRATIONS
4·298 (1) A railway company agreed 0at a fl~ of co~tractors sho~d work the
line and keep the engines and rolling stock 10 repair for a certain ren:unera-
tion. Held, by Knight-Bruce and Turner L.JJ., that no decree of speC1:fic per-
formance of the agreement could be granted, nor its breach be restrained by
injunction:Johnson v. Shrewsbury and Binningham Railway (1853). 11
(2) W. agreed to construct a railway in accordance with a specification to be
prepared by the company's engineer, and to gi~e a bon~ for due p~rformance.
W. refused to carry out the agreement. The railway claimed s~ec1fic perform-
ance of the contract and execution of the bond. Held, by Knight-Bruce and
Turner L.JJ., that the contract was of such a nature that the court could not,
consistently with public convenience, decree specific performance, and that
the execution of the bond would be a piecemeal performance of the contract
which the court would not decree: South Wales Railway v. Wythes (1854). 12
(3) The directors of a railway company entered into a written agreement to
give the plaintiff "a contract for the construction of ~he ~ine for ~e sum ?f
£55,000, subject to a specification of the works on the hne 1n.cluded 1n the said
sum, to be agreed upon between the plaintiff and the en&m;eer of,!he com-
pany, in case of dispute the matt~r to be r~f~rred to an arbitrator . On the
faith of this the plaintiff entered mto subs1d1ary contracts for the supply ~f
materials, etc. The company, however, delayed the commencement of th~lf
works and then placed the contract elsewhere. The plaintiff sued for specific
performance of the company's agreement to employ him as contractor. Held,
by Malins V.-C., on demurrer, that the agreement was of ~uch a nature t.hat
specific performance of it could not be decreed: Greenhill v. Isle of Wight
Railway (1871 ). 13
4-299 ( 4) A preliminary building agreement was entered into, whereby S. agreed
to let plots to W., who was to build on them. S. was to advance 75 per cent. of
the actual cost of each house as soon as the houses were roofed m. Hefd, by
Bacon V.-C., that specific performance could not be decreed: Wood v. S1lcock
(1884)."
(5) By an agreement S. provided the land, and a c~mpany ~ontracted. to
complete a road thereon to the satisfaction of the pubhc authonty according
9 Per Sir J. Mellish L.J. in Wilkinson v. Clements (1872) L.R. 8. Ch. 96.
w Merchants' Trading Co. v. Banner (1871) L.R. 12 Eq. 18.
11 22 L.J.Ch. 921.
1224 L.J.Ch. 87.
1i 23 L.T. 885.
14 50 L.T. 251.
SECT. 4] SPECIFIC PERFORMANCE 677
to a plan and specification, and to do everything necessary in order that the
road might be declared by such authority a public highway. The road was
made substantially according to the plan and specification, but the authority
refused to declare it a public highway or to take it over, on the ground that
they were not entitled to do so until it was flagged and lighted. The specifi-
cation provided for gravel paths, and did not provide for lighting at all. S.
brought an action claiming specific performance of the agreement, and dam-
ages. Held, by North J., that the court could not decree specific performance
of the agreement, the specification being what it was, and, as no damage was
proved by S., the action was dismissed with costs: Saunders v. Brading Har-
bour Improvement Co. (1885).'5
In the case, however, of Moseley v. Virgin, 16 Loughborough L.C. said: 4-300
"If the transaction and agreement is in its nature defined, perhaps there
would not be much difficulty to decree specific performance; but if it is loose
and undefined, and it is not expressed distinctly what the building is, so that
the court could describe it as a subject for the report of the master, the juris-
diction could not apply."
In Brace v. Wehnert,' 1 Romilly M.R. seemed to be of the like opinion,
although in that case no decree was granted because the court had no
means of ascertaining the plan according to which the house was agreed to
be built. However, in the case of Hepburn v. Leather,18 specific perform-
ance of a contract to build a wall was decreed, and in Jeune v. Queen's
Cross Properties, the restoration of a collapsed stone balcony in discharge
of a landlord's repairing covenant was specifically enforced. 19
But an exception to the rule has undoubtedly been long recognised in
those cases (similar to building leases) where the plaintiff is not in pos-
sessi.on or control of the land upon which the defendant's contractual obli-
gation to build arises. In the case of contracts for building and engineering
work upon a building owner's own property, the owner can, upon a breach
of the contract, himself complete, using another contractor, and recover
damages: whereas if the owner has parted with possession of the land, it
may be impossible for him to do the work himself, or be compensated in
damages, or for the damages to be ascertained, so that special perform-
ance may be the only effective remedy. 20
The modem state of the law was summarised in 1966 in Snell's Princi- 4-301
pals of Equity,21 and subsequently approved in the Court of Appeal in
1978" as follows:
" [1885] W.N. 36.
16
(1796) 3 Ves. 184.
17 (1856) 25 Beav. 348; 27 L.J.Ch. 572.
is (1884) 50 L.T. 660.
19 [1974] 1 Ch. 97.
:m Wolverhampton Corporation v. Emmons [1901] 1 Q.B. 515, see infra; Carpenters Estates
Ltd. v. Davies [1940] Ch. 160, at p. 162, see infra.
21
(26th ed., 1966), p. 647.
u Per Robert GoffL.J. in Price v. Strange [1978] 1 Ch. 337, at p. 359. See also,per Pennycuick
V.-C. in Jeune v. Queen's Cross Properties [1974] 1 Ch. 97, at pp. 99-100.
 PERFORMANCE [CHAP. 4
678
"The rule has now been settled that the court will order specific perfonnance
of an.agreement to build if-
(i) the building work is sufficiently defined by the contract, for examp1e,
by reference to detailed plans;
(ii) the plaintiff has a substantial interest in the performance o! the con-
tract of such a nature that damages would not compensate bun for the
defendant's failure to build; and
(iii) the defendant is in possession of the land so that t~e ~efendant can,~
not employ another person to build without comm1tt1ng a trespass.
ILLUSTRATIONS
(1) An agreement was entered into between the railway company and G.,
4·302
part of whose land had been taken by the company, whereby_G. underoak to
withdraw a petition to Parliament against the company's ~di, and t e co~-
pany undertook to construct, on G .'s land, a siding of spectfi~d length for h~~
use. Held, by Bacon V.-C., that this agree~ent could be specifically enforce ·
Greene v. West Cheshire Railway (1871).
(2) An urban sanitary authority, in pursuance of a scheme of street
im rovement, sold to E. land abutting on a street, and. E. agr~ed to. erect
buhdings thereon within a certain time. Subsequently, tn consideration of
further time, E. bound himself to erect certain special ?uildings. Held, by the
Court of Appeal that this case came within the exceptlon to the gen~ral rule,
and specific perf~rmance of the building contract would be decreed. Wolver-
24
hampton Corporation v. Emmons (1901)-
(3) D. sold certain land to C. for building developmen~ and covenantt:d t~
make certain roads and lay certain sewers, drains and mains on land r~t~n~
by him which he failed to do. It was argued that, as D. had not o ta1n.
ossess'ion of the land retained by virtu~ of the contract of sale, but was t~
~osssession of that land under his own title, he could not be ordered to p;r
form his obligation. Held, by Farwell J., that in the circumstances an order or
specific performance constituted the only adequate remedy, and should be
25
granted: Carpenters Estates Ltd. v. Davies (1940).
4-303 As stated, where specific performance is desired the contract must be
sufficiently clear as to what is to be performed.1:he mo~em ~rend appears
to be less meticulous about this where what 1s requrred 1s reasonably
apparent.
ILLUSTRATIONS
(1) The defendant covenanted in a lease to pull down and rebuil,d premises
in Ireland, and to do for that purpose such work as the landlord s surveyor
23 L.R. 13 Eq. 44.
2• [1901] 1 Q.B. 515, C.A. . 97
;s [1940) Ch. 160. See also Jeune v. Queen's Cross Properties [1974] 1 Ch. ·
SECT. 4] SPECIFIC PERFORMANCE 679
should direct and approve to the value of £600. This covenant was not per-
formed, and the plaintiff sought a decree of specific performance. Held, by
Meredith M.R., that the case was distinguishable from Wolverhampton
Corporation v. Emmons, supra, because here there were no agreed plans, and
that the covenant was not sufficiently specific for the decree to be granted:
Rushbrook v. O'Sullivan (1908). 26
(2) P. agreed in writing with 0. that he would build certain houses oncer-
tain land in consideration of 0. taking a transfer of the unexpired term of a
lease thereof at a certain rent. It was further agreed that O.'s wishes should be
consulted in building, and that a formal contract should be drawn up by a
named solicitor. This contract was never drawn up, but possession was given
and P. altered the buildings at O.'s request. Held, by the Privy Council, that
specific performance could be decreed, and that the Court could have regard
to the conduct of the parties in dealing with the property in considering
whether the agreement was sufficiently clear in intention: Oxford v. Provand
(1868)."
(3) A municipal corporation agreed to let to C., for a term of years, land to 4·304
be stumped out by a committee and himself at his expense. The corporation
did not stump out the land, and C. did so himself, took possession, erected a
concrete terrace in the manner referred to in the minutes of agreement, and
paid rent. Held, by Stuart V.-C., that C. so acted with the acquiescence of the
corporation, and was entitled to a decree of specific performance. The Court
took into consideration what had been done in coming to a conclusion as to
whether the agreement was sufficiently certain in intent: Crook v. Corpor-
ation of Seaford (1870). 28
(4) Brick manufacturers excavated claypits, and as a result slips occurred
which were damaging adjoining land. A mandatory injunction was granted by
the Court of Appeal requiring the defendants "to take all necessary steps to
restore the support to plaintiff's land": Morris v. Red/and Bricks (1967). 29
(2) Injunctions Having Effect of Compelling Performance
One converse situation, in which it has been argued that contractors have ,4.305
a right to enforce a building contract as against the owner, should be men-
tioned. This stems from the single decision in England in 1971 of Houn-
slow London Borough Council v. Twickenham Garden Developments,30
where Megarry J. refused to grant an injunction requiring a builder to
vacate the site to an owner who had terminated a building contract under
Clause 25 of the RIBA/JCT conditions, on the ground that there was an
implied negative obligation of the owner not to revoke the builder's
lj.cence wrongly, and until the validity of the determination, which was
disputed, had been satisfactorily established in arbitration or litigation, no
injunction should issue. The case is analysed and heavily criticised later in
~ [1908] 1 Ir.R. 232; and see Waring & Gillow Ltd. v. Thompson (1912) 29T.L.R.154; Stim-
son v. Gray [1929) 1 Ch. 629.
:l!L.R.2P.C.135.
is L.R. 10 Eq. 678.
"l!l.[1967] 1 W.L.R. 967. See also the collapsed balcony in Jeune v. Queen's Cross Properties
[1974] 1 Ch. 97.
30
[1971] Ch. 233, illustrated post, para. 12·090.
 680 PERFORMANCE
this book, as being inconsistent with both consensual and practical con-
siderations in a construction context.31 It has been expressly not followed
in a number of powerful judgments independently arrived at in Victoria,
New South Wales and New Zealand.32 It has been more recently doubted
in England.33
On any view, the decision cannot be regarded as enforcing the contract,
in the sense that it avowedly creates no obligation on the owner to make
further payments or co-operate in any way in respect of such remaining
work as the builder may choose to do, but merely creates a situation of
impasse, with the owner excluded from the site unable to make other
arrangements for completing the project.
4·306 In the Twickenham case it was the owners who sought an injunction
compelling the contractor to leave the site following a termination, but
that was only a tactical accident of that particular dispute, which might
equally have taken the form of an application by the contractor for a quia
timet injunction to prevent the exercise of the owners' termination rights.
Thus in a case where a contractor was threatening to cease work unless
higher interim payments were made, the Court of Appeal held that in
principle a quia timet injunction might lie at the suit of the owner (that is,
the practical equivalent of a mandatory injunction or order of specific per-
formance), although for discretionary reasons arising from the procedural
remedies available under a foreign arbitration clause the House of Lords
ultimately refused the injunction. 34
This subject and the cases are considered in greater detail post, Chapter
12, Section 3(2). 35
[CHAP. 4 SECT. 4] SPECIFIC PERFORMANCE 681
ILLUSTRATIONS
(1) The Corporation of London agreed to grant a lease of premises to the
def~ndan~ when he should have rebuilt a house thereon to the satisfaction of
their architect. The d~fe.ndant entered into possession, but neither paid rent
nor commenced rebuilding. The corporation sought a decree of specific per~
foi:mance, and the defendant demurred on the ground that the contract to
budd to t~e sa~faction of 3: thir~party could not be specifically enforced. The
corporation waived the sattsfactton requirement. Held, by Malins v.~C., that
the demurrer should be overruled: Mayor of London v. Southgate (1869),36
(2) I_l· took a lease of land and covenanted to erect seven houses thereon.
The minerals were reserved t? the owner with power to destroy the surface;
R. also, at th~ same date, acqu~red a lease of the minerals from the owner with
f?ll surface rights. The houses m the street in question were not all of the same
stze. M., th~ landlord, sought a decree of specific performance of R. 's cov-
enant to build. Held, by Kekewich J., that upon the construction of the lease
the covenant was not destroyed by the power reserved to the mineral owne;
to destroy the surface; that damages assessed upon the principle of Ebbetts v
37
Conquest :,vould afford no adequate remedy; th.it the houses to be erected
were sufficiently defined for the purpose; and that specific performance
should be decreed: Molyneux v. R-ichard (1906).Js

(3) Decrees in the Case of Agreements for Building Leases

4-307 In the ordinary case of a building lease, where a person agrees to take a
lease of land and erect premises thereon, a decree of specific performance
will issue.

31 See post, Chap. 12, paras. 12·084 et seq., where the cases are illustrated.
32 Porter v. Hannah Builders [1969] E.R. 673; Mayfield Holdings v. Moana Reef [1973] 1
N.Z.L.R. 309,per Mahon J; Graham Roberts Ltd. v. Maurbeth Investments Ltd. [1974] 1
N.S.W.L.R. 93 perHelshamJ. See also Chelmar Productions Ltd. v. Prestest Ltd. (1991) 7
B. & C.L. 46,per Southwell J. Victoria, and Kong Wah Housing Development SDB v.
Desplan Construction Trading [1991] 2 M.L.J. 117, Malaysia. See, however, the recent
contrary decision in Robert Salter Constructions Pty. Ltd. v. Elmbee Pty. Ltd., unreported,
Supreme Court ofVictoria,per Smith J., June 29, 1990, noted in [1990] A.C.L.R. 874.
33 Tara Civil Engineering Ltd. v. Moorfield Developments Ltd. (1989) 46 BLR 72,per Judge
Bowsher.
36
34 See Channel Tunnel Group Ltd. v. Balfour Beatty Construction Ltd. [1992] Q,B. 656 (C.A.: 38 L.J.Ch. 141.
see particularly Staughton L.J.'s judgment); and [1993] A.C. 334. ,> 37
[1895] 2 Ch. 377.
35 See post, paras. 12·084 et seq. "[1906] 1 Ch. 34.

CHAPTERS
ACCEPTANCE AND DEFECTS
Section 1. Acceptance
(1) Generally ............ .
(2) Acceptance not Implied by Occupation ................ :................... ..
(3) Acceptance, Payment or Judgment no Bar to Oaim for
Damages ........................................................................................ ..
(4) Defects where Work is Done to the Approval of the Owner .. .
(5) Defects where Approval or Certificate of a Third Person········
(6) Defects which Could have Been Previously Detected .............. .
Section 2. Defective Work
(1) Generally ....................................................................... .
(2) The "Temporary Disconformity" _Theo!)'. .... .
(3) Express Powers during Construction Penod
(a) Required powers ............................................................... ..
(b) Current powers in standard forms .................................. ..
(c) Special anomalies of RIB A/JCT forms ........................... .
(d) No duty of owner or A/E ...................................................
(4) Types of Maintenance and Def_ect~ _Liabili_ty Clauses ............... .
(5) The Maintenance or Defects Lrnb1hty Penod ............................ .
(6) Nature of Maintenance or Defects Obligation .................. .
(7) Damages for Defects..
SECTION 1. ACCEPTANCE
(1) Generally
5·001 It has already been seen that where a person undertakes to sell goods or do
work for a price, and the obligation is entire, compl~t.e perfor1:1an~e of the
contract is necessary (subject to any express prov1s1ons for 1ntenm pay-
ment on account) before the right to be paid can arise; an.d that to p:event
the manifest injustice that the rule can cause if a substantial benefit is con-
ferred upon an owner or buyer, although complete performance has not
taken place, the courts have evolved, in the case of contracts for the sale of
goods, the theory of acceptance, and in the case of contracts for work and
Jabour the doctrine of substantial performance. 1
In the case of sale of goods, acceptance (which can easily be inferred
from receipt and use of the goods concerned, or from failure to reject or to
give notice of rejection within a reasonable time after delivery) has the
same effect as substantial performance, in that the buyer becomes legally
I See ante, Chap. 4, Section 1(1 ),
682
SECT. 1] ACCEPTANCE 683
liable to pay for the goods, subject to his right to claim damages for any
breach of contract which may have occurred. But precisely because, it is
sµbmitted, acceptance can only rarely be inferred where work or labour
b.as taken place upon an owner's land (since work, whether well or badly
dOne, becomes automatically his property as soon as the materials have
been fixed or attached to the land or buildings) 2 it has been necessary in
suCh cases to evolve the very different basis of substantial performance in
order to. achieve the desired result.
PARA. · In older editions of this book, acceptance was treated as a doctrine
~pplicable to building contracts, but there are almost no cases which, on
5·001 · ,;1.)1.alysis, lend support to this view, and ample authority to the contrary. In
5·003
tjie United States, the same view has been clearly stated:
5·007
5·012
5·014 "The position taken by most courts considering the question is that mere
5·020 .occupancy and use do not constitute an acceptance of the work as complying
with the contract or amount to a waiver of defects therein." 3
5·025
5·027
However, unusual facts can sometimes show acceptance, and so a liability 5·002
5·029 to pay,.as where a building owner who could without difficulty take an
5·033 alternative course of action chooses instead to make use of the contract-
5·035
5·038 ·., qi's· in¢o.mplete work. 4 Except in such cases, however, it is not easy to con-
5·039 ./.C~iv.e of a situation where acceptance could be reasonably inferred from
5.045
5·050
· .i:Gl:s of the owner where there would not also be substantial perfonnance.5
5·059 .-<Acceptance is sometimes discussed in the context of construction con-
fr~cts in a sense having still more drastic consequences, since it is some-
.times contended by contractors, particularly in civil law countries, that
~th'e:re _iS .some general theory whereby acceptance of the work by the
·9,WTier has the effect of depriving him altogether of his right to claim dam-
':aies·at some later time for defective or incomplete work. It is sufficient tO"
:;i;ay that even in the case of the sale of goods no such rule has ever existed,
,:and that the common law right of the owner to sue for damages for any
'Qreach of contract, including the right to recover for defects in the work,
·an only be lost as a result of some express provision in the contract, or by
'l)enitio·n of doctrines of waiver or estoppel (which, it will be rernem-
.,...e:red;require either consideration, or a clear representation intended to
·.,i·~<::ted upon and accompanied by an alteration of the other party's pos-
tipn, tO.his detriment). 6 It will be seldom that facts will arise in practice, it is
·b:rhitted, which can found such a waiver or.,estoppel.7 Certainly judg-
gl·en.tfor
··hi·,··. the full contract price, or full payment of it, will not do so. 8
'fSee:.infra, Subsection (2); see aiso post, Chap. 11, Section 1.
''Wi:it~on Lumber Co. v. Guenniwig 226 N.E. 2nd 270, 278 (1967), citing 13 Am. Jur. 2nd
section 56 of Building Contracts).
ee the Tannenbaum case, infra, para. 5·006.
ee,.e.g. the South African case of Sacherv. African Canvas &Jute Industries Ltd. [1952] 3
.A.L.R. 31, illustrated infra, para. 5·004 .
.e~ante, Chap. 1, Section 10, and infra, Subsections (2) and (3).
·See infra, Subsection (6), and see also ante, Chap. 1, Section 10.
.,_See infra, Subsection (3).
 ACCEPTANCE AND DEFECTS [CHAP. 5
684
(2) Acceptance not Implied by Occupation
5°003 In cons~dering what amounts to acceptance, the difference between a
building contract and a contract for the sale of orforwork d~ne to a chattel
needs to be remembered. In the case of goods sold and dehvered, accept-
ance can be shown from the retention of the goods; the buyer, if dissati~-
fied, is bound to reject or give notice of rejection, and, if he does not, he is
bound to pay for the goods subject to any claim which he may have f~r
t;
damages for breach of warranty. Thus, h:1 a cont_ract ~anufactu_re furru-
ture, acceptance can be shown by using the furruture. It 1s otherwise when
work is done on land. A building owner does not accept work merely by
resuming occupation or continuing in possession of the land on which the
work has been carried out.
ILLUSTRATIONS
(1) A building lessee D. went bankrupt when two ~uildings he had under-
taken to build were still unfinished. M. contracted with the !esso: B. to co~-
plete the buildings in accordance with the terms and specifications of D. s
contract to the approval of B. 's surveyor within one month, time to be of t~e
essence for £240 and B. agreed to extend the time under D. 's contract. M. did
not co~plete to t'ime, nor was he able to obtain the surveyor's. a~proval of the
work done. B. regained possession and sold the land and buddings .. M. sued
for £240 under the agreement, alternatively on a quantum merult for the
labour and goods supplied. Held'. on demurrer by th~ ~ourt of Commo~
Pleas, completion by the promised date '?1d. _obtaining t?e surveyor s
approval were both conditions precede~t to hab1hty. Not ha~1ng perfon~ed
the contract, M. could not recover on either account, entry into possession
and sale being no evidence either of acceptance or of a fresh contract to pay
for what had been done: Munro v. Butt (1858).
10
5·004 (2) w. entered into a contract to build and prov~de seats for a church. The
architect objected to the materials and workmans~tp of the pews as ~he~ were
being put in, but on completion they were occ1:1p1ed. Held, that this did not
11
constitute acceptance of the work: Wood v. Stringer (1890).
(3) A shop-owner pur~ha_s~d blinds to ?e suppli~d and erected at t~e front
of her shop. She denied bab1hty for the pnce, pleadmg defects o~ such import-
ance as to render them useless for their purpose, and that the bhnds had been
badly erected so that they did not protect the :Vindows from the sun, as well as
being faded. On a preliminary issue, the supp hers ~rgued that she ~hould have
tendered rejection of the goods, and that she was habl_e for the pnce. Held, by
the Transvaal Provincial Division, the contract rehed on was not one of
9 Hoenig v. Isaacs [1952] 2 All E.R. 176, see ante, Chap. 4, paras. 4·017 et seq., where the
doctrine of substantial performance is fully discussed. .
w E. & B. 738. See also Whitaker v. Dunn (1887) 3 T.L.R. 602, illustrated ~1te, Chap. 4,
Section 1,para.4·011. ,,.
"20 O.R. 148, Ontario.
SEcr. l] ACCEPTANCE 685
sii_iiple purchase and sale, but for work and labour done as well as goods sup-
phed. Whether or not there was an obligation in contract to plead a tender of
restoration or, if not, the impossibility of restoration, in a contract for work
and labour do~e and materials supplied, a repudiating party may or may not
have taken delivery. Here there was nothing in the pleadings to indicate that
0e defendant had ac~epted the blinds, either expressly or impliedly, by tak~
1ng the benefit of therr presence after erection. The defendant was under no
obligation to tender restoration of the blinds and the plaintiff was not entitled
to recover: Sacher v. African Canvas and Duty Industries Ltd. (1952).12
[Note: The contention in the above case was that no defence was disclosed
on the pleadings, but it is an excellent example of the principle that accept-
ance will not be inferred from possession and use. It seems doubtful on the
facts as pleaded whether substantial performance could have been estab-
lished.13 Other cases which illustrate the same principle areSwnpterv. Hedges
(1898) 14 and Whitaker v. Dunn (1887).15]
In Munro v. Butt (supra) Lord Campbell C.J. said: 5·005
"Now admitting that in the case of an independent chattel, a piece of furni-
ture for example, to be made under a special contract and some term, which
in itself am?unted to a condition precedent, being unperformed, if the party
for whom It was made had yet accepted it, an action might upon obvious
grounds be maintained,either on a special contract with a dispensation of the
condi~ons alleged or on an implied contract to pay for it according to its
value; 1t does not seem to us that there are any grounds from which the same
conclusion can possibly follow in respect of a building to be erected or repairs
done, or alterations made to a building on a man's own land, from the mere
fact of his taking possession. Indeed, the term 'taking possession' is scarcely a
correct one. The owner of th eland is never out of possession while the work is
being d?ne. But, using the term in a popular sense, what is he under the sup-
posed circumstances to do? The contractor leaves an unfinished or ill-con-
structed building on his land; he cannot without expensive, it may be tedious,
litigation compel him to complete it according to the terms of his contract;
what has been done may show his inability to complete it properly; the build-
ing may be very imperfect, or inconvenient, or the repairs very unsound, yet it
may be essential to the owner to occupy the residence, if it be only to pull
do"".n and _replace. all that has been ?one before. How then does mere pos-
session rruse any inference of a waiver of the conditions precedent of the
special contract or of the entering into of a new one? It, indeed, the defendant
had done anything coupled with taking possession which had prevented the
performance of the special contract, as if he had forbidden the surveyor from
enteri~g to inspect the work, of if, the failure in complete perfonnance being
very shght, the defendant had used any language or done any act from which
acquiescence on his part might have been reasonably inferred, the case
would have been very different. " 16
(The last sentence of the above quotation may suggest a theory of accept- 5·006
ance, but it is clear from the two illustrations given that these could be
12 [1952J 3 S.A.L.R. 31.
13
For similar cases where substantial performance was refused see ante, Chap. 4, paras.
4·011-4·013.
14
[1898] 1 Q.B. 673 see ante, para. 4·011.
ll 3 T L.R. 602, see ante, Chap. 4, para. 4·011.
16
Munro v. Butt (1858) 8 E. & B. 738, 752-753.
 [CHAP.5
686 ACCEPTANCE AND DEFECTS
explained in the first case as a breach of contract by the owner, or ~nder
the prevention principle,1 7 and as a case of substantial performance 1n the
second.) · d
However, in some unusual circumstances, acceptanc~ may ~e 1nferre
where there has not been substantial performance, and 1f so will have the
same legal and monetary consequences.
ILLUSTRATION
A. had built a sewer, but no pumping station as agreed, which was to serve
both A.'s and B.'s land under a contract between A. and B. B. co~structed a
pumping main as a temporary measure, and then connected up his o':'n sev:--
ers to the one built by A. Held, by the Ontario Court of Appeal, while~· _s
conduct might have amounted to a repudiation if accepted, B., by accepting
the benefit of A. 's work, was liable to pay the agreed sum less the cost of th~
pumping station: Tannenbaum Meadows Ltd. v. Wright Winston Ltd. (1965).
(3) Acceptance, Payment or Judgment no Bar to Claim for Damages
5·007 This subject has already been discussed in so~e detail in the context of
estoppel per rem judicatam in Chapter 1, to which reference should also be
made. 19
Even though a building owner may have a~cepted. the work so that a
liability to pay the price of it arises,20 that will n?t \in the ~bs~nce of a
provision in the contract making :h~ acceptance binding on h1~ preve~t
him from showing that the work 1s mcomple:e or badly d?ne, he may ei-
ther counterclaim or set off damages in an action by the builder; or ?e may
pay.or suffer judgment to be obtained against him for the full pnce and
later bring a separate action for his damages; or he ma~set up the d~fects
in diminution of the price by way of defence to an action by the builder,
and later bring a separate action for any special damage which he may
suffer by reason of the breaches of contract. The reason :Why paymen~ of
the price for the work in full is no bar to a subsequent action by the budd-
22
ing owner was put by Blackburn and Hannen JJ. in Davis v. Hedges :
"The hypothesis is, that the plaintiff [that is, the c?ntr~ctorl suing for the
price is in default. The conditions on which he can br1ngh1s. actlon are usually
simple and immediate. The warranted chattel has been delivered or the W?rk
contracted for has been done, and the right to bring an action for the pnce,
unless there is some stipulation to the contrary, arises. On the other hand the
extent to which the breach of warranty or breach of contract may afford a
11 As to which see Chap. 1, Section 6(2).
1a49 D.L.R. (2d) 386, Canada. Illustrated more fully, ante, Chap. 4, para. 4·017.
19 See ante, Chap. 1, Section 10(2), paras. 1·250-1 ·252.
10 In the rare cases where this can occur, see supra.
21 See infra.
12 (1871) L.R. 6 Q.B. 687, 690.
SECT. 1] ACCEPTANCE 687
defence is usually uncertain; it may take some time to ascertain to what
amount the value of the article or work is diminished by the plaintiff's
default. It is unreasonable, therefore, that he should be able to fix the time at
which the money value of his default shall be ascertained. In many cases the
extent to which the value of the works may be diminished by defects in their
execution may be altogether incapable of discovery until some time after the
day of payment has arrived."
ILLUSTRATIONS
(1) A ship-owner successfully pleaded defective work in diminution of the 5·008
price when sued by the ship-builder. Later, he sued the ship-builder for loss of
use of the ship during repairs. Held, by Parke B., that he was not estopped
from doing so: Mondel v. Steel (1841). 23
(2) To an action against B. for unskilfully erecting a kitchen range in A.'s
house, B. pleaded that A. ought not to be admitted to allege that B. did not use
due skill in constructing the range because, after the supposed grievance, B.
had commenced an action against A. for work and labour in constructing the
range and for the price thereof, and that A. had pleaded payment of money
into court, which B. had taken out of court in full satisfaction. Held, by the
Court of Exchequer, that the plea did not amount to an estoppel, and
afforded no answer to the action: Rigg v. Burbidge (1846). 24
(3) D. employed H. to do certain building work. When the work was com-
pleted, H. brought an action against D. for the contract price, and recovered
the whole amount. D. then brought an action against H. for the improper
performance of the work, and for not performing the work in accordance with
the specification. Held, by the Court of Queen's Bench, that although D.
might have used the causes of action for which he claimed in reduction of the
claim in the former action, he was not bound to do so, and might maintain a
separate action for them: Davis v. Hedges (1871).25
(4) M. contracted to build a shed for the defendants, to be paid 90 per cent. 5·009
on completion to the satisfaction of their engineer, and 10 per cent. six months
after completion to take account of remedial work. The 90 per cent was paid
in February while the work was unfinished, on the contractor promising that it
would be complete by the end of the month. He was still doing work in June,
and never completed to the satisfaction of the engineer. The defendants
called on him to do certain remedial work in October, but he refused, and they
then had it done by another contractor. The defendants offered the plaintiff
the 10 per cent. less the cost of the repairs, but the plaintiff sued for the whole
10 per cent, arguing that the works had been accepted as complete in Febru-
ary, and that the repairs called for were out of time. Held, by the Court of
Exchequer (Kelly C.B. dissenting), that work had continued until July, the
repairs called for were in time, and the payment of 90 per cent. did not create
an estoppel, so that the defendants might deduct the cost of the defective
work: Moss v. Lorul.on & North West Railway Co. (1874). 26
(5) An owner accepted and occupied a building knowing that it contained
defects, and agreed to the payment of retention moneys by his bankers to
DSM.&W.858.
24
15LJEx.309.
• :L.R. 6 Q.B. 687, 690.
25
u.22 W.R. 532.
 688 ACCEPTANCE AND DEFECTS [CHAP. 5
the builder. Held, by the Full Court of Western Australia, there was no waiver
or estoppel preventing him from suing for the defects: Lamberto v. Spry
(1977)."
5·010 Just as payment of the price in full does not (in the absence of any
express stipulation to the contrary) prevent the building owner complain-
ing of defects, nor does payment on account, or by instalmerits, or under
interim valuation certificates issued under the contract. Such certificates
are for the benefit of the contractor to enable him to obtain payment on
account and are not, unless it is expressly so provided, evidence or con-
clusive, even temporarily, as to the satisfactory performance of the work.
ILLUSTRATION
The plaintiff built an entrance lodge and chapels for the defendants, whose
architect, although he frequently complained of the mode of execution,
allowed the work to proceed and issued certificates for instalments of the
price on account. The architect refused to issue a final certificate until certain
work had been taken down and re-executed. The plaintiff sued for the bal-
ance of the price and contended that the architect had certified his satisfaction
and that to withhold the final certificate was a fraud on the plaintiff. Held,
there was no evidence that the architect had a corrupt or malicious motive, he
had not disqualified himself from refusing a certificate of sufficient perform-
ance, and the plaintiff could not recover: Cooper v. Uttoxeter Burial Board
(1865)."
5·011 In the case of interim certificates given under the traditional century-
long wording of the RIBA contracts and sub-contracts (much copied out-
side England) for payment on the architect's certificate of the value of
work properly done, the Court Of Appeal's interlocutory decision in 1971
inDawnays Ltd. v. Minter Ltd., 29 rapidlyfollowedby five further decisions
of the Court of Appeal in the following two years,30 unexpectedly held
the architect's interim payment certificates to be binding on the owner (or
in a sub-contract on the main contractor), and enforceable immediately
by summary judgment pending later arbitration or litigation of any
defence or set-off pleaded for delay or defective work. However, the
House of Lords effectively overruled all these cases in 1974, restoring the
previously understood position as stated above, so that, in the absence of
27 Unreported, October 6, 1977. . . . . , C.C.P.P., Chap. 15
26
11 LT. 565. For the effect of interim.payments on other defences or claims by the owner,
see Royston Urban District Council v. Royston Builders Ltd. (1961) 177 E.G. 589, ante,
Chap. 1, para. l ·247, and see also post, Chap. 6, Section 6(7) for interim certificates gener-
ally. For certificates or approvals which may be conclusive as to defects, see infrd, Subsec·
tions (4) and (5).
:19{1971] 1 W.L.R.1205. ~-;",
30
See post, paras. 6· 194 et seq., and see these authorities collected and analyse'd in, "Set Back
to Set to Off'' (1973) 89 L.Q.R. 36, reproduced. in C.C.P.P., Chap. 14.
SECT.!] ACCEPTANCE
689
clear wording to the contrary, an A/E's interim payment certificates will
~ot confer ~ven a temporary finality on contractor's payment claims based
n the certificates,. should a bona fide defence or cross-claim be raised.31
~ere lapse of time does not, subject to the rules of limitation 32 and
subject to an~ e~press provisions in the contract,33 debar a building ~wner
from complat~ng of d~fective work, although the effect of it may, of
cours~, make It mo~e diffi~ult to prove that the damage was caused by
defectJ.ve work; but 1f that 1s proved, liability must follow.
ILLUSTRATION
M. employed G. to do certain plumbing work. Four years later certain pipes
~ave way and there was a flood. M. was found liable to her tenant for the
amage caused by the flood and sued G. for the amount of damages and costs
~h; ha_d been ordered to pay. It was proved that the cause of the flood was
e ectJ.ve w?rk by G. G. pleaded that no tradesman could be expected to
guarantee his work four years after. Held: by the Court of Session M could
recover the amount claimed: Mcintyre v. Gallagher (1883).34 ' ·
. Unless the work is expressly to be done to the building owner's satisfac-
35
tion or approval, and there is positive evidence that it has been given, his
mere kno~ledge of defects at the time when the work was done does not
prevent him from later complaining of the defects.36
(4) Defects where Work is Done to the Approval of the Owner
< 'jj.
In the comparatively rare case where work is expressly to be done to the
5·0U
a~proval of the buil~ing .owner (as opposed to some third person, such as
his AIE), and no arbitration clause permitting a review is present the gen-
eral rule in buildi?g cas~s was that the covenant to obtain appro~al over-
rode any other stipula~10~ describing the work, and, once approval had
been expressed, the bu~~1ng owner was liable for the whole price and was
deb:11-red fro~ compla1nmg of defective work, unless there was an arbi-
tration clause 1n the contract in sufficiently wide terms.37
31
Se~.fz;a, Suhse~tion_ (5), andpost,paras. 6·194etseq., and see Gilbert-Ash (Northern) Ltd
;~t-if;;n(1:;:)1~~nQg R(B,2;,ltol) Ltd. [1974] A.C. 689, analysed in detail in, "Set Fair fo~
:: See ante, Chap. 4, Section 3(?)(~), paras. 4·292-4·293. .
See, e.g. Marsden Urban District Council v. Sharp (1931) 48 TL R 23 ill d
doubted infra, para. 5·054. · · · , ustrate but
34
ll R.(Ct. of Sess.) 64.
3
s See infra, Subsection (4).
36 See, etg. WhlitakerCv.hDunn (188?) 3 T.LR. 602, ante, Chap. 4, para. 4·011 and see the cases
37
on es oppe ante, ap. 1, Sectmn 10, and Subsection (6) infra
See post, Chap. 6, Section 2, where the subject is much m~re fully discussed See part'
lady Bruens v. Smith 1951 (1) S.A. 67, illustrated in Chap. 6, para. . 1. · icu-
6 05
 [CHAP.5
690 ACCEPTANCE AND DEFECTS
ILLUSTRATIONS
(1) Work was agreed to be done using the best materi~ls and also to ~h~
satisfaction of the architect and of the owner, and the architect was to certify,
but it was provided that, notwiths~anding the ~e~tificate of the architect: the
owner might recover for defects discovered w1th1n 12 months. The ar~h1tect
certified, and the owner expressed satisfaction by paying under the c~rtificate;
defects were discovered after 12 months; no fraud by the architect was
alleged. The owner brought an action against the builder _for da~ages for
inferior materials. Held, that the owner could not, after certificate given_, and
expression of satisfaction by himself, sue for defective work after the expiry of
38
the 12 months:Bateman (Lord) v. Thompson (1875).
(2) A South African building contract provid_ed that all ~ork should be
done to the satisfaction of the owner, who was satisfied and patd for the ~o~k.
Later he sought to recover damages for ~efects. Held, b)'. the Cape Provincial
Division, that the expression of satisfaction freed the butlder from all further
liability: Gorfinkel v. Januarie (1954). 39
5.013 (This does not always mean that, conversely, the building o':n~r's
approval is a condition precedent. In such a case, even though the building
owner may not have expressed his satisfaction, the contractor may be able
to recover the price of the work if the building owner ought reasonably to
have been satisfied, except where the work is to be done to the taste and
convenience of the building owner.40
Whether payment by a building owner for work which is t~ b_e done ~o
his approval amounts to an expression of that approval must, it is sub?ut-
ted, be a question of fact in each case. Thus, payment can hardly be sa~~ to
show approval of the work in a case where it is insisted upon as a condition
for the handing over the keys of a newly constructed ho~se, or where the
payment is merely a payment on account for the conv~n1ence of_ the con-
tractor. But in Bateman's case, supra, payment following a ~rtificate _of
satisfaction by the architect was clearly held to be an expression of sa1:Is-
faction by the building owner. . certification or payment, if based upon a valuation of work done, will
The modern tendency of the courts, however, accur~tely reflecting
present-day attitudes and the contractorto:,v?er rel~tio°:ship in.the ~on-
struction industry, will require more expllc1t wording if_a satisfact~on,
approval or certificate, whether of the owner or of the A/E, ts to have bmd-
ing force, it is submitted. 41
iH Hudson, Building Contracts (4th ed.), Vol. 2, P: 36. " .
i9 1954 (1) s.A. 88, South Africa, and see cases cited, post, Chap. 6, Approval and Certifi-
cates", paras. 6-022 et seq, and 6·046 et seq.
40 See post, Chap 6:''Approval and Certificates", paras. 6-036 et seq. . cations upon these rules are fully discussed.
41 For this more modern attitude, see in particular Bil/yack v. Leyland Constructton Co. Ltd.
[1968J 1 W.L.R. 471, C.A.; National Coal Board v. William Neill & Son (St. Helens) Ltd.
[1985] Q.B. 300, Piers Ashworth Q.C.; and Crestar Ltd. v. Carr (1987) B~·~13, C.A.,
illustrated infra; see also infra, Subsection (5), and generally post, Chap. 6. See also the
discussion in C.C.P.P., paras. 17-10 et seq.
SECT.!] ACCEPTANCE 691
(5) Defects where Approval or Certificate of a Third Person
In the more usual case where work was expressly agreed to be executed to S,014
the approval of a third person,for example, the architect, engineer or sur-
veyor of the building owner, or for payment on his certificate, the general
rule in building contracts was that the contractor could not, in the absence
of a sufficiently wide arbitration clause,42 recover payment for the works
until such approval had been obtained,43 unless he could show that the
approval had been dishonestly withheld. Conversely, if the A/E had in fact
approved or certified the work, no complaint as to defects, whether latent
or patent, could usually be made by the owner, so that from this point of
view the effect was the same as the satisfaction of the owner.44 Where,
however, the third person was not employed by the building owner, such
as an independent person like a Lloyd's surveyor or a local authority's
building inspector, the courts were less likely to treat the satisfaction or
approval, if given, as binding on the owner, but rather as an additional
protection for him. 45 This latter qualification is important, because in
builder-developer (that is, where there is no architect) or "design and
build" contracts, references to local authority approval are frequently
inserted in the specification prepared by the builder-developer or
contractor.46
As noted supra in Subsection (3), the landmark Gilbert-Ash decision in
the House of Lords in 197347 overruled no fewer than six Court of Appeal
decisions during the previous two years, 48 when holding, in the very
important commercial context of interim certification and payment, that
interim certificates given under the traditional century-long wording of
the English main and sub-contract standard forms in both industries did
not impose even a temporary finality (in the sense of entitling either con-
tractor or sub-contractor respectively to enforce payment by summary
judgment, leaving for later resolution in arbitration or litigation any cross-
claim or set-off for delay or defective work or other breach of contract). In
the context of defective work defences in particular, it should be noted
that, either expressly or impliedly, most contractual provisions for interim
mean a valuation of work properly done. This has had the important effect
of defeating more recent express draughtsmanship, particularly in sub-
contract standard forms, designed to re-impose finality on interim certifi-
cates in response to the Gilbert-Ash decision.
4i But nearly all modern contracts contain such clauses. See for the history of this C.C.P.P.,
paras. 17-06 et seq.
'·' Such approval is usually required to be given in the form of a certificate.
•• See post, Chap. 6, Section 3(3), where this subject,and important exceptions to and qualifi-
4
~ Petrofina S.A. v. Compania Italiana (1937) 53 T L.R. 650, CA., see post, para. 6-055.
·~ See the important case of Bil/yack v. Leyland [1968] 1 W.L.R. 471,post, para. 6·056.
47 [1974] A.C. 689, analysed in, (1974) 90 L.Q.R. 21, reproduced in C.C.P.P., Chap. 15.
4
s Collected and doubted in, (1973) 89 LQ.R. 36, reproduced in C.C.P.P., Chap. 14.
 692 ACCEPTANCE AND DEFECTS [CHAP. 5
ILLUSTRATION
5·015 Clause 13 of a sub-contract, closely modelled on the standard form, entitled
a sub-contractor to monthly interim payment for the total value of the work
properly executed within 17 days of application by the sub-contractor. Clause
15 provided that the main contractor might set-off against any "monies other-
wise due" the amount of any loss or expense already incurred by the main
contractor due to any breach of the sub-contract, but subject to the further
very strict proviso that notice and quantification of the expenditure mllst be
given within 17 days of application. Clause 15 further provided that "t~e
rights of the parties to this sub-contract in respect ofset-off are fully set out 10
these conditions and no other rights shall be implied as terms of the sub-
contract relating to set-off'. The main contractor failed to comply with the
set-off clause by incurring the expenditure or giving notice within 17 days, but
resisted summary judgment on the ground that the sums in the application
were either in respect of work never done, or for additional sums not due
under the terms of the contract, or for work not properly executed. Held, by
the Court of Appeal, citing Lord Diplock's speech in the Gilbert-Ash case,49
that these were defences to the claim, independent of any doctrine of set-offby
way of cross-claim for damages for breach, and so not excluded by the set-off
prohibitions in the sub-contract, so that the main contractor was entitled to
leave to defend: Acsim (Southern) Ltd. v. Danish Contracting and Develop-
ment Co. Ltd. (1989).50
[Note: It will be noted that payment under this particular provision did not
even depend upon an architect's certificate. It is clea~ ?"om th~ Court ~f
Appeal's judgment and reasoning, however that the dec1s1on apphes to certi-
fication as well as to "submission of application" cases.]
5,016 Indeed, the modern tendency in relation to all payment certificate pro-
visions, not excluding final certificate provisions, will be to require express
wording indicating a clear intention to bar further claims against the con-
tractor or sub-contractor, whether for defective work or otherwise, if the
clause is to be interpreted as having that effect: "It is not too much to ask
that contracting parties who are desirous of giving conclusive effect to a
quasi-arbitrator's certificate of liability should express that intention quite
clearly." 51
ILLUSTRATION
By Clause 9(iii) of the RIBA/JCT minor works contract the architect was
required to certify the date when the contractor's obli~~t~ons under the
defects liability clause had been discharged. By Clause 10(1u) 1t was then pro-
vided that within 10 days thereafter the architect should "issue a final certifi-
cate certifying the amount remaining due to the contractor ... and such sum
49 {1974] A.C. 689, at p. 717B, cited in extenso post,-Chap. 6, Section 1, and undoubtedly the
seminal authority at the present day. . .
50 47 BLR 55. See also, for a similar example of strict construction of a sub-CQ.~tract mtenm
certification clause, N EI Thompson v. Wimpey Construction Ltd. (1987) BJ::R 70.
si Per Evatt J. in the High Court of Australia in Kirsch v. Brady (1937) 58 C.L.R. 36, at p. 59.
SECT.!] ACCEPTANCE 693
from the fourteenth day after ... the final certificate [shall] be a debt payable
... by the Employer." The architect issued a final certificate but the owner
resisted payment and applied for a stay for arbitration after the 14 days had
expired in order to defend the claim, alleging defective work and that certain
sums which had been allowed were not due. Held, by the Court of Appeal,
that there was no express provision in the contract making the certificate con-
clusive as to the work complying with the contract or as to sums due, nor did
the words "shall be a debt payable ... by the Employer" have that effect:
Crestar Ltd. v. Carr (1987).s2
[Note: While there is little citation of authority in the above case, it is an
excellent example of the modern tendency to deny finality in the absence of
the most explicit wording, first foreshadowed in Billyack v. Leyland,53 and
undoubtedly accords with the presumed intention of the parties, it is submit-
ted. Almost certainly it would have been decided in an opposite sense in the
English courts in the last century.s4J
Building and engineering contracts not infrequently contain express 5·017
provisions fo.r materials or samples to be submitted for approval before
the relevant work is carried out. Usually these provisions relate to
materials. In such a case, provided the materials actually used by the con-
tractor conform to the observable characteristics of the sample, or, in a
case of simple approval, the ultimate cause of the trouble is not due to
some hidden defect, it will not be open to the owner subsequently to con-
tend that the characteristics of the material or sample apparent on inspec-
tion do not in fact comply with any other provisions of the contract. For
instance, if a specification required timber to be reasonably free from
knots, and all timber to be approved by the architect before incorporation
in the works, and if the architect approved samples containing knots in no
greater nwnbers than the timber finally used, it would not, it is submitted,
be possible later to criticise the timber on that ground, and this apart
entirely from any question of waiver or estoppel. In such a case, the term
for approval is clearly intended to override any other description of the
work or materials, unless there is some express indication to the contrary,
and subject always to the possible effect of an arbitration clause.
ILLUSTRATION
Bricks for an engineering contract were required to be sound, hard, square, 5·018
well-burnt bricks free from lime or other extraneous matter, fire cracks or
other defects and from an approved yard. The whole of the works were to be
done in a thoroughly workmanlike manner with the best materials and to the
satisfaction of the engineer. Samples of stock bricks to be used for manholes
were approved by the engineer, but underground conditions were unexpec-
tedly wet and the bricks failed to keep out water, and the engineer refused to
s, 37BLR 113, C.A. See also the valuable judgment in National Coal Board v. William Neill
Ltd. [1985] Q.B. 300, per Piers Ashworth Q.C., see post, para. 6·058.
53
[1968] 1 W.L.R. 471.
54
See post, Chap. 7, generally.

694 ACCEPTANCE AND DEFECTS [CHAP. 5
accept the work. The bricks used did not contain any hidden defe~t, but wer.e
ordinary stock bricks conforming to the sample. There was an app~cable arbi-
tration clause. Held, by Phillimore J ., that the contractor was not 10 breach of
contract, and could not be called on to replace the bricks free of charge:
Adcock's Trustee v. Bridge Rural District Council (1911). 55
It is clear, however, that approval will not bind the owner if the defect is
a concealed one not apparent on inspection:
"I think, therefore, that if the bricks were equal to sample, and to the appar-
ent sample-I do not mean if the sample actually had a number of conc~aled
cracks-the defendants would be bound by the acceptance of that part1cular
sample of brick." 56
5·019 Furthermore, the remarks in Adcock's case were made where there was
an express description. Sometimes, however, such descriptions may con-
template alternatives. Thus the expression "or other approved" is quite
common in specifications, often in relation to a source of supply.
ILLUSTRATIONS
(1) A specification provided: "Artifi~al _Stone ... the following to b~
obtained from Empire Stone Company Limited ... or other approved firm.
The contractor claimed to be entitled to nominate other firms for approva!·
Held, by the Court of Appeal, applying Trede?arv. H~r.wood51 that the archi-
tect was entitled to insist on the named firm without g1vmg reasons. Per Hod-
son and Romer L.JJ ., the contractor could also insist on the named firm
without giving reasons. Per Singleton L.J ., the words may have been inserted
to cover the inability to supply or failure of the named firm: Leedsford Ltd. v.
City of Bradford (1956). 58
(2) Clause 94 of a specification provided that "t~e pipes ~I be manufa~-
tured by either Stantons' or Staveleys"'. The engineer required Stantons ,
whereas the contractor wished to supply Staveleys'. Held, by Donaldson J.,
Clause 94 gave the contractor an option to chaos~ t?e pipe he preferred, so
that the engineer's instruction constituted a vanauon: Crosby v. Portland
Urban District Council (1967). 59
(6) Defects which Could have Been Previously Detected
5·020 In the great majority of more sophisticated express contracts, power is
given to the A/E to order the contractor to remove and replace
SS75J.P.241.
56 Per Phillimore J., ibid. . .
s1 [1929] A.C. 72, where a landlord offered a similarly phrased choice ofmsurance companies
toa tenant.
ss24BLR45.
59
5 BLR 121.
••
·.1·
..•.· ...· ·.. ·..··
SECT. 1] ACCEPTANCE 695
defective work or materials during the progress of the works. The power
will also be implied, it is submitted, whenever work is expressed to be done
under the direction or to the ·satisfaction of the architect or engineer.
But even in the absence of an architect or engineer, or of express or
implied provisions as to their supervisory role, the fundamental express or
implied obligation of virtually all priced construction contracts is of the
dual character already referred to ante, Chapter 4, in the context of the
contractor's completion obligation, namely both to carry out and to com-
plete the work in all respects in accordance with the contractual descrip-
tions (that is, with any specifications or drawings and any express or
implied obligations as to the quality or suitability of workmanship or
materials or of the design). It is true that it has been suggested that, under a
theory of permitted "temporary disconformity",60 no breach of contract
will exist in respect of defective work until the time for the work to be
handed over on completion. But construction contracts by virtue of the
need to incorporate work into the owner's land, which thus becomes his
property, and the inevitable and substantial expense of subsequent demo-
lition and repair if many kinds of defective work and materials are to be
incorporated into a structure and covered up, differ essentially from other
contracts for work and materials, such as making furniture or a suit of
clothes, where no doubt there will be no breach in regard to defective
work until delivery. An owner cannot, it is submitted, be forced to stand
by without remedy and permit defective work or materials to be incorpor-
ated into the fabric of his building and there is now, it is submitted, ample
authority in England that this is not so.61 Indeed, under the codes in many
civil law countries, a continuation with defective work in the face of objec-
tion, or a maintained refusal to remove or repair defective work on which
later work must be technically dependent, will entitle the owner to rescind
the contract,62 and it is submitted that, in the common law countries
equally, a contractor's continuing with defective work after notice will
evince an intention not to be bound and constitute a repudiation entitling
the owner to rescind (that is, terminate) the contract.63
On this view, there is a continuing implied obligation of the contractor,
throughout the period of construction, to remedy defective work, al-
though no doubt in some cases a decision to leave easily replaced work on
which the other work is not dependent for later repair will mean that the
breach is a purely temporary one not justifying rescission or even dam-
ages, provided later reinstatement effectively eliminates the possibility of
substantial damage to the owner, thus perhaps giving a sensible mean-
60
See for this infra, Section 2(2), paras. 5·027 et seq.
61
For the cases, see infra, Section 2(2),
. 62 See Lorenz, Encyclopedia of Comparative Law, Chap. 8, Section 103, discussed in
C.C.P.P., paras. 28-11.
6J See, for an example, Sutcliffe v. Chippendale & Edmondson (a firm) (1971) 18 BLR 149,
per Judge Stabb Q.C., and the hire-purchase case of Yeoman Creditv. Apps. [1962] 2 Q.B.
508, C.A., there cited.
 [CHAP. 5 SECT. l] ACCEPTANCE 697
ACCEPTANCE AND DEFECTS
696
ing to this otherwise confusing (and relatively recent) "temporarydiscon-
formity" concept.64
From early times, it has been sought to be contended on behalf of con-
5·021
tractors or their sureties who have carried out defective work (it may be
noted, inconsistently with any "temporary disconformity" theory) that
the owner has waived or is estopped from claiming damages by reason of
the fact that the breaches of contract were visible during the course of the
AJE 's or clerk of work's usual visits to the site while supervising the work,
but that no disapproval was then expressed. This is tantamount to alleging
ILLUSTRATION
that the AfE or clerk of works has been employed to supervise for the
protection of the builder rather than the owner, and indeed, if correct,
would mean that an owner would in law be better protected in regard to
defective work if he abstained from employing an A/E. It is clear, it is m!:i
0
~~:~~~~f~~;i, %~! :: ~~ik~r:~!~ ~~~:~~:!~h~n'::~~r the re-
~nd.e~ the sup~nntendence and to the satisfaction of the engineer ~f~;~i~
5·023

submitted, that no estoppel or waiver could arise unless some matter was
expressly brought to an A/E's attention by the contractor and he was b~c~~1on as tot e manner in w~ch work was to be executed was to be.final and
expressly asked for and gave his approval. Even in such a case, the estop- e:c:~ct::~t!:~t ~h~~dh~ve a.fi nal.certifica~e after the works had been
. . a e o IS satts1action. The Jury found that there was an
pel would only, it is submitted, operate in relation to an apparent charac-
teristic of the doubtful work or materials, and not to some concealed
~r;::~
th
1~~ ~:
t t
i::~J!rtof the ~orgoration properly to superintend the work,
gscampe w entheclerkofworkswasabsent.Suretiesof
defect of which the AfE was unaware at the time of expressing his e c'?n ra.c ors averred that there was a duty of the owner to su ervise and

approval:65
~:a:;~~~ 1;.!1at lotbeen negligently ex~rcised they should be rel~ased. Held,
u O ppeal, the power was In the nature of an option ·ven to th

5·022
67
"I have alreadycited66 from Clayton v. Woodman & Son Ltd. the general owner "Yhet~er he sh~uld superintend or not. The fact that he did !t
the op~on dtd not relieve the contractors from the obligation to do the work
exercis:
proposition that an architect has no right to instruct a builder how his work is
to be done or the safety precautions to be taken. Moreover, in general an proper y. Nor could the final certificate having been obt . eel b
architect owes no duty to a builder to tell him promptly during the course of
release
onl th t th · Lord Esher M ·R ··.'"The mean,·n go f thrun
the sureties. Per . )'. fraud,
e prov1s1on was
construction, even as regards permanent work, when he is going wrong; he fr Y ~ e c<;>rporation ~hould have a right to observe and see how the work
may, if he wishes, leave that to the final stages notwithstanding that the cor- o~ . to time was being done. If that be the true view it was merel an
rection of a fault then may be much more costly to the builder than had his option given to the corporation whether they would sui,erintend or ~ot
error been pointed out earlier; see Hudson's Building Contracts (1965) 9th Therefore ... the fact that they did not exercise that option did not relieve th~
ed.), pp. 280-281, and East Ham Corporation v. Bernard Sunley."
68
contractors from the obligation to do the work properly "· K'
Hull Corporation v. Harding (l 89Z).72 ••• • tngston-upon-
"It seems to me most unlikely that the parties to the contract contemplated
that the builder should be excused for faulty work at an early stage merely
because the architect failed to carry out some examination which would have However, despite the robust language of the judgments in the East Ham 5.024
disclosed the defect. Evenifthe architect ... was in clear breach of his duty to and AMF cases quoted above, as also the seminal judgments in Clayton v
his client, the building owner, I can see no reason why this should enable the
builder to avoid liability for his defective work; the architect owes no duty to '!1'oodman,73,all of_which make it clear there will be in general no reductio~
in the ~":ner s entitlement as against the contractor by reason of negligent
the builder ... " 69
"I cannot see why [the builder] should be allowed to escape from the ordi- superv1s1on of the latter's defective work, many English and CommOn-
nary consequences of his negligence when discovered years later, a conse- w;alth ~our!s have been perhaps too ready to permit statutory remedies
~ c~ntnb~t1~n to ~ontractors against negligent supervisors, in contrast to
au eux _.J. s. strm~en_t obse:Yation in the Supreme Court of Canada,
Stemming from Lord Diplock's remarks in Kaye v. Hosier and Dickinson [1972] l W.L.R.
64
146, at p. 1650, and cited infra, para. 5-027 of which this is, it is submitted, the true when cons1denng ~ similar claim for contribution under the Civil Code of
explanation. Quebec.by a ~up~her of defective concrete from an inspector employed to
65
This paragraph in the ninth edition was cited by Mocatta J. in AMF International Ltd. v. check his delivenes:
Magnet Bowling [1968] l W.L.R. 1028 in the passage next quoted in the text above. See
also infra. paras. 5·059-5·062 for a possible effect on damages, and post, Chap. 7, Section
1(2)(f) and Chap. 8, Section 2(2) for a further discussion. 70 Per Lord Upjohn, ibid.
66 For this important further passage, see ante, Chap. 2, paras. 2·196-2· 197. Per Lord Pearson, ibid., at p. 449.
71

67 [1962] 1 W.L.R. 585, ante, Chap. 1, paras. 1·318-1·319. n [1892] 2 Q.B. 494. See also Jones v. Cannock (1850) 5 Ex 713
Ml The AMF case, at p. 1053,per Mocatta J. ,·
~ Per Lord Upjohn in East Ham Borough Council v. Bernard Sunley [1966fA.C. 406, at
7J [1962] Q.B. 533, C.A.; cited anter-Chap 1 paras 1·312
2·196-2·197. · ' · i
- ·313 an d Chap. 2, paras.
6

p.444.
 698 ACCEPTANCE AND DEFECTS [CttAP. 5
" ... How could it [the supplier] fairly be heard to say ... 'because you fail to
supervise me properly, and you are bound to do so by your undertaking to the
[buyer], you must share with me the burden of making compensation and, to
that extent, relieve me of it'. "74
This use of contribution remedies has been examined and doubted for
policy reasons ante, Chapter 1. 75 In the absence of contribution remedies,
there have even been cases of the owner's claim being reduced in amount
under a statutory apportionment remedy based on the owner's or his
A/E's contributory negligence, particularly in Canada. 76 At the time of
writing, contributory negligence and apportionment have not been statu-
torily applied to liability in contract, but should this eventuate it will be
certain to be rapidly advanced as a defence by contractors against owners'
claims for defective work. This would seem even more objectionable, for
obvious reasons, than the availability of a contribution remedy. A short
notice of a proposed Bill to this effect wa:s published by the English Law
Commission in December 1993, and is mentioned ante, Chapter 1, Section
12(10)(b).
SECTION 2. DEFECTIVE WORK
(1) Generally
5·025 Defective work for the purpose of the present chapter will be work which
fails to comply with the express descriptions or requirements of the con-
tract, including very importantly any drawings or specifications, together
with any implied terms as to its quality, workmanship, performance or
design. 77 By definition, therefore, the defects here discussed will be
breaches of contract by the contractor. Liability for defective work dis-
covered following final completion of the contract, as also in the context of
a defence or set-off by an owner against sums certified or otherwise due,
has already been discussed supra. 78
More sophisticated contracts will contain express terms concerning the
removal and replacement of defective work during construction. The
usual scheme of such contracts is to confer express powers on the owner or
his A/E for this purpose during the construction period up to the time of
completion and handover ( often referred to in English standard forms as
"practical completion" or "substantial completion").79 It will be seen80
that the inadequacy and impracticality of the express powers in standard
1
• Bilodeau v. Bergeron [1975] 2 S.C.R. 345, at p. 351.
,, Section 12(10)(c), paras. 1·379-1 ·380.
76 See ante, Chap. 1, Section 12{10)(b), paras. 1·377-1·378.
77 For these, see ante, Chap. 4, Section 1(2), paras. 4·063-4· 125.
7H Section 1(4)-(6).
7'l See ante, Chap. 4, Section 1(1 ), paras. 4·003-4·005.
"'' See infra, Subsection (2).
DEFECTIVE WORK 699
forms in many countries represents one of their most serious failures to
accord adequate protection of the owner's reasonable interest.
The initial express or implied dual liability of the contractor both to 5-026
carry out and to complete work in accordance with the contract descrip-
tions81 is often followed by a later and separate express liability of the
contractor to return and remedy any defects which may "appear" during a
stipulated period following completion and handover. This period has for·
many years been known widely as the maintenance period,82 but in more
modern building forms in England it is known·(more appropriately) as the
defects liability period. 83 It is usual to link releases of instalments of the
retention moneys with the beginning and end of this period, the release of
the last portion of retention following compliance with the final repair
obligation at the end of the period. This may be followed in some modern
contracts by a still further and later final payment of any outstanding bal-
ances found to be due, normally upon the final certificate of the A/E.
It should perhaps also be noted that, under nearly all English standard
forms, provisions for interim or final payment will normally be expressly ,S4
or, if not, impliedly, based upon the value (or in instalment payment cases
a completed stage) of work properly carried out, thus affording a defence
to claims for interim payment quite separate from any set-off or cross-
claim for unusual repair expenditure or other consequential damages.as
(2) The "Temporary Disconformity" Theory
This recent suggestion or theory is to the effect that a contractor who car- 5·027
ries out defective work will not be in actual breach of contract until com-
pletion and handover. 86 If that were correct, no injunction could be
obtained to prevent a recalcitrant contractor from continuing to build in
breach of the specification or drawings. It would be particularly damaging
to owners in informal contracts with no express powers of rejection, or in
the very common cases where the express powers in many standard forms
afford only the often impractical remedy of demolition and remOval. 87
The "temporary disconformity" theory owes its origin to one passage in
a dissenting speech of Lord Diplock in the House of Lords in a very differ-
ent context, where he was putting forward a new argument to the effect
that, in the case before him, a final certificate might, despite "conclusive
. evidence" wording in the contract, only apply to the state of the work as
being satisfactory at the time when the certificate was given, and not necess-
81
See Chap. 4, paras. 4·003-4·005(e ).
si Compare the ICE civil engineering forms.
83
For these types of clause, see more particularly Section 3, infra.
84
See Clause 60(7) of the fifth edition ICE conditions, and Clauses 30(2) and 30.2.1 of the
pre- and post-1980 JCT/RIBA contracts.
85
See Subsection 1(5), supra, and the Acsim case there referred to.
86
See also ante, paras. 4·003-4·005(e) and supra, para. 5·019 where this has been discussed.
fr/ As to which, see infra, Subsection (2).
 700 ACCEPTANCE AND DEFECTS [CHAP. 5
arily carry the implication that it had always been so at earlier stages dur-
ing the construction period.ss However, he then went on to say:
"Upon a legalistic analysis it might be argued that temporary disconfonnity
of any part of the works with the requirements of the contract even though
remedied before the end of the agreed construction period constituted a
breach of contract for which nominal damages would be recoverable. I do not
think that makes business sense. Provided that the contractor puts it right
timeously I do not think that the parties intended that any temporary discon-
formity should of itself amount to a breach of contract by. the contractor. " 119
(Emphasis added.)
It is submitted that, on grounds of both principle and practicality, a con-
tractor will be in immediate breach of contract whenever his work fails to
comply with the contract descriptions or requirements, although no
doubt, as envisaged by Lord Diplock, the damages will be at best nominal
in a case where he can show that he intends to rectify it at some more
convenient time before completion without affecting the quality of the
remaining work. 90 Subject to this, it is submitted that there is effectively an
implied entitlement of the owner to call for prompt and timeous contract
compliance, and that refusal to comply would be a repudiation by the con-
tractor entitling the owner to rescind. 91 This follows, it is submitted, from
the basic dual completion obligation, whether express or implied, in all
construction contracts which are not mere jobbing contracts, both to carry
out and to complete the work in all respects in accordance with the con-
tractual requirements and descriptions.92
5·028 A number of later cases do not support the "temporary disconformity"
dictum. Thus, in a case where it was not necessary to decide the point,
since the trial judge and Court of Appeal both held that, in making a valu-
ation which was contractually required upon the termination of a contract,
there was an accrued implied right of the owner at that time to exercise the
express contractual powers of rejection of defective work, O'Connor J.,
when considering the "temporary disconformity" argument that there
had been no breach at the time of termination in respect of admitted
defects, said "It seems to me that the technicalities may well be that there
is a technical breach each time the defective work is done ... ", and in the
Court of Appeal Roskill L.J., when dealing with the same submission,
said: "I confess I find that submission rather surprising ... with respect I do
not think that that submission is correct. " 93 Of Lord Diplock's dictum,
itself, Roskill L.J. said: "I respectfully question whether his Lordship on
any view intended it to be of universal application."94 In the following
88 It is submitted that this argument was correct. See post, Chap. 6, Section 4(3).
s9 P. & M. Kaye Ltd. v. Hosier & Dickinson Ltd. [1972] 1 W.L.R. 146, at p. 165.
00 See this view also expressed supra, paras. 5·020-5·021.
n Ibid. See the authorities cited infra.
92 Chap. 4, paras. 4·003-4·004, and in the context of limitation, paras. 4·292-4·293.
9J Lintest Builders Ltd. v. Roberts (1978) 10 BLR 120, at p. 128; (1979) 13 BLR,38, at p. 44,
C.A. ,,
94 /bid.
SECT. 2] DEFECTIVE WORK 701
year,_ Mocat~a J., dealing with a rather similar bondsman's argument that
despite adnutt:d defects there had been no "default" by the bonded con-
tractor at !he tune ?f termination of his contract within the terms of the
b<?nd, agam .found 1t unnecessary to deal with the point, but pointed out
that Lord ~1plock'~ dictum had been given in the special situation where
the defects m question had already been put right by the contractor and in
~at co~text drew attention to the dual nature of a contractor's obligation
in relation to de!ective work, citing Hudson on this latter point,95 More
recently, the point has been directly decided by an official referee in
favour of a c?ntinuing duty to carry out the work properly throughout the
contract ~enod95 although there have been conflicting cases on the differ-
ent question whether various final certificate provisions should be inter-
preted so as t~ bar complaints or set-offs based on consequential costs
~aused by earlier defects or delays during construction.91 It is submitted
infra9s that, while such provisions may obviously differ in their wording
fi~al certifica~~s often form part of a mandatory machinery for payment:
~th no p~ov1s1on for past repair cost damages to be taken into account
m the certificates {indeed, in many English contracts, liquidated damages
for delay, for example, are expressly left for separate treatment outside
~he payment certificates themselves). Contracts should not normally be
I~terpre~ed so. as to place a certifying A/E in the position of
either ~1thhold1ng a mandatory certificate indefinitely or, by granting it,
excluding the owner permanently from a bona fide set-off or counterclaim
for known co~seq~ential losses. Moreover, few if any contracts contem-
P!a~e or permit the 1s~ue of qualified certificates. All these factors point to
g1VIn~ the final certificate a reasonably limited conclusive effect it is
subnutted. '
(3) Express Powers during Construction Period
(a) Required powers
It is se!f-evident that, if defective work or materials are detected prior to 5·029
completion and handover, the owner or his NE to avoid any doubts
should in any s?phistic~ted contract have expre'ss powers, backed b;
necessary financial sanctions or other remedies, to secure either their re-
: Nene Housing Association v. J>!ational Westminster Bank (1980) 16 BLR 22, at pp. 32-33.
. Surrey Heath Borough Council v. Lovell Construction Ltd. (1988) 42 BLR 30 at p 34 d
se: at p. 32,per Judge Fox-Andrews Q.C. ' · an
91
Fairweathe_r~. Asden (1979) 12 BLR40,per Sir William Stabb Q.C.;H. W. Nevill (Sunblest)
Ltd. v. .w,ll,am Pre~s & S~n Ltd. (1981) 20 BLR 78, per Judge Newey Q.C.; Whar
P~opertles Ltd. v. Enc Cumme Associates (1984) 29 BLR 110 per Hunter J Hon K f
High a. • ., g ong
98
See paras. 5·048-5·049.
 702 ACCEPTANCE AND DEFECTS [CHAP.5
moval, or at the very least the carrying out of remedial work which will be
a sufficiently satisfactory substitute for outright demolition and rebuild-
ing, since in many cases the latter may not be practical, from the owner's
point of view as well as from that of the contractor).
In fact, in the everyday situations of construction contracts and projects,
whether informal or sophisticated, defective work may, depending on its
particular character, require a far wider range of options exercisable by
the owner or his A/E than these two alternatives. Draftsmen should also
bear in mind that in many cases a contractor, whether rightly or wrongly;
may dispute liability for defective work, for example, blaming the A/E's
design, and that recalcitrant contractors, particularly where, to their
knowledge, the owner is under powerful commercial inducements to
enter into Occupation as soon as possible, find it a greater negotiating
advantage to adopt an unco-operative attitude, rather than obtain the ear.-
lier release of an instalment of retention on completion and handover
which a more co-operative attitude might secure. The more serious the
financial implications of the discovered defects, and the more ill-defined
the owner's or his A/E's powers in such a situation, the more likely such a
confrontation will be, often placing the owner and his advisers in a serious
quandary in a situation where, by.definition, the contractor is in breach.
5·030 Inatypicalsituationwhenthefirstemergingsymptomsofseriouslydefec-
tive work are discovered, the following powers will often be needed:9Sa
(a) to stop work and order an investigation or tests to determine the
cause;
(b) once the responsibility has been seen to be that of the contractor, in
many cases it may be both prudent and necessary to order further
opening-up and investigation in order to ascertain the full extent of
the breaches (if, as in large projects is often the case, they are likely
to be of a repetitive character), before determining on an appropri- ·
ate scheme of remedial work if wholesale demolition and replace~
ment is to be avoided. Clearly this wider investigation should be at
the cost of the contractor ( and would be so recoverable, in the
absence of express provision, as damages for breach of contract)
whether or not the subsequent investigations disclosed further
breaches,
(c) to order removal or demolition and replacement (usually the only
traditional remedy, and often quite impractical, particularly at .a
late stage of construction);
(d) to vary the originally intended permanent work, at no cost to the.
owneF, if that is the best way of dealing with the problem created by
the defective work ( that is, a power to order "remedial" work in this
special sense); . ers, all at the cost of the contractor (if the reasonable and prudent
( e) depending on the nature of the breach and any remaining degree.of
confidence in the contractor, to order acceptance of the work
unremedied, subject to an appropriate deduction from the contract
' .
Olla See also C.C.P.P., paras. 21-29-21-30, 29-08-29-10, 29-19, and 30--03-30-11.
SECT. 2] DEFECTIVE WORK 703
price. This is a particularly valuable and important remedy with a
recalcitrant contractor at a late stage nearing completion, but
should be available at any time, including the time of issuing the
practical or substantial completion certificate;
(f) to avoid tactical obstruction at the time of handover, or to secure
early entry, a power to issue a completion certificate listing uncom-
pleted items for later completion, where this is consistent with
occupation by the Owner (compare Clause 48(1) of the fifth edition
ICE conditions which seems, however, dependent on contractor
consent).
It will be seen that, in the absence of express provision to the contrary, ( a), 5.031
(b) and (d) above would all normally be obtainable as damages for breach
of contract or under the rules of mitigation of damage, while the power of
deduction (e) would normally be available as a defence to a claim for the
· full price, unless the contractor insisted against instructions on remedying
the work. Ironically, the removal power in (c), which is the only express
p_ower conferred by the ICE and JCT/RIBA forms, might not always sur-
vive a plea of failure to mitigate damage in a case where less drastic
r~medial work would be satisfactory.
. In view of the many tactical victories which have been secured by con-
·j: t,ractors under the English standard forms as a result of actions taken by
.AfEs following discovery of defective work, defensive provisions are also
·.4ighly desirable in modem contracts to the effect that no instruction given
...a~ a reasonable consequence of defective work or any other breach of
~pntract by the contractor, or of any sub-contractor or supplier, should
-':€:p.title the contractor to additional payment of any kind or (a fortiori) to
't~~minate the contract. Thus the {for some reason rarely used) English
, g~'.\:'ernment GC/Wks/1 contract (but very notably no other English stan-
. ;,Q.ard form), achieves both objectives by denying compensatiOiI for com-
,.. 'I?liance .with architect's instructions given "as a result of any default on the
,J~~ 9f the Contractor" ,99 and in the case of sub-contractor default by pro-
;,yfsJing that the contractor is to "make good any loss suffered or expense
}nc.uJTed by the Authority by reason of any default or failure whether
;;~ptal or partial, on the part of any [nominated or other] sub-coniractor or
·,S,.upplier" .1
·<:_As an example of a modern standard form which endeavours to.satisfy 5·032
itl~,e above requirements, the Singapore SIA post-1980 private sector
building contract provides for:
'
..,(a) .stoppage of work, investigation and later wider investigation pow-
consequence of defective work), and whether or not subsequent
defects are found 2;
Pause 9(4)(c).
J~lause 31(3).
See Clause 11(2), C.C.P.P., pp. 564-565.
 704 AccEPT ANCE AND DEFECTS [CHAP. 5
(b) the traditional removal and demolition power3;
(c) the power to vary at the cost of the contractor4;
( d) the power to accept defects unremedied subject to reduction of the
contract price5;
(e) a power to certify completion with minor works outstanding for
completion during the maintenance period,6 and additionally a
power of the owner to enter and occupy a part of the works without
the contractor's consent subject to compensation for any
disturbance7 ;
(f) a general provision denying compensation for any variation the
reasonable consequence of defective work or other breach of
contract. 8
(b) Current powers in standard forms
5·033 Until 1990, the only express power conferred by the principal English
standard forms in respect of defective work during construction was that
of removal or demolition. 9 Obviously, this power is impractical for an
owner who at a late stage of construction of a high-rise building, for exam-
ple, discovers penetration from driving rain due to repetitive failures of
detailing and workmanship throughout the cavity walls of the building, or
who discovers evidence of movement due to a subsequently diagnosed
breach of contract in the foundations. The absence of any power to order
"remedial" work in the RIBA/JCT contracts has been judicially noted.10
Thus instructions which may constitute a variation of the permanent work
will need to be given in such a situation if the owner is to control the meth-
ods of remedying defects, which will almost invariably be a commercial
and legal necessity for him. The opportunities for obstruction, and for
presentation of financial claims, (and even, astonishingly, for contractor
termination of the contract) which the absence of any savings in the vari-
ation clauses in the two principal English contracts affords, is self-
evident,1t and the failure to remove such provisions from local authority
and public contracts using the English standard forms is a serious reflec-
tion on the quality of central and local government administration in
England.
5·034 Again, while each main standard form contains an opening-up or
inspection power, in both cases the contractor is expressly entitled to
~ Clause 11(3), C.C.P.P., p. 565.
4 Clauses 1(3)(d) and 11(4), C.C.P.P., pp. 554, 565.
~ Clause 11(3), C.C.P.P., p. 565.
6
Clause 24(1), C.C.P.P., pp. 580, 581.
7
Clause 26(3), C.C.P.P., p. 584.
s Clause 12(5)(d), C.C.P.P., p. 569.
9
See Clauses 6(4) and8.4 of the pre- and post-1980 RIBAJJCT contracts, and Clause 39(1)
of the fifth edition ICE conditions.
10 Per Parker L.J. in Fairclough Building Ltd. v. Rhuddlan Borough Council (1985) 30 BLR
26,at p.44.
11 See the Gloucestershire C.C., and Jarvis cases illustrated infra, para. 5·03'~;".and see also
Fairclough Building Ltd. v. Rhuddlan B.C. illustrated post, Chap. 13, para. 13·076. See also
the cases referred to post, Chap. 7, paras. 7·028 et seq.
SECT. 2] DEFECTIVE WORK 705
addi~i~nal payment if the inspection discloses no defective work.12 Such a
pr~v1s1on could be appropriate only to a "spot-check" power of investi-
?atio~ wh~re no def~ct is suspected, but is obviously not appropriate to an
mvesttgatton resulting from previously discovered defects. Moreover
such an e~~e~s provision made without qualification can very arguably be
used to drm1msh the damages which the owner may ultimately recover for
the defects in question.
Again, neithe~ form ~ontains the tactically invaluable right to accept
~efec_ts unremed1ed subJect to an appropriate reduction of price. Such a
nght Indeed did appear to be present, but for an apparent transposition of
the word "and" in both Clauses 5 and 15 of the 1963 RIBAIJCT forms. It
was und?~bt~dly present in earlier RIBA forms. 13 Literally read, this
tran~~os1tion m the 1963 forms would bring about the absurd result of an
a.dditlonal payment, should the architect so instruct, for remedying defec-
ttve work due to breach of c·ontract. That this indeed was the 1963 RIBA/
JCT _intention became explicitly clear by feason of the quite different
drafting scheme of the interim payment provisions in the 1980 RIB A/JCT
contract~. That later wording additionally constituted a positive denial of
anypo~s1ble cont!actual right to accept work subject to reduction of price.
Follow!ng a detailed analysis and criticism in C.C.P.P. of this absurd and
damag1~g ~nomaly, 14 the 1980 contract was at last finally amended so as to
remov~ It ID 1987, some 20 years after its first public identification, from
the setting out and defects liability period Clauses 7 and 17 of that form of
contract.
Subsequently, in 1990, in a newly amended Clause 8·4, the RIBA/JCT
cmtracts adopted the three additional powers (b), (d) and (e) over defec-
tive work dunng the construction period which are listed supra, para-
graphs 5·029-5·030. No doubt the ICE Conditions can be expected to
follow suit in the near future.
(c) Special anomalies of RIB.A/JCT forms
Qui~e apart from the.already demonstrated inadequacy of the express 5·035
d~fecttve work powers m these forms prior to 1990, these contracts con-
tain not only ~revisions for a?<litional loss or expense ( as, for example,
those for opemng up and testmg where no defects are discovered or for
postponement instruc~ion~, or for late instructions), 15 but they a~tually
confer po:"ers of tenn1~ation o~ the contractor if the works are delayed
for a relatively short penod on srmilar grounds, with either no savings for
c?ntractor default (as in the case of delays caused by opening-up instruc-
tions) or savings which are inadequately drafted so as not to cover nomi-
12
Clauses 6(3) ~n.d 8.3 of the p~e- and post-1980 RIB A/JCT contracts, and see Clause 38(2)
of the fifth edition ICE conditions.
13
,See, for an example in an East African RIBA contract" Ata ul Haq v City Council ofN; ·
robi (1962) 28 BLR 76, at p. 86. ' · m-
:: See the analysis in detail in C.C.P.P., paras. 30-08 to 30-10.
· See, e.g. Clauses 24(1)(a), (b) or (e) and 26.2.1, .2, .5 and .7 of the pre- and post-1980
contracts.
 706 ACCEPTANCE AND DEFECTS (CHAP. 5
nated or domestic sub-contractors' defaults. 15" Combined with the con-
spicuous absence of any more general defensive provisions comparable to
those in the GC/Wks/1 contract which could serve to exclude these event-
ualities,15b these forms of contract have succeeded in producing serious
anomalies whereby contractors have been able to extract extraordinary
tactical advantage as a result of architect's instructions given to deal with
defective work, particularly that of nominated or domestic sub-
contractors.
ILLUSTRATIONS
5·036 (1) Nominated suppliers under the 1957 (revised) RIBA contract supplied
pre-cast columns which were found to be cracked when erected. The con-
tractor, who admitted he would have stopped work anyway, confirmed the
clerk of works' oral instruction to do so in writing to the architect, who called
in consultants for tests. While their report was still awaited, the contractor
first informed the architect that he had no further work to do by letter, which
the architect acknowledged without comment, and then five weeks after that
terminated the contract under the terms of Clause 20, on the ground of delay
exceeding one month caused by architect's instructions or alternatively by
late instructions. The consultants' reports received after the termination
showed that the columns had contained serious manufacturing defects. Held,
by the House of Lords (Lord Pearson dissenting), that the termination was
valid: Gloucestershire County Council v. Richardson (1969). 16
(2) Nominated piling sub-contractors left the site in early July 1983 leaving
their piles untested, which was in breach of contract, and when two piles failed
tests later arranged by the owner, refused to return. The architect immedi-
ately advised the contractor that he was taking steps to obtain competitive
tenders for a second nomination. In response to an initial letter from the main
contractor in July, the architect had written "you should cease work on this
element of the contract". Neither he nor the contractor interpreted this as an
instruction to cease work on the whole contract, but in September the con-
tractor, on advice, terminated the contract without warning, contending that
the architect's letter was a postponement instruction under Clause 23.2 of the
1980 JCT/RIBA contract, and that under Clause 28.1.3.4 (which now had a
saving preventing any such tennination if the instruction was caused by the
negligence or default "of the Contractor", but was otherwise the same as
Clause 20 of the 1957 contract) the saving did not apply to the default of a
nominated sub-contractor. Held, by the Court of Appeal, the termination was
valid: John Jarvis Ltd. v. Rockdale Housing Association (1987). 17
[Note: The saving words in question, ultimately introduced into the RIBA
contracts in 1973 in response to criticism of the unqualified nature of the ter-
mination clause, were undoubtedly typically carelessly drafted in the owner's,
interest, having regard to the difference between the "contractor" wording of:
this saving and the express "sub-contractor" references in another saving in_
the same clause, and might be said to justify the decision, however anomalous
the policy. However, it had apparently been conceded that the architect's
letter constituted a postponement instruction, which seems very doubtful, and
there are other reasons for doubting the reasoning of the Court. 18].
1;. SeeC.C.P.P.,paras. 29-20-29-23and3D-24. 1>b See,e.g. G.C./Wks/1, Clause9(3)(d}.
16 [1969] 1 A.C. 480, illustrated more fully ante, Chap. 4, para. 4·122 and post, Chap. 7, para.
7·031, and see more particularly the note to the case post, Chap. 7. ,· '
17
36BLR48.
18 See these discussed in "The Bickerton Albatross Once More" (1987) 3 Const.L.J. 274.
SECT. 2] DEFECTIVE WORK
707
. (3) By Cl~use 20A.3 of a contract for the construction of a nuclear submar-
ine, the main contractor was to be paid the cost of "excepti"onal ct· I ti"
5·037
and delay d . is oca on
b · · · ue to a1terations, suspensions of work or any other caus
eyon~ the contra~tor's controI''. A nominated sub-contractor installe;
defectt"'.e cable, which was detected during construction and dul re laced
r e main contrac!or sued the owner for his additional expense ca~selb th;
frelay. It was admitted that th~ main contr~ctor was entitled to claim hi{loss
om the .sub-contr~ctor (which he had 1n fact done, but had alle edl
compromised the clrum for less than its true worth 1sa and was now p gd. y
for the balance), y,ih~reas the owner could hav: no claim a ains~~~:e s~~~
contractor, D;Ot being 1n con~ractual relations with him. Held, ;y the House of
~rds, !hat since the defect in the cable was a latent one not discoverable on
~nsp~ctio~ ant the contractor ha? secu~ed full rights for himself against the
o~:;te ~~-contractor, the d1slocat1on caused by remedying the defect
~as y~n -~ contractor's control", so that he was within the terms of the
~:/:~c!(19ii).~9ed to succeed: Scott Lithgow Ltd. v. Secretary of State for
[Note: The reas?ning of the House of Lords in this "one off'' case makes it
~1ear that the nom1n~t~d sub-contractor status of the cable manufacturer was
lfr~levant to the dec1s10~, and that the case would apply equally to domestic
su -co~tractors _or suppliers operating in a field outside the main contractor's
~rea . o expertise a~d pers_onal control. Notwithstandin the ve dis-
tn!gu~h:d membership of this particular Committee of the 1fouse, itfs
sub-
nutt.e t at any attempt to extend the reasoning of the case to other contracts
or ctrcumstance_s should be treated with considerable caution 20 and that th
~ontradryt,ebasonn!.g of LordJauncey in the court below is partic~larly convinc~
l ng an o e pre1erred.20aJ
The last of the above illustrations does not seem to have involved a
RIBAIJCT con_trac~, although the wording is commonly found in man
standard forms 1n this or other contexts, but it is a striking example of whit
· seems to be a n~w t_endency of the English higher judiciary to excuse main
_coµtrac~o.r obligations on the ground of sub-contractor default thus
emphas1smg the need for careful draftsmanship in the owner's int;rest 21
< :Further examples of potential contractors' claims arising in situatio~s
·, ()f contractor default under English standard forms are collected post
,c;:h~pter 7. 21a '
;{d) No duty of owner or AJE
The present subsection has been concerned with the desirability of
5·038
~~ress contractual p~wers to deal in different ways with defective work.
~thas been seen that 1n the Kingston-Upon-Hull case22 the contractors'
i~~~~~e similar allegation made in Pacific Associates v. Baxter, see ante, paras.
,5,BiR6.
j:~°:a:~:sis and doubts in "Beyond the Contractor's Control" (1991) 7 Const.LJ. 3_
-~e,fo~
_-:::St
t
aC~rth;~doubtful example,
of : 0
(1974) 6 BLR
City ofJ:lanchesterv. Fram Gerrard Ltd.
t~· :tt~~15·059, where a mam contractor's indemnity was so interpreted in
eqm . ere~tapproa~hoftheHouseofLordswhenconsideringanext;n.
trm e 'ulause m 1970 m Westminster Corporation v. J. Jarvis & Sons Ltd. [
,,.. R • 637, 1 ustratedpost, Chap. 10, para. 10·099.
19701 1
$ee paras. 7·025 et seq. ·
illustrated supra, Section 1, para. 5·023.

708 ACCEPTANCE AND DEFECTS [CHAP. 5
sureties unsuccessfully argued that an owner or his A/E owed a duty to the
contractor while supervising, in that case to detect and prevent defective
work. That duty could equally easily, as a matter of principle, have been
expressed as a duty of the owner or his AJE to give precise instructions to
the contractor as to the remedial work required, or to exercise any other
contractual power upon the discovery of defective work during the con-
struction period. Indeed, in the Gloucester case23 Lord Pearson, notwith-
standing his dissenting speech, was apparently prepared to hold that, in
the special case of nominated suppliers' defective work, the contractor
would be entitled to receive instructions, but this view has been doubted
post, Chapter 7.24
In the wider context of difficulties encountered during construction, a
contractor is only entitled to receive instructions as to the final permanent
work required, and not as to his methods of working. 25 A fortiori, the fact
that the contract may have expressly reserved powers for the A/E to take
action in the event of defective work discovered during construction will
not, it is submitted, impose any duty to do so on the AJE or impose any
liability on the owner, who will be under no obligation to the contractor in
regard to the exercise of such powers.
However, in a relatively recent case in England, Judge Newey Q.C. did
hold a building owner under the 1963 RIB A/JCT standard forms liable to
the main contractor for his architect's refusal to issue a variation instruc-
tion to cover remedial work proposed by a specialist nominated sub-con-
tractor for defects due to the sub-contractor's design and choice of
materials. This was based on an interpretation of Clause 3(3) of the 1963
conditions or an implied term for co-operation. Nevertheless, a contrary
view is stated in a number of chapters elsewhere in this book.26
In addition to the discussion and cases illustrated above, the cases and
discussion in Chapter 7, J}ost, 27 should also be considered in this context.
(4) Types of Maintenance and Defects Liability Clauses
5,039 It should be made clear that in clauses of this kind the word "defects"
will today usually be held to indicate any deficiency in the quality of the
work, whether structural on the one hand or merely decorative on the
23
See supra, para. 5·036. More fully illustrated ante, para. 4· 122.
21
See para. 7·031.
2
~ See ante, Chap. 4, Section 2(3)(b), paras. 4·176 et seq.; and see Kingston-Upon-Hull v.
Harding [1982} 2 Q.B. 494, supra; Clayton v. Woodman [1962] Q.B. 533; AMF Inter-
national v. Magnet Bowling [1968] 1 W.L.R. 1028; City of Monckton v. Aprile (1977) 17
N.B.R. (2d) 678; affd. (1980) 28 N.B.R. 631. See also post, Chap. 7, paras. 7·025 et seq.
26
See Holland Hannen & Cubitts (Northern) Ltd. v. Welsh Health Technical Services
Organisation (1981) 18 BLR 80, ante, Chap. 2, para. 2·201; but see Cha~. 2, Section
6(2)(d), paras. 2·138-2·140; Chap. 4, para. 4·095; and post, Chap. 7, !?~as. 7·025
et seq.
27
See Chap. 7, paras. 7·025 et seq.
/----:-\
SECT. 2] DEFECTIVE WORK 709
other, and whether due to faulty material or workmanship, or even in
design or performance if that is a part of the contractor's obligation. In
some cases, the making good or repair obligation may be limited expressly
to cases of breach of contract on the part of the contractor, but the modern
tendency is to require making good or repair whatever the cause of the
defect, but with full compensation to the contractor in cases where he is
not in breach of contract. In other less usual cases, the repair obligation
may be "absolute", in the sense that the contractor may be obliged to
make good without additional cost to the owner whether or not he is at
fault.
In building contracts in England the defect, whatever its cause, is often
defined as one which "shall appear" within the maintenance or defeats
liability period. 28 Thus, in these cases, defects which "appear" after the
period has expired will not be within the ambit of the clause, and in the
absence of 8. binding certificate the contractor will remain liable in dam-
ages for them for the period of limitation, usually running from practical
completion. Moreover, on this wording patent defects which are not
merely de minimis will not, in the absence of ex-contractual agreement or
express provision, enable a practical completion certificate to be properly
given so as to permit the maintenance period to start.29 This particular
wording is not, however, present in the ICE standard forms, so that pre-
viously known defects during the construction period appear capable of
being the subject of the maintenance period liability.30 The word "defect"
in the expression "defects shrinkages or other defaults" has been held not
to include work never done at all, so that an architect was held entitled to
call for it to be done after expiry of the defects liability period and before
final certificate. That case depended very much on the particular wording
of Clause 1 of the R.A.lA. contract, however. 31
The word "defect" in this particular context may in practice often mean
the symptom rather than the cause, which may often be difficult to estab-
lish (and so any consequential questions of liability), until work has been
demolished, removed or uncovered, or special investigations carried out.32
Despite the similarity of many modern clauses, there are in fact differ- 5·040
ent types of wording which may occasionally be met with in construction
contracts and which may have very different consequences, particularly in
those cases where the contractor's obligation is to arise independent of
fault on his part, so that he is not entitled to extra payment whatever the
cause of the defect. Thus "absolute" wording of this kind may have the
result:
28
Compare Clauses 15 and 17 of the pre- and post-1980 RIBA/JCT standard forms. The
word is "appears" in the RIB A/JCT minor works contract.
29
See infra, paras. 5·048-5·049.
30 See Clause 49(2), fifth edition.
31
Qantas Airways Ltd. v.Jose/andand Gilling (1986) 6 N.S.W.L.R. 327, Full Court; (1987) 3
Const.L.J. 299.
n See the case of Cunliffe v. Hampton Wick Local Board, illustrated infra, Subsection (5),
para. 5·046.
 710 ACCEPTANCE AND DEFECTS [CHAP. 5
(a) of starting the running of the limitation period for defective work
generally (not the particular defects liability obligation) from a
date later than practical or substantial completion or handover,
from which it would normally start to run 33 ; or
(b) of prolonging the period during which damage to the works
remains at the risk of the contractor, which otherwise will usually
end at practical or substantial completion or entry into occupation
by the owner.
If, as in most modern forms, however, the contractor is entitled to extra
payment for repairing defects if these are not due to his own breach or
fault, the exact form of wording may be of much less importance from
these points of view. But in "absolute" cases the wording will need to be
very carefully considered to determine whether it has these consequences.
The possible types of clause have been classified as, first, requiring that
the contractor should repair rectify or make good all defects within the
period (the usual modern forms); secondly, that he should be under a
more general "repairing" obligation akin to that in a lease, in regard to the
completed works during the period; and, thirdly, that he should maintain
and uphold the works for the period. 34 This latter wording may sometimes
have a more limited meaning preserving the actual condition of the works
at the beginning of the period even if containing defects, than a repair of
defects clause would do. 35
5·041 Thus the precise obligation of the contractor under a defects clause may
vary with the wording in each case and it is theoretically possible that all
three types of liability can be embodied in one clause. An important con-
sideration may be whether the obligation arises only on receipt of notice
or instructions from the NE ( since after all the owner will now be in pos-
session) or whether the obligation is unconditional. Generally, however, a
defects clause would seem to be less burdensome than a repairing clause,
because whereas in the former the contractor's liability, even if "absol-
ute", usually only extends to reinstating "defects", aiid the word "defect"
may not in context always be appropriate to include damage done to the
works by some external event or third party, in the latter case the contract-
or may be called upon to rebuild the structure if it is accidentally destroyed
or damaged, as by fire or tempest or acts of vandals or third parties. As
stated ante, Chapter 4, under the general law the contractor will usually be
under this obligation only until the work has been practically or substan-
tially completed and handed over,36 so that a "repairing" clause of this
type may extend the general obligation beyond the usual completion or
handover date for the period stated in the clause.
It would seem that a "repairing" clause of this kind imposes upon a
contractor much the same obligation as a repairing -covenant in a lease;
1
:i. See ante, Chap. 4, paras. 4·292--4·293.
34
Roux v. Colonial Government, illustrated infra, para. 5·044.
,., See Bruens v. Smith [1951] 1 S.A. 67.
:1<1 See ante, paras. 4·003--4·005, 4·037 and 4·043.
SECT. 2] DEFECTIVE WORK 711
that is, he will be obliged to keep the structure in that condition in which it
would be found had it been managed by a reasonable owner, having
regard to its age and the locality and class of person likely to occupy it at
the time when the obligation to repair began.37 The ICE "maintenance"
clause combines the language of a repairing obligation and a making good
of defects clause, but has a "fair wear and tear" exception, as well as pro-
viding expressly for compensation for all expenditure not due to contract-
or breach. 38
"Absolute" clauses, in addition to matters such as damage to the works 5·042
due to external factors, may well include defects due to the architect's
design in the events which have happened, but on the Alderslade prin-
ciple39 will not extend, it is submitted, to cases where the design of the AJE
is the cause, in the absence of sufficiently clear wording.
Defects clauses of all kinds seldom make any mention of consequential
damage. In the seventh edition of this book, it was said that, if a party who
undertook to keep a structure in repair failed to carry out his obligation,
he might be liable in damages for loss of rent or profit during the execution
of such repairs by the other party, and cited Birch v. Clifford40 That, how-
ever, was a case where a tenant had failed to repair during the term, so that
after the term expired the landlord had to carry out repairs when he might
otherwise have let the building or put it to profitable use. It is a different
case where a contractor fails to keep in repair a building which is in the
possession of a building owner, because in such a case the building owner
would in any event lose the use of the building while the repairs were
carried out, so that in an "absolute" case where the builder was not at fault
these consequential expenses will not, it is submitted, be payable-aliter,
of course, if the defects are due to defective work by the builder, when
they will be recoverable 3.s consequential damages for that breach.41
ILLUSTRATION
Contractors agreed to carry out site clearance, piling, foundation and 5·043
drainage works, prior to construction of a building on the site_by other con-
tractors. Their contract was in the RIBA/JCT standard form. They finished
their work in May 1974, but were required to return and make good defects in
the drains and the hard-standing in November 1974, which they duly did.
However, the other contractors for the building had been delayed by four
weeks, and the owners had to pay them for delay and additional work as a
result of the defects in the defendants' work. Subsequently the architect
issued a certificate of making good of defects and later a final certificate. The
37
Anstruther-Gough-·Calthorpe v. McOscar [1924] 1 K.B. 716.
JijSee Clause 49(2), fifth edition.
J• Explained post, Chap. 15, Section 2(2), paras. 15·040 et seq.
40
(1891) 8 T.L.R. 103.
41
In addition to the Nevill case, illustrated infra, see Lord Diplock's clear obiter dictum on
this point in R. M. Kaye Ltd. v. Hosier & Dickinson Ltd. [1972] 1 W.L.R. 146, at p. 1660.
 712 ACCEPTANCE AND DEFECTS [CHAP. 5
owners brought proceedings to recover their additional costs and other con-
sequential losses. The contractor, in addition to contending that the final cer-
tificate was binding, pleaded in the alternative that the owners' remedies for
the defective work were limited to those in the defects liability clause, Clause
15, of the contract. Held, by Judge Newey Q.C., that Clause 15 merel~ created
a simple way of dealing with a part of the situation created by defective work
in breach of contract, and was not to be read as depriving the injured party of
any other rights. The final certificate was only conclusive that the work com-
plied with the contract at the date when it was given and the owners were
entitled to damages: Nevill (Sunblest) Ltd. v. William Press & Son Ltd.
(1981)."
5·044 In all cases, however, the language of the particular clause must be care-
fully considered in order to determine its exact scope and whether the
obligation is of an absolute or qualified character. In a normal construc-
tion contract, there will be a presumption that it is qualified.
ILLUSTRATl ON
In a contract to construct a dam in South Africa it was provided that pay-
ments should be made on account as the work proceeded, that the balance of
the contract sum should be paid to the contractor within 12 months after the
date of the final certificate of the chief inspector, and that during this period
the contractor should make good at his own cost all omissions and defects that
might appear and arise subsequent to the issuin~ of the final certificate. The
final certificate was issued in January 1900, and 1n March the dam collapsed.
After 12 months the contractor sued for the balance. Held, by the Cape Divi-
sion Court of Queen's Bench (Buchanan, Maasdorp and Jones JJ. ), that there
are three distinct classes of undertaking which are commonly entered into
with regard to retention money; the first being·a repairin~ clau~e; _the secon?,
a clause that the builder shall rectify all defects appeanng w1th1n a certain
period, and the third, a maintaining and upholding clause. This clause was of
the second type and, it not being established that the.co~lapse of the d~m was
due to any defect or omission on the part of the plaintiff, he was entitled to
recover: Roux v. Colonial Government(1901). 4l
(5) The Maintenance or Defects Liability Period
5·045 These periods traditionally start on "completion" (the time when the
owner re-enters and occupies the site), which in sophisticated contracts is
signalled by an A/E's certificate given at that time. This will usually have
the additional effect of terminating any liquidated damages for delay, and
42 20 BLR 78. Judge Newey also followed Lord Diplock's dissentingjudgm~?.t in the Kaye
case on the final certificate point.
43 18 Cape of Good Hope (S.C.) Rep. 143.
SECT. 2] DEFECTIVE WORK 713
will frequently release a proportion of retention money. The modern
English practice is to follow this initial certificate with a further certificate
signalling the satisfactory making-good of defects at the end of the period,
followed in tum by a still later "final" certificate resolving all outstanding
financial matters, and at the present day it is this last certificate, and not
some earlier completion certificate, which may or may not, depending on
the wording of the contract, be given binding or conclusive effect pre-
venting any further complaint of defective work. Indeed, the modern and
justifiable tendency of the English courts is to reject any binding or con-
clusive interpretation, in the absence of much more explicit wording than
the express provisions for payment against a certificate of the architect ( to
the effect that the works had been completed to his satisfaction) which in
the earlier Victorian contracts had undoubtedly been frequently inter-
preted as conclusive and binding as to the adequacy of the work, without
any need for more explicit wording. 44
However, in earlier forms of contract where the certificate had been
interpreted as having binding force, there was no uniform contractual
practice as to which of the various certificates at the end of the contract
was to be regarded as the definitive conclusive certificate of satisfaction.
Thus many earlier English contracts, and some forms of contract in Aus-
tralia and New Zealand, treated the completion certification at the begin-
ning of the period as the definitive certificate of satisfaction, so that in
these contracts the final certificate might be relatively unimportant from
this point of view. 45
ILLUSTRATIONS
(1) In a contract for sewers it was provided that the contractor should make 5,046
good defects appearing within three months of completion of "the several
works", and should maintain and keep them in proper working order during
the period. One part of the works was completed before the rest, and an
interim certificate given in respect of that part. Later the whole was finished
and the engineer issued a final certificate showing the balance due to the con-
tractor, which under the contract was to be conclusive evidence of the works
being duly completed. Within three months of that certificate, a defect
appeared in the part which had been completed more than three months
before. ~so, a stoppage in the sewer was discovered within the three months,
although 1t was not opened up and the cause ascertained until after the three
months. Held, by the Court of Appeal (a) that the final certificate was the
required evidence of due completion, the three-month period ran from the
date of that certificate, and the contractor was liable to make good the defect;
44
See the former leading case of Bateman (Lord) v. Thompson (1875), Hudson, Building
Contracts (4th ed.), Vol. 2, p. 36, now not followed in Billyack v. Leyland [1968} 1 W.L.R.
471, National Coal Board v. William Neill & Son (St Helens) Ltd. [1985] Q.B. 300 and
Crestar Ltd. v. Carr(l987) 37 BLR 113. For a historical view of certification provisions, see
C.C.P.P., paras. 17-09 et seq.; and see generally pQst, paras. 6·046 et seq., and 6·067 et seq.
45
See, e.g. the cases of Stratford (Borough of) v. Ashman [1960] N.Z.L.R. 503; Major v.
Greenfield [1965] N.Z.L.R. 1035, illustrated post, paras. 6·082-6·083, as well as A ta ul Haq
v. City Council of Nairobi (1962) 28 BLR 76, P.C., illustrated infra.
 714 ACCEPTANCE AND DEFECTS
and (b) the contractor was liable for removing and making good the cause of
the stoppage: Cunliffe v. Hampton Wick Local Board (1893). 46
(2) A contract in South Africa provided for retention of a proportion of the
price as security for making good defects appearing within two months of
completion. The work was to be to the satisfaction of the architect, and pay-
ment was to be upon his certificate. The architect certified the final balance
due, subject to making good certain listed defects. These were remedied and
the contractor paid. The owner then sued for damages for certain defects
which had been apparent during the carrying out of the work, and others
appearing after two months. Held, by MaasdorpJ., that the certificate was the
equivalent of a final certificate and binding except in regard to defects appear-
ing within two months of the certificate, and the owner could not recover:
McCarthy v. Vb-ser (1905). 47
5·047 (3) Clause 7 of the contract provided "when the works have been COJ?-
pletely executed according to the provisions of t~e contract and ~o the sat_is-
faction of the engineer, the date of such completion shall be certified by him
and any such date shall be the commencement" of the period of maintenanc~.
There was an obligation to rectify defects during the maintenance period 10
the usual form. Completion was certified under this clause as to 11 out of 17
blocks of buildings (there was power to do so) but the certificate was refused
as to the remaining six. After the expiry of the maintenance period the owner
brought an action alleging defects in all the blocks. Held, by the Privy Council,
(a) a decision under Clause 7 was final and binding and not subject to ar~i-
tration411 and (b) it was in effect a certificate that the works were both 1n
accordance with the contract and to the engineer's satisfaction, and ( c)
accordingly the only remaining obligation of the contractor in respect of the
11 blocks was to repair such defects within the maintenance period as he
might be called upon to do under the defects clause and, no such defects hav-
ing appeared or been brought to his attention, he was under no further liabil-
ity and was entitled to the full price of the 11 blocks, but (d) no ce:tificate
having been given in relation to the remaining blocks, the owner was 1n those
cases entitled to damages: Ata ul Haq v. City Council of Nairobi (1962). 49
Some construction contracts require full performance of the work in all
respec.tS before the certificate of completion signifying the beginning
of the period. It has been pointed out50 that it may be very much in the
owner's tactical interest for the A/E to have a discretion, not dependent
on contractor consent, to certify re-entry before all the work is complete,
but if so the contract must obviously define and provide expressly for the
time and manner of completion of such unfinished or defective work, and
some contracts successfully do so. 51
5·048 In the case of the RIBA/JCT contracts, however, these neither define
the concept of "practical completion" which starts the period running, nor
4,19 T.L.R. 378. The arbitration clause in this case suggests that the certificate might not have
been binding in any event.
41
22 Cape of Good Hope Rep. 122, South Africa. This case might not be so decided today:
see supra, paras. 5·014--5·016.
4
s See the fuller illustration and doubts expressed on this point, post, Chap. 6, para. 6-052.
49 28 BLR 76, P.C. In the absence of explicit wording, no longer of authority, it is submitted;
see supra, paras. 5·014--5·016 and post, Chap. 6, para. 6·052.
so See supra, Subsection (3)(a), paras. 5·029-5·032. . ~~~·'.
11 See, e.g. Clause 48(1) of the fifth edition ICE contract, although this 1s dependent on con-
tractor consent, and see also the SIA provisions referred to supra, para. 5·032.
DEFECTIVE WORK 715
concern themselves with prescribing the time or manner of completion of
such outstanding defective or omitted work as may nevertheless be con-
sistent with the giving of the certificate. Thus, in the context of a need to
ascertain the date for the purpose of terminating the liquidated damages
liability and interpreting an extension of time clause based on sub-con-
tractor delays, Salmon L.J. in the Court of Appeal described it as com-
pletion "for all practical purposes, that is to say for the purpose of allowing
the employer to take possession of the works and use them as intended",
but not "completion down to the last detail, however trivial and unimport-
ant". 52 In the same case in the House of Lords, Viscount Dilhorne said:
"One would normally say that a task was practically completed when it was
almost but not entirely finished, but 'practical completion' suggests that that
is not the intended meaning and that what is meant is the completion of all the
construction work that has to be done." 53
He then proceeded to hold, very importantly, that the presence of defects,
provided they were not patent at the time, would not prevent practical
completion,54 and added: "If they had been then apparent, no such certifi-
cate would have issued. "55
These statements and views about the RIBA/JCT contract wording
appear to have been correctly encapsulated by Judge Newey Q.C. in a
later case when he said: ·
"An architect would have a discretion to certify practical completion where
very minor de minim is works had not been carried out, but if there were any
patent defects ... the architect could not have given a certificate of practical
completion. "56
Some architects appear to take the view that, in a situation of patent 5·049
defects during the construction period, they can defer their making good
until later under the terms of the defects liability clause, and that position
has apparently been supported in some text books. Except by ex-contrac-
tual agreement, this does not, however sensible, seem possible on the
wording of the RIBA/JCT contracts, where the owner's rights under
defects liability clauses are expressed to apply to defects "which shall
appear within" the period, in contrast to the ICE fifth edition clause,
which imposes no such limitation.51-ss Nor does this view take account of
the statements of the Viscount Dilhorne and Judge Newey Q.C., cited
above, to the effect that no certificate of practical completion could be
given if patent defects were present.
si1. Jarvis & Sons Ltd. v. Westminster Corporation [1969] 1 W.L.R. 1448, at p. 1458, C.A..
s, Westminster Corporation v. J. Jarvis & Sons Ltd. [1970] 1 W.L.R. 637, at p. 646, H.L., illus-
trated post, para. 10.099
s.i Ibid. at p. 647. ss Ibid. at p. 647A. See also,per Lord Diplock in Kaye Ltd. v. Hosier &
Dickinson [1972] 1 W.L.R. 146, at p. 165A.
S6 Nevill (Sunblest Ltd. v. William Press & Son Ltd. (1981) 20 BLR 78, at p. 87.
sMs See Clause 49(2) of the fifth edition.

716 ACCEPTANCE AND DEFECTS [CHAP. 5
(6) Nature of Maintenance or Defects Obligation
5,050 The maintenance obligation of the contractor essentially confers a right
on the owner to call for his physical return to the site for a limited period
after the owner has resumed possession in order to repair or make good
defects. However, since such work can usually be carried out more
cheaply, and possibly more efficiently, by the original contractor rather
than by some outside contractor brought in by the building owner, defects
clauses may in practice confer a substantial advantage on both parties to
the contract. So the contractor may not only be seen as having the obli-
gation but, in many cases, the right to make good at his own cost any
defects which appear within the period. Thus Lord Diplock said of the
then current RIBA/JCT defects liability clause:
"Condition 15 imposes upOD. the contractor a liability to mitigate the damage
caused by his breach by making good the defects of construction at his own
expense. It confers upon him the corresponding right to do so. It is_a necess-
ary implication from this that the employer cannot, as he otherwtse could,
recover as damages from the contractor the difference between the value of
the works if they had been constructed in conformity with the contract and
their value in their defective condition, without first giving to the contractor
the opportunity of making good the defects. "59
5·051 Although the above statement ( disregarding the probably rather loose
references to "value" as the quantum of damage) confirms a submission
previously made in the tenth edition, that submission was based on the
suggested alternative grounds of the owner either acting unreasonably
and failing to mitigate his damage or, on the stronger view which was
affirmed obiter by Lord Diplock in the above passage, that an owner
choosing to repair himself without giving the contractor an opportunity to
do so would thereby be in breach of contract. It is suggested, however, that
this latter view fails to take aCcount of the not uncommon case of an owner
who, by reason of a past history of unsatisfactory work or dilatoriness, may
have reasonably lost confidence in the contractor's willingness or ability to
remedy the defects satisfactorily, and who therefore reasonably prefers to
bring in another contractor.60 The needs of that situation would be better
met, it is submitted, by founding any contractor's entitlement to seek a
reduction of damages on the owner's unreasonable failure to mitigate
damage, if that could be shown, rather than upon a right to damages of the
contractor in such a case. Since explicit language is rarely used in the
clauses on this particular point, it is submitted that the courts should, not-
withstanding Lord Diplock's dictum, be slow to imply a term that the con-
tractor will in all cases have an unqualified right to re-enter and remedy
defects himself for breach of which damages would be recoverable from
the owner.
,., Kaye Ltd. v. Hosier & Dickinson [1972] 1 W.L.R. 146, at p. 166. ,>
60 Compare the case of Sutcliffe v. Chippendale & Edmondson (1971) 18 BLR 149.
,/'.,
SECT. 2] DEFECTIVE WORK 717
There may also be cases, depending on the wording of the contract
where in such circumstances an owner may lose his right to recover an;
part of the cost from the contractor, rather than suffer a reduction, but
most explicit wording will be required to bring this result about in a nor-
mal construction contract, it is submitted, although there have been cases
relating to.the exercise of s~atutory powers of repair, or under repairing
covenants in leases, where nghts have been lost altogether in this way. 61 In
more normal cases, the authority to the contrary is now overwhelming. 62
In the absence of express provision, it would appear reasonable to imply 5·052
a term that the contractor should be given notice of defects if the owner
intends to exercise his rights and require them to be remedied under a
defects cla.use, since the owner, by definition, will be in occupation.63
What will amount to a sufficient notice will depend on the particular
nature of the defects. It is usually the sense of such clauses that the owner
through his AJE, expects to exercise control over the work done to remed;
~he. defect. It s~metimes happens that cracking or other symptoms may
1nd1cate a possible defect, but the cause remains unknown for the time
being. Particularly in a case where the obligation of the contractor is "non-
absolute", the A/E must obviously decide whether or not the defect is the
fault of the contractor in order to determine liability or the financial conse-
~uences, and until that is known the A/E may be required to give instruc-
tions as to any initial work to be done, including any investigatory
opening-up, at least until a stage when the A/E is satisfied that there
has indeed been a breach of contract and it has been identified to the con-
tractor. I tis submitted that there is no subsequent duty to describe exactly
the :precise method of making good the defects, 64 although the A/E's duty
to his own client will obviously include giving advice to him on that point,
and ~Iearly the A/E will at least have power to inform the contractor of any
requrrements which will enable him to issue any later certificate of satis-
faction required by the contract.
In the eighth and ninth editions of this book, it was submitted that,
where the c?nt!act does no~ provide to the contrary, as, for example,
through a b1nd1ng final cert:Ificate, there will be nothing to prevent an
owner, although he cannot insist upon the contractor making good defects
which appear after the period expires, from bringing an action for dam-
ages in respect of the defect for the full period of limitation, and this view
has now been authoritatively confirmed.65
It is always a question of construction whether the rights under the 5·053
maintenance clause are intended to supplant the right to damages at com-
61
London & South-West Railway v. Flower (1875) 1 C.P.D. 77; Makin v. Watkinson (1870)
L.R. 6 Ex. 25; Hugallv. McLean (1884) 53 L.T. 94.
6
i See the cases illustrated infra, paras. 5·053-5·058.
1
"- The RIBA forms, of course, provide expressly for notice in the form of a schedule of
defects, and the ICE conditions for written instructions from the engineer
64
See the discussion supra, para. 5·038. ·
11.< Hancock v. Brazier (Anerley) Ltd. [1966} 1 W.L.R. 1317, per Diploc;k L.J.; affd. by the
Court of Appeal, and illustrated infra.
 ,,--..
718 ACCEPTANCE AND DEFECTS [CHAP. 5
mon law altogether. In the absence of express provision, the remedies un-
der these clauses are in addition to and not in substitution for the common
law rights, 66 and even where the defects have appeared within the period
the owner may sue for damages rather than call on the contractor to do the
work, subject, in that event, to the possibility of the owner's damages
being limited, if he has acted unreasonably in the light of the discussion in
the preceding paragraphs, to the cost to the contractor of doing the work
at that time, 66a rather than the possibly greater cost of bringing in another
contractor either then or at a later date.
Although, therefore, a defects liability clause in a typical construction
contract will not usually affect the normal period of limitation in which the
owner may complain of defective work, and may even extend it in the case
of notified "appearing" defects, in the case of "developer" contracts ( or
houses in the course of erection as they are usually termed) where the
contracts are frequently couched in the terms of a contract for the sale of
land with a defects clause grafted onto it, the rule of "caveat emptor", if the
house is completed at the time of the sale, may result in the defects clause
being the only and exclusive right available to the purchaser.67 Certifica-
tion provisions may also have this effect. It will be seen that there has been
a marked change in the attitude of the courts, as in the case of certification
provisions, however.
ILLUSTRATIONS
5·054 (1) A contract contained a defects clause in the usual form to operate dur-
ing a maintenance period of four months from completion of the work. The
contractor was entitled to be paid the balance due to him four months after
the architect's certificate in writing that the works had been completed in
accordance with the contract, and the certificate of the final balance due was
to be conclusive evidence of the works being duly completed. It was, however,
further provided that despite any such certificate the contractor sh~uld
remain liable for four years after completion for any "fraud, default or wdful
deviation" from the contract. Defects appeared within the four years due to
slovenly workmanship by the contractor's workmen but not to deliberate
"scamping" of the work. Held, by Denman J., that in the face of the final
certificate the contractor was not liable, because it must be shriwn that delib-
erate breaches of contract had been committed with a view to benefiting the
contractor or saving his pocket if the effect of the certificate was to be
avoided: London School Board v.Johnson (1891). 68
(2) A contract for making roads provided: "Should it at any time sub-
sequent to the termination of the period of maintenance up to but not exceed-
ing a period of five years from the date of completion of the works be
66 See also the remarks of Stirling L.J. in Robinsv. Goddard [1905] 1 K.B., at pp. 302 and 303.
See also Johns & Son v. Webster & Tonks [1916] N.Z.L.R. 1020, illustrated post, Chap. 6,
Section 4. See also the other cases there illustrated. 66
' See para. 5·05J . ,
~1 For the nature of the builder-developer's obligations, see ante, Chap. 4, se.ction 1(2)(a).
para. 4·105. In addition to the cases below, see 'post, Chap. 6, Section 3.
611 Hudson, Building Contracts (4th ed.), Vol. 2, p. 176.
DEFECTIVE WORK 719
discov:red that t~e terfi1;S of t~s specification have been violated by the
execution of bad, 1nsuffic1ent or inaccurate work, the council shall be at lib-
erty to make good such work and to recover the cost thereof from the con-
tractor." Due to bad concrete some defects were discovered within five years
and others ~ft~r the expiration of fiv: years. Held, by the Court of Appeal,
that the plaintiffs could only recover 1n respect of defects discovered within
five years: Marsden Urban District Council v. Sharp (1931).69
[Note: In the _abseI?-ce of sufficiently express wording this case has always
seem:d out ~f hne with the gene~al I?rincipl~ and has now (it is respectfully
subrmtted, rightly) been authoritatively disapproved by Diplock L.J. in
Hancock's case, infra. 70]
(3) Clause 5 of the contract for the sale of a bungalow in the course of 5·055
erection provide~ tha~ the purchase should be completed on or before the
14th day after notification by the vendor of completion of the work in accord-
ance with the contract. By Clause 11 the vendors undertook to erect and com-
plete the bungalow by a certain date in a good and workmanlike manner in
accordance wi1? pla'?s and 8: specification, all the work being carried out to the
reasonable sat1sfact1on of the purchaser and her surveyor and if within 14
da~s of the n?tice unde~ Gause 5 she or bet' surveyor we;e not reasonably
satisfied as to its completion, the purchaser was entitled to refuse to complete.
By Clause 12 the ~endors undertook to make good any defects which might
become apparent 1!1 the bungalow, V.:ithin three months of the conveyance,
due to faulty matenals or workmanship. Any dispute as to such defects was to
be referred to arbitration, and the clause was to continue with full force and
effect ~otwithsta!1ding the comple~ion of the sale and conveyance. Defects
were discovered in the central heating system outside the three months, and
the pu~chasersued for breach of Clause 11. Held, by Norman Richards O.R.,
following Marsden v. Sharp, that Clause 12 was intended to be the exclusive
remedy. Even if Clause 12 had_been absent, he would have held the purchaser
barred as she had an opportunity to express dissatisfaction before the convey-
ance was executed: Kent v. Saltdean Estates (1964).n
[Note: There were ~pe~al pointers in this case to an intention to bring an
end t<;> the general ~bhg~tton up?~ the conveyance, including in particular the
wording of the arbitration prov1s1on, and the reference to the satisfaction of
th~ p~rchaser and_ her surveyor. It should not be regarded as applying any
pnnc1ple to be de~ved from M?rsden 's case, and the modern tendency is now
undoubtedly to reJect the finality of certification or satisfaction provisions in
the absence of sufficiently explicit wording such as "conclusive evidence" or
"final and binding".12]
( 4) By Clause 9 of a contract for the sale of a house in the course of erection 5·056
the deve~oper. un~ertook to erect and complete it in accordance with the pla~
and specification tn a proper and workmanlike manner. The contract further
provided. (by Clause_!~) t~at the developer would make good structural
de~~cts discovered w1th1n six months of completion and notified to him in
wnttng. The sale was also made subject to the national conditions of sale, so
""48 T.L.R. 23.
iu [1966] 1 W.L.R. 1317, at p. 1329.
11
114 ~.J. 555. See also McKey v. Ro:ison.[1953] N.Z.L.R. 498, illustrated ante, Chap. 4,
Section 1, para. 4·087, and see the satisfaction cases, e.g. Bateman (Lord) v. Thompson and
Br~ens v: ~mith, illustrated supra, para. 5·012, and post, Chap. 6, paras. 6·049 and 6-051, of
which this is only a further example.
72
See now Billyack v. Leyland [1968] 1 W.L.R. 471; National Coal Boardv. William Neill &
Son (St. Helens) Ltd. [1985] Q.B. 300; Crestar Ltd. v. Carr(1987)37BLR113, and see post,
Chap. 6, paras. 6-055--6·058 and 6·075--6·077.
 720 ACCEPTANCE AND DEFECTS [CHAP. 5
far as not inconsistent with the contract conditions. Clause 12 of the national
conditions provided that the purchase should be deemed to buy with full
notice of the actual state of the property and took it as it was. Defects were
found after the six months. 73 Held, by Diplock L.J. (and upheld by the Court
of Appeal), ( a) applying Lawrence v. Cassel, that the contract to build did not
merge in the conveyance74 ; (b) that the obligation under Clause 9 applied to
work done before the contract was entered into as well as subsequent work;
(c) that Clause 12 of the national conditions of sale was wholly inconsistent
with Clause 9 and should be disregarded; (d) disapproving Marsden v. Sharp
and doubting Kent v. Saltdean Estates, that in the absence of clear terms the
right to have defects made good under Clause 11 was an alternative remedy
and did not replace the right to damages under Clause 9: Hancock v. Brazier
(Aner/ey) Ltd. (1966)."
(5) By Article 32 of a Canadian standard form of construction contract each
party was to reimburse the other for any wrongful act or neglect. It then pro-
vided: "Claims under this Article should be made not later than the time of
final payment, except as expressly stipulated otherwise in the case of faulty
work or materials." Article 17 provided: "Neither the Final Certificate nor
payment thereunder nor any provision in the contract documents shall
relieve the Contractor from responsibility for faulty materials or workman-
ship which appear within a period of one year from the date of substantial
completion, and he shall remedy any defects due thereto and pay for any
damage to other work resulting therefrom which shall appear within such
period." The owner of a retail store constructed under this contract claimed
damages, five years after the final certificate and payment, for faulty materials
and workmanship in a water pipe-line built by the contractor which had
caused flooding and other damage to the building. The contractors argued
that the final certificate and the combined effect of the two articles defeated
any action either in contract or tort. Held, by the Ontario Court of Appeal,
not following Marsden v. Sharp and Kent v. Saltdean Estates, but following
Hancock v. Brazier, Article 17 was a maintenance or defects obligation
clause, and neither Article 17 nor Article 32 was sufficiently clear to excuse
the contractor from paying damages for the breach: Simpsons Ltd. v. Pigott
Construction (1974).76
5·057 (6) Article 28 of a Canadian contract provided: "The issuance of the final
certificate shall constitute a waiver of all claims by the owner otherwise than
under Article 17 of these conditions and the acceptance of such final certifi-
cate by the Contractor shall constitute a waiver by him of all claims except
those previously made and unsettled if any." Article 17 was the same as in
illustration (5), supra. Article 39 provided that each party should reimburse
the other for damage due to wrongful act or neglect of the other, and that the
claim was to be made in writing not later than the time of the final certificate
except as stipulated otherwise for faulty work or materials (i.e. Article 17).
The contractor negligently installed a metal chimney closely adjoining floor
joists without any fire stops, causing a fire which damaged the contents and
part of the house, for which the owner sued the contractor some two years
n See the fuller illustration on this, ante Chap. 4, para. in 4·120.
74 This is another way of describing the survival of the vendor's obligation in "house in course
of erection" cases in spite of the "caveat emptor" rule.
JS [1966] 2 All E.R. 901.
10 40 D.L.R. (3d) 47.
SECT. 2] DEFECTIVE WORK 721
after the fin~! certificate. The contractor relied on the final certificate. Held,
by the ~ntano Court of Appeal, clauses similar to Articles 17 and 39 had been
dealt with by th~ Court in the Simpsons Ltd. case, and could not now be
argued as defeating the owner's claim: Dabous v. Zuliani (1976).n
(7) Clause 4(i) of an ~lectrical standard form contract provided that all
work should b~ exe~uted tn the manner set out in the .specifications and to the
reasona~le satisfaction of the engineer. The engineer issued an unqualified
~nal ce.rt1ficate for payment of the final balance at the end of the defects liabil-
tty penod. Later, defects in breach of the specification were discovered and
t~e ~wners sued th~ contractors, who pleaded that the final certificate was
b1nd1ng. .He_ld, b)'. Piers Ashw~rth Q.C. s!tting as a deputy High Court judge,
on a J?rehm1nary issue, that whde the certificate was conclusive that the engin-
~er himself had as a fact been satisfied, the requirement was an added protec-
tion for the owner (not following Bateman (Lord) v. Thompson and applying
Petrofina S:A· of Brussels v. Cia ltaliana etc. of Genoa and Billyack·v. Ley-
lan~) and, 10 th~ a?sence of wording that the final certificate was to be con-
clus1.ve, t?e pla1~tiffs were entitled to claim damages for breach of the
specification: Nattonal Coal Board v. William Neill Ltd. (1985).78
I~ ~ho~ld perhaps be added that, at the present day, almost certainly in 5-058
anllc1patton ?f
the Unfair Contract Terms Act 1976,79 the English stan-
dard forms either removed altogether (in the case of the ICE conditions)
or very substanfally reduced (in the case of the post-1977 RIBAIJCT
forms) the b1nd1ng effect of their final certificates in regard to defective
work.so However, in the case of interim certificates, the RIBA/JCT main-
and sub-contract forms, and other sub-contract forms, have recently made
strenuous and d~tailed efforts to accord them a temporary finality, so as to
prevent or restrict set-off by the owner and enable summary judgment to
be obtained by the contractor or sub-contractor on such certificates in full
pe~ding subsequent arbitration or litigation of any set-off or counter~
claim .. As a.result, there ?~s been a substantial flow of litigation in recent
years 10 which such proVIstons have, wherever possible, been strictly con-
str~ed ~o a_s to allow a defence or set-off against plaintiffs seeking to assert
their bmdmg effect, although in some cases the language has been too
explicit to be avoidect.si
71
68D.L.R. (3d) ~15. See also the Supreme Court of Canada's decision in Prince Albert Pulp
fo. v. Foundat,on Company off:anada (1~6) 68 D.L.R. (3d) 283, illustrated infra, Chap.
, para. 6·057, where a final certificate stating that the work under the contract had been
completed_ and accepted by the engineer under its terms and conditions did not preclude
!he o~ner ~n a cos~-plus contract. from obtaining damages for the excessive cost ofthe work
rnvolvmg, inter aha, the remedying of defective work.
78
[1985J 1 Q.B. 300.
79
See-ante, Chap. 1, Section 9(7).
80
S~~ this discussed in C.CP.P., para. 30-25, and Clauses 61(2) of the fifth edition ICE con-
ditions and Clauses 1(1) and 30(7)(a)(i) and Clauses, 2.1 and 30.9.1.1 of the pre- and
post· 1?80 ~IBA/JCT fonns. But see now Colbartv. Kumar (1992) 59 BLR 89 doubted b
the editor m (1993) 9 Const.L.J. 137. ' y
8
' See post, Chap. 6, Section 6(7)(c) and (d), paras. 6·194 et seq.
 722 ACCEPTANCE AND DEFECTS [CHAP. 5
(7) Damages for Defects
5·059 In priced contracts the measure of damage as between owner and con-
tractor for breach of the general obligation to carry out and complete the
work in accordance with the contract, or of the special obligation under a
defects clause, will normally be the cost of making good and repair, al-
though where this is unreasonable the lower measure of diminution of
value may sometimes be permitted. 818 In addition, it will include any con-
sequential damages, such as compensation for loss of use of the building
during repairs, or liabilities incurred by the plaintiff to third parties or
other contractors or sub-contractors. 82
Where, however, the claim is against a negligent surveyor for defects
not disclosed in his report, it has been held that the usual measure of dam-
age will be diminution of value, although, it has been submitted that there
may be cases where cost of repair is appropriate. This latter subject is fully
dealt with ante, Chapter 2.s3
It has been seen that express powers over defective work, whether in
regard to the construction period or the defects liability period, will be
treated as "options" or powers rather than as imposing any duty on the
owner,84 so that in the absence of facts amounting to an estoppel, a
reduction in the damage,s to take account of the lesser cost had the con-
tractor himself been notified of the defects earlier will not be permitted.85
Even in the case of the maintenance period liability, it has been suggested
that, contrary to dictum of Lord Diplock in the House of Lords, such a
reduction should not be made unless there has been an unreasonable fail-
ure to mitigate damage on the owners part.86 So far as estoppel is con-
cerned, this would require some action taken by the owner or his A/E with
full knowledge of the defective work on the part of the contractor, in
reliance on which the latter can show that he acted to his detriment, which
will only very rarely be possible in construction contracts. 87
5·060 It has been constantly argued on behalf of contractors, as well as by A/E
supervisors or designers responsible to their clients in contract for defec-
tive work, that a lesser measure of damage based on diminution of value
rather than cost of repair should apply where there is a substantial differ-
ence between the two, presumably on the ground that a decision to carry
out repairs in such a situation would represent a failure of the owner to
mitigate damage. Where a contractor undertakes work for a price, that
10
~ See for this major and difficult subject post, Chap. 8, Section 2(2)(a), paras. 8·119 et seq.
62
See e.g. Nevill (Sunblest) v. William Press & Sons Ltd. (1981) 20 BLR 78 for an example of
consequential loss in a defects liability case, and see post, Chap. 8, Section 2(2)(b ), paras.
8·156 et seq.
s., Section 6(2)(n), paras. 2·205-2·213.
S4 Kingston-Upon-Hull Corporation v. Harding [1892] 2 Q.B. 494, illustrated supra, Section
1, para. 5·023.
85 East Ham Borough Council v. Bernard Sunley Ltd. [1966] A.C. 406, cited supra, paras.
5·021-5·023.
116
See supra, paras. 5·050-5·051.
81
See ante, Chap. 1, Section 10.
SECT. 2] DEFECTIVE WORK 723
would be tantamount to giving contractors an option to omit expensive or
difficult work not likely to be reflected in market value, and deprive the
owner of his contractual, even if idiosyncratic, entitlement. Not surpris-
ingly, therefore, such arguments have had least success when advanced by
contractors, since the fundamental rule in all cases of breach of contract is
that the damages should so far as possible place the innocent patty in the
position in which he would have been had the contract not been broken.
The problem is likely to be most acute in construction contracts in cases
where the defect, for example, in the foundations of a completed house,
may be such as to require total demolition, and has led to judicial conflict
in cases where full demolition seems unreasonable.88
A further argument for reducing cost of repair damages has been 5·061
advanced on the basis of the factor of domestic inflation of building costs,
so that delay by the plaintiff in initiating repairs on discovery of the defects
is said to be a failure to mitigate damage or, alternatively, an independent
causative factor. Another argument, particularly in the case of older
buildings, has been that extensive repairs or rebuilding will involve a bet-
terment factor which should be discounted.
All these attempted qualifications of the primary rule are dealt with
post, Chap. 8.89 It can be said that the above arguments have in general met
i. with little success in English or Commonwealth courts. Thus unavoidable,
' although substantial, betterment on re-building has been allowed. 9°Full
cost of building omitted work has been allowed where loss of value is nil or
nominal only.91 Cost of repair has been awarded (in disregard of older
theories in tort that the impecuniosity of the plaintiff should be disre-
garded) where, due to financial stringency, no repairs had as yet been car-
ried out by the plaintiff at the date of judgment, on the ground that where
liability was disputed it might be reasonable for a plaintiff to await the
decision of a court before embarking on repairs. 92 Similarly, attacks on the
attendant rises in cost of repair due to inflation have been similarly unsuc-
cessful. 93 On the other hand, where the cost of repair would be unreason-
able, a disallowance for reduced amenity value may sometimes be
appropriate. 94 It is submitted that reduced cost to the contractor may be a
valuable alternative basis. 94a
ss Contrast the powerful and persuasive "cost of re-building" decisions in Bellgrove v.
Eldridge (1954) 90 C.L.R. 613, High Ct., Australia, and the design case of Bevan Invest·
ments Ltd. v. Blackhall Struthers [1978] 2 N.Z.L.R. 45, N.Z. Ct. of Appeal, with the sugges-
tions for an "indemnity" or restitutio in integrum solution suggested by Hutley and Hardie
JJ.A. (although disapproved in the Bevan case) in Auburn Municipal Council v. Arc
Engineering [1973] N.S. W.L.R. 513. See also the diminution in value cases of Carosella v.
Ginos (1981) 46 L.G.R.A. 51, Full Court of South Australia; Pantalone v. Alaouie (1989)
18 N.S.W.L.R. 119, N.S.W. Supreme Court. See generally post, paras. 8·111-8·153A.
89
See post, Section 2(2)(a) and see the earlier analysis in C.C.P.P., Chaps. 9-13.
90
Harbutt's Plasticine Ltd. v. Wayne Tank & Pump [1970] 1 Q.B. 447, C.A.
91
Radfordv. De Froberville [1977] 1 )V.L.R. 1262,per Oliver J.
91
Dodd Property (Kent) Ltd. v. Canterbury City Council[1980] 1 AIIE.R. 928; William Cory
Ltd. v. Wingate Investments (1981) 17 BLR 109, and see the Radford case supra.
93
See the Radford, Dodd and Cory cases, supra, and see C.C.P.P., Chap. 11, 12 <1;nd 13.
94
Atkinsv. Scott (1980), first reported in (1991) 17 Const.L.J. 215, C.A., and illustrated post,
para. 8· 131.
94., See post, para. 8· 153A.
 724 ACCEPTANCE AND DEFECTS [CHAP.5

5·062 Two further areas of difficulty under the standard forms may also be
mentioned. First, under many forms which provide for interim payment
on a stage instalment or valuation basis of work properly done, there is no
express indication as to how the AJE is to carry out the valuation to take CHAPTER6
account of known defective work. Contractors will frequently argue that
he should simply disallow the contract value of work not properly done
(that is, on the basis of contract prices), and disregard the not uncommon APPROVAL, SATISFACTION AND CERTIFICATES
fact that the work of making good a repair in a defective part of the work
may be considerably more than the contract price for executing that part
of the work properly. Since the AJE's valuation is almost always required, PARA.
Section 1. Types of Provision
for good practical reasons, to be a retrospective valuation of all the work (1) General Review................. 6·001
done to date, a deduction representing the likely cost of making good (2) Narrow Construction of Stipulations........................................... 6·011
defects from the total contract value of the work, had it been properly (3) Evidence of Approval.................................................................... 6·020
carried out, would not seem open to criticism, it is submitted, and would (4) Vendor's Approval of Building on Land Sold............................ 6·021
Section 2. Approval by Building Owner
accord with the commercial realities. (1) Implication of Reasonableness..................................................... 6·022
Secondly, it has already been submitted that, apart from exercising his (2) Disapproval Must be Honest........................................................ 6·027
powers of investigation or opening-up in order to determine whether a (3) Approval as to Matters of Taste.............................................. 6·028
defect is present or its precise cause, there is usually no duty to instruct the (4) Binding Effect of Approval........................................................... 6·029
Section 3. Approval by Third Person
contractor as to how to remedy the defect, so that, in the absence of such (1) Generally......................................................................................... 6·031
instructions, the contractor cannot refuse to proceed. 95 (2) Whether Certificate, Satisfaction or Approval a Condition
Precedent to Builder's Right to Sue ............................... :......... 6-036
(3) Whether Employer Bound by Certificate, Satisfaction or
Approval...................................................................................... 6·046
Section 4. Effect of Arbitration Clause
(1) Generally......................................................................................... 6·060
(2) The "Crouch" View........................................................................ 6·063
(3) Distinction between Certifier and Arbitrator............................. 6-065
(4) Review of Earlier Cases
(a) Generally............................................................................. 6·067
(b) Arbitrator not bound by AlE's certificate....................... 6·068
(c) Arbitrator bound by A/E's certificate.............................. 6·078
(5) Summary of the Law...................................................................... 6·089
Section 5. Recovery Without Certificate
(1) Generally......................................................................................... 6·096
(2) Disqualification on Ground of Interest........................................ 6·099
(3) Disqualification on Ground of Fraud or Collusion.................... 6·106
(4) Prevention or Interference by the Owner................................... 6·112
(5) Conduct Not Amounting to Fraud or Collusion ................. _..... 6·126
(6) Summary and Discussion of Preceding Subsections.................. 6· 139
(a) Interest of certifier .............................................................. 6·140
(b) Fraud.................................................................................... 6·141
(c) Interference with the certifier........................................... 6·142
(d) Want of impartiality or indiscreet conduct of the
certifier............................................................................. 6· 143
(e) Prevention by the owner.................................................... 6·145
(f) Refusal of the certifier ....................................................... 6· 146
(g) Wrong matters taken into consideration......................... 6·149
Section 6. Certificates
(1) Generally ......................................................................................... 6·152
(2) Form and Sufficiency of Certificate.............................................. 6-154
(3) Mistakes in Certificates.................................................................. 6·167
(4) Correcting a Mistake in a CertifiCate ........................................... 6·169
(5) Who is to Give the Certificate?..................................................... 6· 172
"·'Seethe discussion supra Subsection (3)(d), and the cases there referred to. (6) FinalCertifi.cates....... 6·181

725

726 APPROVAL, SATISFACTION AND CERTIF1CATES
(7) Interim Certificates
(a) Generally..........................
(b) Is interim certificate a condition precedent to payment?
(c) Is an interim certificate binding on the owner?..............
(d} The concept of "temporary finality" generally...............
(e) Extent of valuation in certificate ......................................
(f) Early arbitration.........................................
(g) Other aspects of interim certificates..............................
(8) Final Accounts................................................................................
Section 7. Effect on Third Persons
Section 8. Summary of the Law on Conclusiveness of Satisfaction or
Certificates.............
Section 9. Status and Duties of Certifier
(1) Generally.......................................................
(2) Duty When a Final Certificate has to be Given...................
(3) Where the Same Person is Named as both Certifier and
Arbitrator....................................................................................
(4) Duties of Certifier to Building Owner.........................................
SECTION 1. TYPES OF PROVISION
(1) General Review
6°001 The implementation of many of the provisions of construction contracts is
expressly made to depend, and even if not will almost always as a fact
depend, upon the opinion, approval, satisfaction or decision of the
owner's A/E, or indeed of any other less qualified agent or representative
authorised by him to oversee and deal with a contractor on his behalf.
While certificates and other formal expressions of satisfaction required by
a contract can in principle be oral, 1 they are for obvious reasons almost
invariably required to be in writing. As such, they are no much than a
somewhat more formal record of the AfE's satisfaction decision or action
in regard to a particular matter, and are required by the contract as a mat-
ter of administrative convenience so as to avoid doubt.
Thus periodical or stage payments under more sophisticated contracts
will almost always be regulated by the A/E's payment certificates, them-
selves implying, even if not actually stating, his various collective judg-
ments as to the quality, quantity and value of work done to date. There
may also be separate more generalised express provisions, either in the
contract conditions or the specifications or elsewhere, requiring the work
to be done to the owner's, or more usually his A/E's, approval or satisfac-
tion, in addition to provisions which require compliance of the work with
the drawings, specifications or other technical descriptions. At certain
important stages, such as initial completion and handover, or perhaps
later on final certification or payment, contracts may expressly require a
1
See post, Section 6.
('.
[CHAP. 6 'TYPES OF PROVISIONS 727
6·186 certificate of the A/E's general satisfaction with all the work, linked to
6· 190 release of a previously retained part of the price, or of a final balance to the
6·194 contractor. As a drafting matter, a large class of contracts have in the past
6·204
6·206 required this certificate of general "'atisfaction to be given upon com-
6·209 pletion and handover, with a superimposed maintenance liability on the
6·214 contractor for a period following that certificate,2 and this form of contract
6·215
6·216 has persisted in parts of the Commonwealth.3
Other contracts have contemplated this general certificate of satisfac- 6·002
6·218 tion being given on the making good of defects at the end of the mainten-
6·220 ance period,4 and in many cases in England today the relevant certificate
6·225 for this purpose will be a still later final certificate for the outstanding
balance. 5
6·226
6·228 These various groups of provision, whether for approval or satisfaction
or for payment on certificate,6 have provoked an enormous and by no
means consistent Victorian jurisprudence on two main questions with
which the present chapter, and in particular Sections 3 and 4, "Approval of
Work" and "Effect of Arbitration Clause", will attempt to deal, namely
whether the intention of the contract is to confer a binding and conclusive
character on the certificate; and, if so, first, whether that in turn confers a
contractual immunity on the contractor ( or in a sub-contract on the sub-
contractor) in regard to subsequently discovered defects in the work; and,
secondly, the quite different question whether the contractor ( or sub-con-
tractor) will be unable to recover payment or additional payment without
the necessary supporting certificate.
During the Victorian period there was an undoubted tendency, in the
absence of an arbitration clause or in cases where the A/E was also named
as arbitrator, to accord finality in both of these senses to satisfaction or
certified payment provisions, even in the absence of explicit wording in
the contract. This can be criticised today on the ground that the essentially
administrative character of the A/E's functions, like that of any other
agent of the owner ,7 appears not to have been given sufficient weight in the
early cases, with the result that a "quasi-judicial" or "quasi-arbitral" status
was accorded by the courts to straightforward administrative decisions
which they did not in reality merit. It can be inferred that this soon satisfied
neither party to construction contracts, because in the latter half of the
nineteenth century arbitration clauses in quite general terms began to be
added to the standard forms. When subsequently difficulties arose
because it was argued by whichever party saw itself as benefiting from an
A/E's decison that, notwithstanding the generality of the arbitration
clause, the arbitrator was himself bound by the A/E's satisfaction or
2
See for an early leading example, Bateman (Lord) v. Thompson (1875) Hudson, Building
Contracts (4th ed.), Vol. 2, p. 36, see infra, para. 6-049.
3
See, e.g. Borough of Stratford v. 1. H. Ashman Ltd. [1960} N.Z.L.R. 503, infra, para. 6·082.
4
Compare the various ICE forms.
~ Compare the RIBA/JCT forms.
6
Which it will be seen will often be held to imply satisfaction: see post, Section 6.
1
See this developed and explained in detail in C.C.P.P., paras. 17-06 to 17---09.
 728 APPROVAL, SATISFACTION AND CERTIFICATES [CHAP.
certificates, the now widely prevalent express "open up review and revise"
power was inserted into the arbitration clauses in main contract standard
forms in both industries in the United Kingdom, in order to rebut such
arguments, as early as the turn of the century .8 For some perhaps acciden-
tal reason, this particular wording has not, however, found its way into
many forms of sub-contract arbitration clauses, although these are usually
perfectly general and devoid of express exclusions.9
6-003 The result of these developments, at least in England, has been, no
doubt as a result of the very considerable producer influence on the
English building standard forms, that the draftsmen of the latter have con-
centrated on securing a sufficiently binding character for the final certifi-
cates under those contracts, not reviewable by the arbitrator, so as to
confer an effective immunity on the contractor for any defective work
which might be subsequently discovered after making good of defects. 10
This is often accompanied by a cosmetic, but not in practice damaging,
restriction or time-limit on the contractor's presentation of financial
claims for sums greater than those certified in the final certificate.
However, the imminence of the Unfair Contract Terms Act 197611
appears to have led to the precipitate removal of whatever binding power
the final (maintenance) certificate in the 1973 fifth edition ICE contract
might have had, 12 and also to a major if somewhat imprecise retreat in the
immunity previously imposed by the wording of the RIBA/JCT
contracts. 13
While the draftsmanship of the final certificate provisions in the latest
versions of the English building and civil engineering main contract forms
is, therefore, less likely to prejudice owners seriously if defective work is
subsequently discovered,14 there remain express provisions as to the effect
of taking over the works under many electrical and mechanical contracts
or sub-contracts which, while not based expressly on the binding effect of
a certificate, still confer an almost immediate immunity for subsequently
discovered defective work. 15 These latter have not as yet attracted the
attentions of an Unfair Contract Terms Act defence. Moreover,
8 See this history developed in some detail in C.C.P.P ., paras. 17~11 to 17~24, and see the
RIBA standard form in Robins v. Goddard [1905] 1 K.B. 494 for an early example.
~ See, e.g. the FASS forms of nominated sub-contracts for use with the RIBA/JCT main
forms, but see to the contrary Article 3·5 of the post-1980 NSC 4 sub-contract.
10 See Clause 24(f) of the 1950 and Clause 30(7) of the post-1963 RIB A/JCT standard forms,
and see also the very difficult Clause 61 of the 1955 fourth edition ICE contract, the latter
never considered by the courts until very recently by the Hong Kong Court of Appeal in A.
G. of Hong Kongv. Wang Chong (1991) 7 Const. LJ. 310, which held the certificate to be
binding in a perhaps doubtful decision.
11
See ante, Chap. 1, paras. 1·238 et seq.
12 See Clause 61(2) of the 1973 contract.
13
See Clauses 1(1) and 30(7)(a) of the 1976 revision, now Clause 30.9.1 of the post-1980
contracts, explained in detail in C.C.P.P., para. 30-25. But see now Colbart Ltd. v. Kumar
(1992) 59 BLR 89, doubted in (1993) 9 Corst. L.J. 7, discussed infra, para. 6·185.
14
See also ante, Chap. 5, paras. 5·014-5·018. ~·.
15
See, e.g. Southern Water Authority [1985] 2AllE.R.1077, in that case under O<ltise 30(6) of
the E & ME contract.
6 SEcr. l] TuPES OF PROVISIONS 729
m~y contracts ~sing earlier English standard forms providing for con-
clusr~e final certificate~ are still being widely used at the present day.
~t is of th~ great~st ?TI~ortance, and essential to the understanding of 6·004
the su?stantlal earlier Junsprudence reviewed in this chapter, to note that
~he~~ IS no~ ~n unmistakable and justifiable trend in more recent English
JUd1c1al dec1s1ons against according binding force even to a final certifi-
cate, in the absence of the most explicit wording or indication in the con-
tract itself (as, eg. the use of contractual expressions that the certificate is
to "final and binding" or "conclusive evidence").16
T~e same judicial attitudes, and indeed the most important recent
Enghsh authoritative judicial pronouncement in this field has also
emerged in a series of cases between 1971 and 1973 which in~olved the
interim certificates for payment under the RIB A/JCT main and associated
sub-:o.ntract ~orm~ in England. These forms, usually containing a simple
proV1s1on for 1nterun payment upon the certificate of the architect based
on the value of work done to date, and in the case of sub-contracts with a
further provision listing a number of permissible set-offs under various
express terms of the sub-contract, were unexpectedly interpreted by the
Court of Appeal in 1971 so as to exclude any set-off or counterclaim not
expressly permitted by the contract, however well-founded and bona fide
thus permitting immediate summary judgment for the full sum certified
despite the existence of the set-off or defence in question-in effect a
"temporary finality" binding until the conclusion of later arbitration 'or
litigati~n as t~ the _validity of the set-off, or until adjustments properly
ma~e In later mtenm certificates. This case17 was followed in rapid suc-
cession by five Court of Appeal decisions to the same effect in the ensuing
18 months, with leave to the House of Lords refused on a number of
occasions. 18 Subsequently, however, these cases were all themselves over-
ruled by the House of Lords in the Gilbert-Ash case in 1973 19 and the
meteoric 1971 so-called "Dawnay rule" carne to an end.20 '
The cases on the binding effect, if any, of interim certificates are dealt 6·005
21
~th ~a, but the Gilbert-Ash case contained two passages in Lord
D1plock s speech which have undoubtedly become the modem locus clas-
sicus on the interpretation of satisfaction or certification provisions gener-
ally, and should not be seen as limited to interim payment certificates.
~er pointing out that set-off was a remedy provided by the common law
in contracts for work and labour, Lord Oiplock said:
16
See Billyack v. Leyland [1968) 1 W.L.R. 471; National Coal Board v. William Neill & Son
(St lfelens) Ltd. [1985) Q.B. 300; Crestarv. Carr (1987) 37 BLR 113, C.A., illustrated infra 0
Sectmns 3 and 4; and see also the Canadian cases illustrated ante Chap. 5 Section 2(5)
paras. 5·056-5·058. ' ' '
ri Dawnays Ltd. v. F. G. Minter Ltd. [1971] 1 W.L.R.1205.
18
See this his to~ analysed in detail in, (1973) 89 L.Q.R. 36, reproduced in C.C.P.P., Chap.14.
: Mode~n Engmeering Ltd. v_. G~bert-Ash Ltd. [1974J A.C. 689.
21
See !his analysed by the editor m, (1974) 90 L.Q.R. 21, reproduced in C.C.P.P. Chap. 15
Sectmn 6(7), paras. 6· 186-6·189. ' .
 730 APPROVAL, SATISFACTION AND CERTIFICATES [CHAP. 6
"It is of course open to parties to a contract for sale of goods orforwork and
labo~ or for b~th to exclude by express agreement a remedy for its breach
which would otherwise arise by operation of law ... but in construing such a
I SECT.1]
contract one starts with the presumption that neither party intends to abandon
any remedies for its breach arising by operation of law, and clear ex_prf!SS
words must be used in order to rebut this presumption. In the case of buildmg
contracts no question of usage arises to rebut the presumption ... "
"So when one is concerned with a bhilding contract one starts with the pre~
sumption that each party is to be entitled to all those remedies for it.s breach
as would arise by operation of law, including the re~edy of setti?-g up a
breach of warranty in diminution or extinction of the pnce of mater~als sup-
plied or work executed under the contract. To re~ut that pres~mpti<:>n, one
must be able to find in the contract clear unequivocal words m which the
parties have expressed their agreement that this remedy shall not be avail-
able in respect of breaches of that particular contract. "22 (Emphasis
supplied.)
It is submitted that these passages apply with equal force to cases where
a certificate is alleged to be a condition precedent, without which a party
cannot sue, as it does where a defence or set-off is sought to be raised.22a
6·006 Following the Gilbert-Ash decision, there has been an o~tburst .of
drafting activity, particularly in the sub-contract forms associated with
the RIBA/JCT main contracts in England, designed to secure interim
payment of sub-contractors based on main contract architect certifi~a-
tion (or even on mere submission of statements of account), and to ~estnct
within the narrowest possible bounds any right of set-off by main con-
tractors against the sum certified. Here, again, the courts, wherever pos-
sible within the terms of the wording used, have in a number of cases
successfully avoided such finality, invoking Lord Diplock's statement of
principle in the Gilbert-Ash case.23 • contractor or sub-contractor arguing that an architect's delay certificate is
The express wording and machinery of some modern English contracts
and sub-contracts have thus of recent years become ever more compli-
cated and elaborate in their efforts to control or avoid defences or set-off
against sums certified, for example, providing for the appointment of
adjudicators to determine and, if necessary, reduce the amount of ~uch
set-offs or counterclaims as have survived the initial contract barriers.
Inevitably, such elaborate and explicit draft'smanship will frequently_ be
successful in preventing valid and ultimately enforceable counter~larms
from being set-off against certified sums, since the court~ cann?t, 1n. the
face of sufficiently explicit contractual wording, use any wider dtscret:Ion-
ary powers which they may possess to avoid injustice in summary proceed-
22 Ibid. at pp. 717H, 718E. . . .
22a There is, however, contrary modern authonty 1n the former case, see mfra, paras.
6· 192-6·193.
z:i See, e.g. NEI Thompson Ltd. v. Wimpey Construction U.K. Ltd. (1987) 39 BLR 80, C.A.;
ASCIM (Southern) Ltd. v. Danish Contracting (1989) 47 BLR 55, C.,:\.; Mellowes PPG
Ltd. v. Snelling Construction (1989) 49 BLR 109; and see also the mam contract c~ of
Pi/lings & Co. Ltd. v. Kent Investments (1985) 30 BLR 80, C.A. But see the recent deCJS10n
of Giles J. in New South Wales inSabemo Ltd. v. De Groot (1991) 10 A.C.L.R. ~is accord-
ing finality to Qause 10.07 of the Australian 198~ J.C.C.B. form pending arbitrafibn, which
seems inconsistent with the Gilbert-Ash reasorung.
TYPES OF PROVISIONS
ings by staying an action or giving leave to defend in such a case.24
Examination of cases involving this highly complicated and frequently
731
changing contractual machinery, dependent solely on express terms and
not on principle, will not, therefore, be pursued in excessive detail in the
present chapter. 25 This would seem to be an area which may attract the
provisions of the Unfair Contract Terms Act/.6
So far, approvals or certificates which may be relevant to the quality or 6·007
value of the work have been discussed. But a number of other matters may
be made the subject of decisions and certifications of the A/E. One
important area will be the administration of liquidated damages for delay
provisions, including extension of time decisions, and the very important
certification for this purpose, in most contracts, of the date when com-
pletion should have occurred.27 Another will be the administration of
owner tennination provisions, which frequently require certification by
the A/E of failure of due diligence, for example. In some older contracts,
not commonly found in England today, the owner's liability to pay for
extra work was also expressly made conditional upon a certificate.
In all these cases (as indeed .in the straightforward quality and value
cases), it is impossible to interpret such provisions and to ascertain their
bindingeffect,if any, without also considering the terms of the arbitration
clause, if one is present in the contract.28 Looking at both sets of pro-
visions, the question in such cases will be whether the arbitrator is
intended to have jurisdiction to decide the merits of the dispute at the end
of the day, whatever the certifier may have decided, or whatever previous
action may have been taken upon his decision. Whether or not an arbi-
tration clause is involved, in all these cases it is also highly desirable to
consider whether the alleged finality is unilateral or bilateral-the main
a condition precedent to the owner's or main contractor's recovery of
damages for delay is hardly likely to greet with enthusiasm the corre-
sponding contention that, if the certificate is granted, he has lost perma-
nently the right to dispute his liability to pay the resulting liquidated or
other damages for delay, whether in arbitration or litigation.29 Similarly, if
a payment certificate is to be conclusive as to quality binding on the owner,
is it also to be a condition precedent to payment binding on the contrac-
tor? Yet contracting parties are in general not likely to intend one without
the other. Recent judgments in England have paid scant attention to this
factor when considering the interpretation of these types of provision.
As a useful rule of thumb at the present day, it is submitted that the 6·008
courts should approach any provision for approval, satisfaction or certifi-
24 Tubeworkers Ltd. v. Tilbury Construction (1985) 30 BLR 67, C.A.
25 See, however, the more detailed discussion and cases, infra, Section 6(7), paras.
6·198--6·205.
26See ante, Chap.1, paras. 1·238-1·240.
21 See post, Chap. 10.
28 See for this infra, Section 4.
29 Compare and examine Brightside Kilpatrick Engineering Services v. Mitchell Construction
[1975] 2 Lloyd's Rep. 493, infra, para. 6·087, and Ramac Construction Ltd. v. Lesser [1975]
2 Lloyd's Rep. 430, see infra, para. 6·075.
 732 APPROVAL, SATISFACTION AND CERTIFICATES (CHAP.
cation in the first place on the basis that it is likely to be intended to be
administrative only, and not intended to bind either side, either tempor-
arily or permanently and whether in litigation or arbitration, unless suf-
ficiently explicit wording to that effect is present. Secondly, it is suggested
that the courts should consider in every case, where initially minded to
accord the binding effect claimed by one party, what the converse position
of the other party will be. For example, if a payment provision will bar a
contractor permanently from recovering more than has been certified, it is
much easier to understand why a certificate, once given, should, as a mat-
ter of balance, prevent further argument as to the quality of the work.
Indeed, it may be suspected that this "balance of harshness" was the basis
of many of the earlier cases reviewed infra, Section 3. Finally, the possible
effect of an arbitration clause, and any reciprocal binding effect on the
other party, both need to be considered in deciding these questions; as also
whether what is being contended for is a temporary or a permanent
finality. Almost invariably the English courts have approached doubtful
cases narrowly, and without consideration or discussion of the wider
consequences of their ruling. 30
6·009 While a certifier is certainly not usually intended to be an arbitrator or
settler of disputes,31 it is implicit in his r6le as a certifier in construction
contracts, that he will often be required to decide what are strictly quest-
ions of law as well as of fact. For example, a decision as to whether or not
work is an extra will be a question of law involving a correct interpretation
of the original contract obligation, before any question of valuation arises.
Even questions of valuation, if the contract lays down rules for ascertain-
ing the value of work, varied or otherwise, may involve questions of law.
So too, questions of extension of time will involve decisions as to entitle-
ment under the terms of the contract (law), as well as of the amount of the
extension (fact). One of the commonest of all certifying provisions (pay-
ment) will usually involve the interpretation of many different provisions
of the contract as well as of schedules of rates or bills of quantities, and the
other commonest provision (satisfaction) may often involve the interpret-
ation of the specification describing the required work. These are
additional reasons why the courts should be slow to accord finality to his
decisions.
In considering the cases, Lord Diplock's statement of over riding prin-
ciple in the Gilbert-Ash case as to the initial presumption against a party
agreeing to the abandonment of his legal rights has already been quoted32:
A similar view was expressed as long ago as 1937 in the High Court of
Australia.
See, e.g. the Brightside case, supra, illustrated infra, para. 6·089.
:io
31Contrast, however, his special role under Clauses 66 and 67 of the ICE_· ._and FIDIC
conditions. a,·
n See supra, paras. 6·004-6·005.
6 SEcr. l] TYPES OF PROVISIONS 733
"Itis n~t too much to ask t~at ~ntracting parties who are desirous of giving
conc~us1ve .effect .to a quas1-arb1trator's certificate of liability should express
that mtentton qmte clearly.""
On the other hand, there is no particular magic in a contractual pro-
vision for a certificate:
"!t .has been argu~d that there isno provision in this contract for the Engineer
givmg a final certificate ... I att~ch no importance to this argument as I find it
expressly s~ated 0at the work 1s to be done to the satisfaction of the Engin-
eer. A certificate 1s only a mode of expressing this satisfaction. "34
It should also be ~e-iterated that, in the absence of a specific provision to
the contrary, a certificate need not be in writing and can be issued orally. 3s
An attempt will be made to review the difficult and by no means coqsist- 6,010
ent case law on this subject in Section 3, "Approval by a Third Person"
and in Section 4, "Effect of Arbitration Clause". The latter section will b~
of particular importance in the modern context, since not only do most
modem contracts contain arbitration clauses in general terms, but the
~odern.tendency .to demand much more explicit language before accord-
ing finality to a satisfaction or certification provision36 may throw doubt on
the modern applicability of some of the earlier cases in Section 3.
However, it will be seen that, even where the certificate or satisfaction is
final, th~re is undoubtedly a class of case where, if the certifier purports to
act outside the terms of his own jurisdiction, or it can be shown that he has
tak~n wrong matters into consideration, his decision may be invalidated
or disregarded. 37 This is because, in the vast majority of construction con-
tracts, it is intended that he should apply the contract according to its
te';ffis and not apply a discretion or ideas of his own when certifying (in
spite of a recent judicial suggestion to the contrary),38 it is submitted.
(2) Narrow Construction of Stipulations
The following illustrations include a number of earlier cases where the 6,011
c?~rts have, as .a matter of strict construction, narrowed the ambit of pro-
v1s1ons for satisfaction or certification. Illustrations (1) to (3) are not
33
Per Evatt J. in Kir.ch v. Brady (1937) 58 C.L.R. 36, High Ct. _Australia, illustrated infra,
para. 6· 165.
34
Per Grove Jin Dun~berg and Witebsk Railways Co. Ltd. v. Hopkins Gilkes & Co. Ltd.
(1877) 36 L.T. 733, illustrated infra, para. 6·050. See also further Section 6, infra, paras.
6·152 et seq. for cases on the form of certificates.
JS Re H~henzollern Actien Gesellschaft filr Locomotivbahn v. City of London Contract Cor·
poratwn (1886) 2 T.L.R.470, C.A.; Hudson,Building Contracts (4th ed.), Vol. 2, at pp.100,
103,per Denman J, Q.B.D.; see also the cases infra, Section 6(1).
36
Noted supra, paras. 6·004-6·005.
JJ See infra, Section 5, paras. 6·096 et seq.
:lll Notably in the unsatisfactory and damaging decisibn of the English Court of Appeal in
N'!~t~ Regional Health:4,uthority v. Derek Crouch Construction Co. Ltd. [1984) Q.B. 644,
criticised and doubted m depth by the editor in C.C.P.P., Chap. 17, and see infra Section
4(2), paras. 6·063-6·064. '
 734 APPROVAL, SATISFACTION AND CERTIFICATES [CHAP.
necessarily of direct relevance to modern construction contracts, but indi-
cate the principle. Illustrations (4) to (9) indicate that in the early con-
tracts, with no arbitration clause and with the A/E's decision often
expressly made final, the courts were understandably particularly reluc-
tant, in the absence of sufficiently explicit language, to allow certifiers to
rule on allegations of the contractor against the owner of prevention or
breach of contract by him. Many of the cases were decided on demurrer,
and it may be inferred that this contention became a favourite pleader's
allegation in order to avoid the effect of a certificate. In addition to the
later cases illustrated, the cases collected infra, Section 6(2), "Form and
Sufficiency of Certificates", should also be considered. 39
ILLUSTRATIONS
(1) The defendant agreed to buy a 16-horsepower engine to be erected on
his premises, and to pay part of the price on delivery, and that he would, on
being satisfied with the work, pay the plaintiff the remainder two months
later. The engine installed was not of the specified horsepower. The plaintiff
brought an action for the price. Held, by the Court of Common Pleas, that the
seller must allow an abatement of the price for breach of warranty as to horse-
power, since the provisions as to satisfaction applied to the work of erection
only: Parsons v. Sexton (1847). 40
(2) A contract for the construction of a tank for a gas company provided
that in case of default the contractor should pay the company such sum as the
engineer should adjudge to be reasonable and proper. Held, by the Court of
Common Pleas, that the engineer was a mere valuer or appraiser; that he had
no power to say whether the convenants had been broken; and the company
must prove positively the fact of any default: Northampton Gas Light v.
Parnell (1855). 41
6·012 (3) R. contracted to make a glue-cutting machine according to drawing,
etc., with "strong and sound workmanship to the approval of A." Held, by the
Court of Common Bench, that the approval of A. was to be as to the strength
and workmanship of the apparatus, and not as to its efficiency for cutting glue
pieces: Ripley v. Lordon (1860).42
(4) Under a ship building contract, the builder was liable to penalties for
delay unless the owner's agent certified that such delay was the result of
events beyond the builder's control. Delays occurred due to acts of the owner,
but no certificate for the delay was given. Held, by the Court of Common
Pleas, that, as the owner had caused this delay, the builder was not liable for
the penalties: Russell v. S.A. da Bandeira (1862). 43
(5) An Irish contract provided that, as to "all matters connected with the
works, or the execution thereof or the value of the entire work or reductions,
39 See infra, paras. 6·154-6·156.
40 16 LJ.C.P. 181.
41 15 C.B. 630. For a decision in a contrary sense see Richardsv. May (1883) 10 Q.B.D. 400,
illustrated infra, para. 6·049, and more full)' post, Chap. 7, Section 2 (5).
42 2L.T.154.
43 13 C.B.(N.S.) 149.
6 SEcr. l] 'TYPES OF PROVISIONS 735
or the meaning of the plans of specifications", the award of the architect in
writing should be a condition precedent to any proceeding whatever. Held, by
the Irish Court of Queen's Bench (O'Brian J. dissenting), that an award was
not a condition precedent to an action by the owner against the contractor for
leaving the work unfinished: Mansfield v. Doolin (1869). 44
(6) A building contract contained an extension of time clause under which 6·013
it was lawfu.lfor the architect to give an extension of time, inter alia, for failure
to supply drawings or directions to the contractor in time. There was a separ-
ate forfeiture clause empowering the owners to terminate the contract if, in
the opinion of the architect, the contractor failed to proceed with due dili-
gence. The contractors sued for wrongful termination, and the owners
pleaded that the architect had certified that the contractor had not proceeded
with due diligence. The contractors replied that the delay was due to failure to
supply plans and drawings and to set out the land. Held, on demurrer by the
Court of Exchequer Chamber (Kelly C.B., Channell B., Blackburn and Mel-
lor JJ. (Cleasby and Pigott BB. dissenting)), that the architect had no power
under the forfeiture clause to decide matters of breach of contract or preven-
tion by the owners. While, under the extension of time clause, he might have
power to refuse an extension of time for such matters, this did not enable him
to bind the contractor for purposes of the termination clause. Held, also, per
Blackbum and Mellor JJ., the language of the extension of time clause being
permissive only, a decision under that clause could bind the owner, but not
the contractor unless he accepted the extension of time given: Roberts v. Bury
Commissioners (1870) 45
[Note: It should be noted that, on the reasoning of this case, the architect's
opinion would have been conclusive and binding on the contractor (in
relation to the forfeiture clause) on any matter except prevention or breach of
contract by the employer. This case was decided on demurrer (i.e. on the basis
of hypothetical facts as pleaded). In a contract such as this, the contractor
would have to prove, not only that delays were caused by the employers'
breaches of contract, but that it was these delays which operated on the certi-
fier's mind when he certified (or refused to certify) as he did, it is submitted.46]
(7) A contract for the construction of a railway in Canada contained a 6,014
clause empowering the company's engineer to terminate the contract upon
written notice if in his opinion there were just grounds for believing that it
would not be completed in the time and manner specified in the contract.
Held, by the Canadian Court of Queen's Bench, that the condition did not
empower the engineer to determine conclusively that the delay was not due to
the company's acts or omissions, as had been alleged by the contractor:
McDonnell v. Canada Southern Railway (1873). 47
(8) The plaintiffs contracted to construct certain drainage works for the
defendants. The contract stipulated that the work should be finished by a
specified date, and that if it should at any time appear to the defendants'
engineer that the works were not being carried on with due diligence or with
such speed as would ensure their completion in the stipulated time, the
defendants might on notice given take the works out of the plaintiffs' hands.
« 4 h.L.R.(C.L.) 17. [Note:This case is perhapsofdoubtfulauthorityifapplied to a modem
contractual provision referring disputes in general terms to a named person.]
45
L.R. 5 C.P. 310. This case, in so far as the view expressed by Blackburn and Mellor JJ. as to
the extension of time clause is concerned, is further considered and illustrated post, Chap.
10, para. 10·030.
46
See the case of Wadey v. Mort's Dock & Engineering Co. [1902] 2N.S.W.R. 391, Australia,
affirmed 22 T.L.A. 61 (P.C.).
47
33 Up.Can.Q.B. 313.
 736 APPROVAL, SATISFACTION AND CERTIFICATES [CHAP. 6 SEcr. l]
The defendants undertook to provide all land permanently necessary for the
completion of the works. An action was brought by the plaintiffs for preven-
tion of performance of the contract, to which the defendants pleaded that due
diligence had not been exercised and that notice had therefore been given
under the contract. The plaintiffs replied that the failure to comply with the
requisitions of the notice was due to the defaults of the defendants and their
engineer in not providing the land and drawings necessary for the works.
Held, by the Irish Common Pleas Divisional Court, that the engineer's opin-
ion was not conclusive as to this, and that in fact the delay had been due to the
defendants' default: Arterial Drainage Co. v. Rathangan Drainage Board
(1880).'"
6-015 (9) A contract under seal for dredging provided that if another contractor's
temporary staging was not removed in sufficient time to enable the
contractor to complete his work within the fixed time, he was to be entitled
to such extension of time as the engineer should deem reasonable. There was
no provision for compensation to the contractor. If any difference arose
between the contractor and the owners "concerning the work contracted for,
or concerning anything in cormection with this contract", such difference was
to be referred to the engineer, whose decision was to be final. The work was
delayed by non-removal of the staging; the engineer agreed to pay compen-
sation for the expense thereby occasioned, but could not agree the amount
with the contractor. The engineer then certified an additional sum but for a
less amount than that claimed. Held, by the Divisional Court, that there was
an implied agreement arising out of the contract under seal that the staging
should be removed in a reasonable time, for breach of which the contractor
was entitled to damages. But held, also, that the breach of the implied term
was not a matter "concerning anything in connection with the contract", and
that the certificate was not, therefore, final or binding: Lawson v. Wallasey
Local Board (1883).49
[Note: The reasoning on the latter point seems doubtful, particularly the
view that the breach was of "an implied but independent contract", but
reflects the influence of Roberts' case, which had been cited in support.]
(10) A builder contracted to do work according to plans and specification.
The specification provided that the work was to be done to the satisfaction of
the architect; there was no power for the architect to order deviations. Held,
that the architect had no power to sanction deviations from the contract, and
that the owner was not bound by a certificate to accept work other than that
contracted for: Ramsay v. Brand (1898). 50
[Note: Where, however, the architect's certificate as to extras or their value
is expressed to be conclusive, it has been held that the owner cannot object to
the certificate on the ground that the extras certified were not ordered in writ-
ing,51 or were not extras at a11.s 2]
6·016 (11) A contract provided that the architect might in certain circumstances
extend the time of completion, but gave him no express power to deal with the
,is6 L.R.Ir. 513.
49 11 Q.B.D. 229; affd. (1883) 48 L.T. 507, the Court of Appeal expressing no opinion as to
whether the action could have been stayed.
50 25 R. (Ct. of Sess.) 1212. Cf. Ashwell & Nesbittv. Allen, illustrated infra.
5i See, infra, paras. 6-047 et seq.; Clemencev. Clarke (1880), Hudson, Building Contracts (4th
ed.), Vol. 2, p. 54, infra, para. 6·079, and post, Chap. 7, paras. 7·099 et seq.,·and the cases
there cited.
52 Richards v. May (1883) 10 Q.B.D. 400, illustrated infra, para. 6·049 andpost,"t:hap. 7, para.
7·100.
TYPES OF PROVISIONS 737
question of the damages which were to be deducted for delay. 53 The architect
issued a final certificate without any apparent deduction for damages. The
contractors took a preliminary point of law that the certificate was conclusive
evidence that time had been extended. The building owners brought an
action to recover damages. Held, by Phillimore J., that as the contract did not
empower the architect to deal with damages, the certificate was not evidence
of any decision by the architect, and the building owners might prove by evi-
dence what the architect had intended to do: British Thomson-Houston Co.
Ltd. v. West Brothers (1903). 54
(12) Under the terms of a sub-contract the sub-contractors were to be paid
upon the certificate of the architect. There was no power to vary the sub-
contract. In fact the sub-contractors were instructed by the architect to carry
out certain unauthorised variations, which they did. The architect then issued
a certificate for the work as varied. The sub-contractors then sued on the cer-
tificate, :ind the contractors alleged that all the work had not been done. Held,
by the Court of Appeal, that the certificate was bad and did not bind the con-
tractors as to the value of the work: Ashwell and Nesbitt Ltd. v. Allen & Co.
(1912)."
(13) Clause 2 of a contract for the sale of a house in the course of erection
provided that the owner should pay the contractor the second half of the pur-
chase money "on the issue of the certificate of habitation by the local auth-
ority, which certificate shall be conclusive evidence of the completion of the
said dwelling-house". 55 Held, by Edmund Davies L.J., that Clause 2 contem-
plated a certificate designed to regulate the time of payment and was not
intended to be a certificate as to the quality of the work: Billyack v. Leyland
(1968).~
(14) A lessee covenanted to pay a contribution towards expenses reason- 6,017
ably incurred by the lessor in performing "the covenants on the part of the
lessor set forth in Clause 3" of the lease, as certified by the lessor's surveyor.
Clause3 was a covenant rendering the lessor liable for certain described kinds
of repair. The surveyor's decision was to be "final and not subject to any chal-
lenge in any manner whatsoever". The surveyor certified, but the lessee
wished to contend that the matters in respect of which the surveyor had certi-
fied did not fall within Clause 3 at all.Held, by Ungoed-ThomasJ., on the true
construction of the lease the question whether a particular defect fell within
the Gause 3 obligation was not intended to be decided by the certifier: Re
Daystone Estates Ltd. 's Leases (1969). 58
(15) By Clause 30(7) of the July 1973 revision of the RIBA/JCT contract,
the final certificate was to be conclusive evidence that the works had been
properly carried out and completed in accordance with the terms of the con-
tract. Contractors for foundations and drainage works completed their con-
SJ This is also the case in nearly all modern contracts, where the actual monetary calculation
or deduction of liquidated damages is not usually expressed to be the subject of a
certificate.
54
19 T.L.R. 493: See also Peters v. Quebec Harbour Commissioners (1891) 19 S.C.R 685,
Canada, illustrated post, Section S, para. 6·129 (deduction of sums arising on measure-
ment), and see also the Port Glasgow Magistrates v. Scottish Construction Ltd. 1960 S.L.T.
319,post, Chap.10, para.10·070.
s.s Hudson, Building Contracts (4th ed.), Vol. 2, p. 462; and see Trade Indemnity Co. v. Work-
ington Harbour & Dock Board [1937] A.C. 1, at p. 22per Lord Atkin (certificatf: including
sums loaned to a contractor by employer).
si; The case is fully illustrated, infra, paras. 6·055-0'058.
~ [1968) 1 W.L.R. 471.
18
[1969] 2 Ch. 378.
 738 APPROVAL, SATISFACTION AND CERTIFICATES [CHAP.
tract and returned during the defects liability period to make good certain
defects. In doing so, they delayed the owner's later contractors for the build-
ings. A certificate of making good defects, and later a final certificate were
then issued in the normal way. The owners subsequently sued for the conse-
quential loss suffered by the owners in compensating the later contractor and
by reason of the overall delay. The contractors maintained that the owners
were precluded by the final certificate from bringing any claim for breach of
contract or negligence. Held, by Judge Newey Q.C., following dicta of Lord
Diplock in P. & M. Kaye Ltd. v. Hosier & Dickinson Ltd.,59 that the final
certificate was only conclusive that at the time it was given the works had been
properly carred out, and the owners were not precluded from recovering con-
sequential losses due to the earlier breaches of contract: H W. Nevill (Sun-
blest) Ltd. v. William Press & Son Ltd. (1981). 60
6·018 (16) Developers contracted with a builder (the "trade contractor") who
was to carry out the work under the supervision and control of their "con-
struction manager". By Clause 19(1) the trade contractor was required to use
due diligence and to complete to time as extended by the manager, and by
Clause 19[3] the trade contractor, if in breach of his obligations under Sub-
Clause (1), was to pay or allow to the developers, pending final ascertainment
or agreement between the parties, such sum as the manager should "bona fide
estimate" as the amount of the developers' loss or damage; "such estimate to
be binding and conclusive ... until such final ascertainment or agreement".
Clause 19(4) provided similarly "if the Trade Contractor shall cause the Cli-
ent loss by reason of any breach of this sub-contract". Clause 19(5)provided
for an "ascertainment" by the manager (as opposed to his earlier "bona fide
estimate") of the damage or loss in consequence of any breach of Sub-Clauses
19(3) or (4). There was also provision for the courts to open up and review any
certificate opinion or decision and to ascertain and award any sum which
ought to have been included in any certificate. The manager refused exten-
sions of time applied for, and made estimates or ascertainments of damage
caused by delay totalling some £5,000,000 under Clauses 19(3) and (5), and
the developers sought summary judgment for that sum. Held, by the Court of
Appeal, that on the true construction of the contract as a whole the manager's
decision was binding only as to quantum and not aS to liability, so that only if
the contractor's breach was admitted or proved beyond doubt could sum-
mary judgment be given: Rosehaugh Stanhope (Broadgate Phase 6) pie v.
Redpath Dorman Long Ltd. (1990). 61
[Note: While this decision is clearly to be welcomed in interpreting what
was an excessively harsh contract, the principal argument in favour of a stric-
ter interpretation, namely that otherwise there would be virtually no situation
likely to be encountered in practice during the course of the contract upon
which the contractual provisions could operate, does not appear to have been
put before the Court of Appeal.]
6·019 Certificates themselves will be strictly examined to ensure that they
conform to the contractual requirements and deal with the intended
matters.
s9 [1972] 1 W.L.R. 146, illustrated infra, para. 6·085.
60
20 BLR 78. See for a further case illustrating the same principle Prince Albert fµlp Co. Ltd.
v. Foundation Co. of Canada Ltd. (1976) 68 D.L.R. 3d, 283, S.C. ,,.
61
50 BLR69.
6 SEcr. l] TYPES OF PROVISIONS 739
ILLUSTRATION
Sellers of second-hand machines undertook to provide the buyers with
"Hunt Engineering Certificates", issued by a well-kno:wn firm of consulting
engineers, to the effect that they had been fully reconditioned to their satis-
faction. Both parties thought that Hunts provided certificates indicating an
objective standard of repair. In fact "Hunt Engineering Certificates" were
really reports by Hunts to their various clients, including the seller in quest-
ion, relating to their particular needs, and the seller's managers had in fact
discussed with Hunts the extent to which their standards might be imposed or
modified to suit the seller's requirements. The buyers sued for damages for
defective machines, and the owner pleaded that under the terms of the con-
tract the certificates were conclusive as to their quality. Held, by Devlin J.,
that the proffered documents were not certificates of quality and did not
relate to a particular objective standard of quality as the contract contem-
plated. Accordingly, the seller was in breach of contract in failing to provide
certificates of the required kind, and the purchaser was entitled to damages
for defects in themachines:Minister Trust Ltd. v. Traps TractorTrust(1954). 62
(3) Evidence of Approval
The owner's or architect's approval must be testified in writing, but only if 6°020
this is required by the provisions of the contract.
ILLUSTRATION
B. agreed to pay M. for building work upon receiving the architect's certifi-
cate in writing that the work had been completed to his satisfaction; the archi-
tect checked and approved of M. 's charges for extra work and sent them on to
B., but gave no certificate that the work had been executed to his approval.
Held, by the Court of Common Pleas, that under the contract a certificate was
a condition precedent to M. 's right to recover, and that what the architect had
done did not amount to such a certificate: Morgan v. Birnie (1833). 63
(4) Vendor's Approval of Building on Land Sold
Many conveyances and leases contain covenants by the purchaser or les- 6·021
see to build to the approval of the vendor, lessor or his architect on the
land sold or leased. This, of course, is a totally different legal situation
from that previously discussed, and does not fall within the scope of this
work. 64
,;i[1954] 1 W.L.R. 963.
63
9 Bing. 672, illustrated more fully infra, Section 3, para. 6-036. See post, Section 6, para,
6· 162, for cases where certificates for payment have evidenced satisfaction.
64
See Brace v. Wehnert (1856) 27 L.J.Ch. 572; Goolden v. Anstee (1868) 18 L.T. 898; Re
Northumberland A venue Hotel Co. (1887) 56 L.T. 833, C.A.;cf Att.-Gen. v. Briggs (1855) 1
Jur.1084, illustrated infra, Section 6, para. 6·172; and Dallman v. King, illustrated infra,
para. 6·024.
 740 APPROVAL, SATISFACTION AND C£RTIF1CATES
SECTION 2. APPROVAL BY BUILDING OWNER
6-022 (1) Implication of Reasonableness
Terms of this kind are comparatively rare in modem contracts. Where
work has to be done to the approval of a building owner rather than some
third party such as his A/E, the courts will generally endeavour to construe
the term to mean that the approval cannot be withheld by him unreason-
ably.65 Despite certain early dicta, this probably does not depend upon any
supposed maxim that "no man shall be judge in his own cause", since, if
the objection on the ground of interest is patent on the face of a contract
stipulating that the work is to be done to the satisfaction of the building
owner, it is hardly possible for the contractor to take such an objection
after an expression of dissatisfaction by the owner.
ILLUSTRATION
A. agreed to refer a dispute between himself and B. to B. himself. Held, by
the Court of King's and Queen's Bench, that he could not object to the award
on the ground that B. was judge in his own case: Matthew v. Ollerton (1672).55
In relation to arbitration clauses or agreements, this particular difficulty
was removed by Section 14 of the Arbitration Act 1934,67 which permits an
application for removal of an arbitrator notwithstanding that the ground
of objection was known at the time of the submission to arbitration, but
that section does not affect the position where the named person is not an
arbitrator,68 and, as will be seen in the next following section, a person
whose satisfaction has to be obtained, whether by certificate or otherwise,
is seldom an arbitrator in the proper sense. The section was primarily
aimed at local authorities and other owners who provided for their own
heads of departments or A/E's to be arbitrator under the contract. The
true view is that the courts are extremely reluctant to regard the satisfac-
tion of a party as binding if it can be possibly avoided, but if, on the other
hand, the wording and intention of the contract is sufficiently explicit then
the strict view will still prevail. Thus, in Dallman v. King where a lessee
had agreed to expend £200 on repairs to be inspected and approved by the
lessor, Tindal C.J. said:
"It never could have been intended that he (the lessor) should be allowed
capriciously to withhold his approval; that would be a condition going to the
6S In addition to the cases cited in this section, see _also the passage from DevlinJ.'s judgment
in Minster Trust Ltd. v. Traps Tractors Ltd. [1954] 1 W.LR. 963, quoted below in Section 3,
"Approval by Third Person", at para. 6·032.
66
4 Mod.220.
67 Nows. 24 of the Act of 1950.
66 See infra, Section 4.
[CHAP. 6 SECT. 2] APPROVAL BY BUILDING OWNER 741
destrll:ction of the thing granted, and if so, according to the well~known rule,
the thing granted would pass discharged of the condition. "68a
On the other hand, Cockburn C.J. said in Stadhard v. Lee68b:
"We quite agree that stipulations and conditions of this kind should, where 6,023
the language of the contract admits of it, receive a reasonable construction, as
it is to be contended that the party in whose favour such a clause is inserted
meant to secure only what is reasonable and just, and we therefore entitely
accede to the propriety of the decision in Dallman v. King. But we are equally
clear that, where from the whole tenor of the agreement it appears that, how-
ever unreasonable and oppressive a stipulation or condition may be, the one
party intended to insist upon and the other to submit to it, a court of justice
cannot do otherwise than give effect to the terms which have been agreed
upon between the parties."
The courts, therefore, in dealing with stipulations reqwrmg the
approval of the owner, will, wherever the construction of the clause will
permit of it, give effect to the presumption that contracting parties do not
intend to abandon their basic common law rights, in this case to payment
for work properly done, and imply a qualification of reasonableness, so
that the contractor will be entitled to payment if he has done the work in a
manner with which the owner ought in reason to have been satisfied. It
must be accepted, of course, that if so this deprives the term for approval
of any real practical effect.
ILLUSTRATIONS
(1) It was agreed that a lessee should spend £200 in repairs, to be inspected 6,024
and approved by the lessor, and that the sum should be retained by the lessee
out of the first year's rent. Held, by the Court of Common Pleas, (1) that the
lessor's approval was not a condition precedent to the lessee's right to retain
out of his rent the sum spent on repairs; (2) that, even if it were, the contract
could not mean that the lessor should be allowed capriciously to withhold
approval; and, the work having been properly done, the con4ition had been
substantially performed: Dallman v. King (1837).11&:
(2) A contract contained a provision that an engine was to be erected to the
satisfaction of the purchaser. Held, by the Court of Common Pleas, that it was
a question for the jury whether the work was such as ought reasonably to have
satisfied the defendant: Parsons v. Sexton (1847).68<1
(3) A policy of insurance provided that, as a condition precedent to pay- 6-025
ment, proof satisfactory to the directors should be furnished of the death of
the insured, together with such further evidence as the directors should think
necessary to establish the claim. Held, by the Court of Queen's Bench, that
this meant such evidence as the directors might reasonably require, and not
6
s. Dallman v. King (1837) 4 Bing. N.C.105.
6
(1863) 3 B. & S. 364, illustrated infra.
81!
68c 4 Bing.N.C. 105.
68d 16 LJ.C.P. supra, para. 6·011.
}
•
 742 APPROVAL, SATISFACTION AND CERTIF1CATES [CHAP.
such as they might unreasonably and capriciously require: Braunstein v. Acci-
dental Death Insurance Co. (1861).~s.
(4) A contract between a builder and a sub-contractor contained a pro-
vision that, in the event of the builder being dissatisfied with the sub-con-
tractor's progress, he might take over the work himself and deduct the
expense from the contract sum due to the sub-contractor. The sub-contractor
contended that his progress was in fact such as should satisfy any reasonable
person, and that the builder's dissatisfaction was capricious and unjustified on
the facts. Held, by the Court of Queen's Bench, on the construction of the
contract, and taldng into account that the builder was probably himself sub-
ject to stringent terms, that this contention, even if it could be established,
could not, in the absence of fraud, avail the sub-contractor: Stadhard v. Lee
(1863). 00
[Note: This is an interesting case, because (apart from the absence of an
arbitration clause) its provisions are very similar to those in many modern
sub-contracts, such as the FASS standard form of sub-contract in England.]
6·026 (5) Work was agreed to be done to the satisfaction of the owner. Held, by
the Supreme Court of Victoria, that the plaintiff was not entitled to a verdict,
unless the jury was satisfied not only that the contract as alleged was entered
into, and that the works were executed, but that the defendant, as a reason-
able person, ought to have been satisfied with the way in which they were
executed: Smith v. Sadler (1880).70
(6) Clause 4 gave the purchaser of a yacht the right to have her surveyed,
and Clause 5 provided that: "if any material defect in the yacht or her machin-
ery shall have been found, the purchaser may give notice to the vendor of his
rejection of the yacht ... If the vendor shall decline to make good the defect or
if the parties fail to agree the amount of the cash allowance either party
may ... cancel this agreement." The arbitration clause was in general terms,
but specifically included disputes as_to whether the vendor had satisfactorily
remedied defects under Clause 5. The purchaser notified the seller of defects,
which the latter by his surveyors disputed. The purchaser argued that his
opinion as to whether there were defects, provided it was honest, was conclus-
ive, and purported to determine the agreement. Held, by the Court of Appeal,
for the notice to be valid there must in fact be material defects, and whether or
not there were such defects was open to arbitration: Docker v. Hyams
(1969)."
(2) Disapproval Must be Honest
6·027 Obviously, refusal to approve, whether or not it must be reasonable, must
be honest and genuine.72 If the refusal is fraudulent, the builder is entitled
to be paid, since no person can take advantage of his own wrong, or set up,
68e 1 B. & S. 782; 31 L.J.Q.B.17.
69 3 B. & S. 364; 32 L.J.Q.B. 75; and see Tredegar v. Harwood [1929J A.C. 72; and Shipway
James) & Co. v. Wyndham & Albery, The Times, December 1, 1908. (Digest, Vol. VII,
p. 386). See also Grafton v. Eastern Counties Ry. (1853) 8 Ex. 699, illustrated post, para.
6·037.
10 6 Vict.L.R. 5.
11 [1969] 1 W.L.R. 1060.
72 Andrews v. Belfield (1857) 2 C.B.(N.S.) 779; Stadhard v. Lee, supra.
6 SECT. 2] APPROVAL BY BUILDING OWNER 743
as an answer to an action, the non-performance of a condition when he has
himself brought it about, 73 and in such a case he would also be liable to pay
damages in tort for deceit in any event. So an owner should make some
trial or inspection; and if without even looking at the work he were to say
that he did not approve, such conduct would usually evidence bad faith.
However, if the owner were not to intimate any disapproval, but simply
remain in possession without protest, it has been seen that mere passive
occupation of building' work will not usually amount to approval or
acceptance.74
(3) Approval as to Matters of Taste
Implications of reasonableness will clearly be less easily applied to mat- 6·028
ters of taste. When work or labour is expressly agreed to be done so as to
satisfy the taste or convenience of the owner, he may exercise his power of
rejection to any extent, provided that he does so in good faith, and not
dishonestly, since the standard of taste of an owner, which is essentially
subjective, cannot by its nature be supplanted by an objective test such as a
test of reasonableness. Obviously, such contracts will be very rare in ordi-
nary construction work.
ILLUSTRATION
A. undertook to execute an order for a carriage "in a manner which shall
meet with B.'s approval not only on the score of workmanship, but also that of
convenience and taste". B. disapproved of the carriage when it was built.
Held, that he might do so if he acted bona fide: Andrews v. Belfield (1857). 75
[Note: This case is not really on all fours with a construction contract, where
work cannot be returned, as in the case of a chattel.]
(4) Binding Effect of Approval
In those cases where approval is given pursuant to a contractual provision 6·029
of this kind, one consequence may be that it will bind the building owner
so as to prevent him subsequently alleging defective work or other breach
of contract. This subject is fully discussed in Section 3, "Approval by Third
Person", infra, where it will be seen that this is not necessarily the exact
converse of a builder's obligation to obtain approval before being able
to sue, and will not necessarily arise though the builder is under this
73
See, e.g. Roberts v. Bury Commissioners (1870) L.R. 5 C.P. 310, at p. 326; and see Section 5,
infra, "Recovery Without Certificate."
74
See ante, Chap. 5, paras. 5·003-5·004.
7
s 2 C.B.(N.S.) 779.
 744 APPROVAL, SATISFACTION AND CERTIFICATES [CHAP.
obligation. It is therefore, theoretically possible, even in a case where a
term as to reasonableness can be implied, so that absence of a certificate or
approval is not fatal to the builder, that the approval or certificate, once
given, may still bind the employer.
The modem tendency, however, is disposed, it is submitted rightly,
against according binding effect to a satisfaction provision, whether of an
owner or his A/E or some third person, in the absence of very clear word-
ing. 76 This is primarily, it is suggested, because it does not accord with the
intentions of most parties to construction contracts at the present day. On
the other hand, if a contract makes it quite clear that obtaining a particular
satisfaction approval or certificate is to be a condition precedent to pay-
ment, and that failure to obtain it will bar any possibility of further pay-
ment permanently, then there will clearly be a stronger case for according
binding effect to the satisfaction or certificate once given, in order to bal-
ance the harshness of the payment provisions. Few modern contracts are
of this kind, however, although they were common in Victorian times, and
indeed by no means unknown in the first half of this century throughout
the Commonwealth. But where, as is usually the case, the contractor
remains free to litigate or arbitrate for payment in the absence of an own-
er's or his A/E's satisfaction or certificate, there seems no sufficient case at
the present day for implying, in the absence of sufficiently clear wording,
an immunity for undetected defects arising upon the satisfaction or certifi-
cate being issued, given the ease with which defects in covered-up work
can escape detection. Undoubtedly, however, there have been many cases
in all jurisdictions in the past to this effect, some of which may, as stated,
have been a response to the strict view taken of payment provisions as
binding on the contractor.
ILLUSTRATION
6-030 By Clause 6 of a contract for a house, the whole of the work was to be do~e
to the satisfaction of the owner in all respects in terms of the other clauses 1n
the contract. By Clause 7 the contractor was to remove all materials not
approved by the owner, and to remove any work not executed to the satisfac-
tion of the owner. By Clause 13, payment was to be instalments, dependant on
the satisfaction of the owner, with payment of the final balance when the work
was fully and finally completed and ready for occupation to the satisfaction of
the owner. Other provisions all referred to the approval or satisfaction of the
owner. There was no arbitration clause. The building owner expressed his
satisfaction and paid the final balance in full. Later he sued for defective work
which he subsequently discovered. Held, by the Cape Provincial Division
(Newton Thompson J. and van Wyk A.J.), following Bateman v. Thompson
and other cases,71 and Bruens v. Smith,18 that the supply of good materials and
76 See the cases already referred to ante, Chap. 5, Sections 1(5) and 2(6), paras. 5·014-5·016,
5·053-5·058, and see the fuller list of cases infra, at Section 3.
71 See infra, Section 3, paras. 6·047 et seq.
7 s 1951 (1) S.A. 67, illustrated infra, para. 6·051.
6 SEcr.2] APPROVAL BY BUILDING OWNER 745
workmanship under the contract was subordinated to the satisfaction of the
building owner, and the claim must fail: Garfinkel v. Januarie (1954). 79
[Note: Counsel submitted (unsuccessfully) in this case that, had the satis-
faction been that of a third person, it would have been binding, but that, in the
case of the owner, it should be regarded as an added protection.]
It should perhaps be reiterated that the above discussion relates primar-
ily to cases where no arbitration clause is present. The presence of such a
clause, in general terms and without exclusions, will usually be a further
strong indication that satisfaction or certification provisions are not
intended to be binding on either party in the two senses mentioned, it is
submitted. 80
SECTION 3. APPROVAL BY THIRD PERSON
(1) Generally
It is by no means unusual in commerce to find provisions for some contrac- 6·031
tual matter to be determined conclusively by the decision or certificate of
some third party. Thus a provision that "official ... certificates of inspec-
tion to be final as to quality" in a contract for the sale of wheat prevented
buyers from recovering damages from sellers in a case where the official
inspectors had negligently issued a grading certificate in relation to a
wrongly-named category of wheat. 81 But in the case of the many opinions
or decisions which may be required of an owner's A/E under the terms of a
construction contract, it has been stated in Sections 1 and 2, supra, that the
modern tendency is no longer to accord binding effect to provisions for his
approval, satisfaction or certificates in the absence of very clear language,
and that this accords with the modern view, on all sides of the industry, of
the A/E's or other owner's representative's role as the agent of the owner
for the purpose of administering and giving effect to the various pro-
visions of the contract on the latter's behalf. Since these various functions
or decisions cannot avoid involving the judgment, opinion or satisfaction
of the owner or his agent, the many references in construction contracts to
the opinions or satisfactions of the A/E do not by themselves, it is submit-
ted, connote any intention of the draftsman that they should be of a
judicial nature and binding either side.82 If a provision of this kind is to be
interpreted as binding, that inevitably deprives at least one of the parties
of what are otherwise his common law rights, whether for additional pay-
ment under the terms of the contract or for damages for breach, and the
guiding principle has now been authoritatively and, it is respectfully sub-
mitted, rightly stated, in the context of modern construction contracts,
that the presumption is against any such interpretation of a provision for
791954 (I) S.A. 88.
so See infra, Section 4, "Effect of Arbitration Clause".
31
Toepfer v. Continental Grain Company [1973] 1 Lloyd's Rep. 289.
82
See this further explained in C.C.P.P., paras. 17-06 to 17-10.
 r
746 APPROVAL, SATISFACTION AND CERTIFICATES l\....lIAP. 6
approval, satisfaction or certification.83 An earlier modern recognition of
this is to be found in the following extract from the judgment of Devlin J.
in Minster Trust Ltd. v. Traps Tractors Ltd. (1954)84:
6·032 "There is, after all, nothing to prevent a party from requiring that work
shall be done to his own satisfaction. He might then choose to act on the
recommendation of an agent. If an agent is named in the contract, it may
be plain that he is to function only as the alter ego of his master, and then
his master can tell him what to do ... Whether it be the act of the master
or the servant there may be a question ( again depending on the impli-
cation to be drawn from the contract) whether the dissatisfaction must
be reasonable, or whether it can be capricious and unreasonable so long
as it is conceived in good faith ... The tendency in modem cases seems to
be to require the dissatisfaction to be reasonable. What has to be ascer-
tained in each case is whether the agent is or is not intended to function
independently of the principal. The mere use of the word "certificate" is
not decisive. Satisfaction does not necessarily alter its character because
it is expressed in the form of a certificate. The main test appears to be
whether the certificate is intended to embody a decision that is final and
binding on the parties. If it is, it is in effect an award, and it has the
attributes of its arbitral character. It cannot be attacked on the ground
that it is unreasonable, as the opinion of a party or the certificate of one
who is merely an agent probably can. On the other hand, it must be made
independently, for independence is the essence of the arbitral func-
tion ... If a party to a contract is permitted to appoint his agent to act as
arbitrator in respect of certain matters under the contract a similar term
must be implied; but it is modified by the fact that a man who has to act as
arbitrator in respect of some matters and as servant or agent in respect of
others, cannot remain as detached as a pure arbitrator should be.
There is another distinction between certifiers. If work ·under a con-
tract has to be completed to the satisfaction of a certifier, it ·may mean
that his duty is merely to see that the requirements of the contract are
met, or it may mean that he is entitled to impose a standard of his own. It
may be that his standard is that to which the parties submit and that it
constitutes the only provision in the contract about quality, or it may be
that his standard is an added protection, so that performance under the
contract must satisfy both the contract requirements and the
certifier ... "
6·033 This same factor had been recognised by the House of Lords in a much
earlier case, where a contract had provided that, during the carrying out of
the work, the engineer's certificates and decisions as to the value and qual-
ity of the work .µid as to extras were to be final, but that following com-
pletion his certificates could be challenged and additional sums claimed
from a referee. There, Lord Cranworth L.C. (in the context of an attempt
to avoid the finality of the engineer's decisions on the ground of lack of
independence) said:
83 See per Lord Dip lock in the Gilbert-Ash case, quoted supra, para. 6·005. See also the dis-
cussion at para. 6·006, supra, with regard to the special case of interim certificates, and also
infra, Section 6(7), dealing specifically with these certificates.
S4 [1954] 1 W.L.R. 963, at p. 973. Illustated supra, para. 6-019.
SECT. 3] APPROVAL B,y THIRD PERSON 747
"But here the whole tenor of the contract shows that it was never intended
that the Engineer should be indifferent between the parties. When it is stipu-
lated that certain questions shall be decided by the Engineer appointed by
the compan)'., this _is, in fact, a stipulation that they shall be decided by the
company. It rs obvious that there never was any intention of leaving to third
persons the decision of questions arising during the progress of the works.
The company reserved the decision to itself, acting, however, as from the
nature of things it must act, by an agent, and that agent was, for this purpose,
the Engineer. His decisions were, in fact, those of the company. The contract
did not hold out, or pretend to hold out, to the appellant, that he was to look
to the Engineer in any other character than as the impersonation of the com~
pany: in fact, the contract treats his acts and the acts of the company, for many
purposes, as equivalent, or rather identical. "85
In cases where the approval or certificate relates to the quality or com- 6·034
pleteness of the work 3cs a whole, the two basic problems which arise in
construing these provisions are, first, whether the builder must obtain the
necessary approval or certificate before he can sue for work done and
secondly, whether the owner is bound once the stipulated appro~al i~
given, and thereby precluded from alleging that the work was not in
accordance with the contract. These two aspects will be dealt with in the
separate Subsections (2) and (3) below.
At first sight, these questions may seem to be the exact converse of each
other, and obviously as has been pointed out, supra, where the courts con-
sider a satisfaction, approval or a certificate to be a condition precedent to
the right of the builder to sue, it is understandable that they may be
tempted to balance this harshness by holding the owner precluded from
alleging defective or insufficient work once the satisfaction, approval or
certificate has been obtained. This, although not openly expressed, may
explain some of the earlier cases.
Nor are these questions exactly the converse of each other, even in the
absence of some express special provision of the kind referred to, because
an owner may be entitled to allege defective work for either of two rea-
sons; first, that the covenant to obtain satisfaction is, on a true construction
of the contract as a whole, not a condition at all, but subordinate to the
obligation to do the work in accordance with the contract, or, secondly,
that even if it is a condition (and accordingly, the builder is not entitled to
sue without obtaining it) it is an added protection, and the obligation to
carry out the work in accordance with the contract remains unaffected.
In fact there are three possible obligations by a builder on which his 6·035
right to payment may depend:
(a) to obtain satisfaction, conformity in other respects with the con-
tract being subordinated thereto and not a condition86 ;
85
f!.angerv. Great Western Railway Co. (1.854) 5 H.L. Cas. 72, at p. 88. In a later difficult case
m t~e C?<>urt o~ Appeal: where the chief engineer's principal decisions were subject to
arb1trat10n, a different view was clearly taken: see De Morgan Snell & Co. v. Rio de Janeiro
(1892) 8 T.L.R. 292, illustrated ante, Chap. 2, paras. 2·027~2.030.
86
Cf per Dev~n .J. supra, paras. 6-031--6·032, and see, e.g. Bateman v. Thompson (1875),
Hudson, Bmldmg Contracts ( 4th ed.), Vol. 2, p. 36, illustrated infra, para. 6·049.
 748 APPROVAL, SATISFACTION AND CERTIFICATES [CHAP. 6 SECT. 3]
(b) to obtain satisfaction and to conform to the contract, both being
conditions which the builder must perform87; or
( c) to do the contract work as specified, the satisfaction of the person
concerned not being a condition at all (and substantial perform-
ance of the contract being possible without it).ss
In the case of contracts falling into categories (a) or (b), on the one
hand, the builder will be unable to recover unless he obtains the required
satifaction, approval or certificate, but not in the case of category ( c). On
the other hand, in the case of category (a), the owner will be precluded
from alleging that the work was not in accordance with the contract if the
builder has succeeded in obtaining the required satisfaction, approval or
certificate, but not in the other two cases.
It may be advisable to reiterate the warning that in modem forms of
contract the effect of an arbitration clause, in general terms and without
exclusions, a fortiori one with an "open up review and reverse" express
power, must be an indication that finality is not intended.89
(2) Whether Certificate, Satisfaction or Approval a Condition
Precedent to Builder's Right to Sue
6·036 Here, there are two possible views, namely that obtaining the stipulated
approval or satisfaction is not a condition of the contract, so that by carry-
ing out the work the builder has substantially performed his obligations
and, on the other hand, that the obtaining of the required approval is a
condition, so that until it has been obtained the builder has failed to satisfy
a fundamental term of the contract, and is thereby disentitled from suing
upon it. Similar principles apply to provisions relating to questions involv-
ing extras to the contract, extension of time, or other detailed matters as
opposed to the quality or value of the main work undertaken.
90
The following are examples of cases where an approval or certificate
was held to be a condition precedent to the right to sue.
ILLUSTRATIONS
(1) By a building contract the price or allowance for variations or alter-
ations was to be estimated and settled by the architect, who should be sole
arbitrator in settling the prices. The work was to be paid for in stage instal-
s7 Cf per DevlinJ.supra, paras. 6-031---6-032, and see Billyackv. Leyln.nd [1968] 1 W.L.R. 471;
National Coal Board v. William Neill & Son (St. Helem;) Ltd. [1985] Q.B. 300, illustrated
infra.
88 Cf Dallman v. King illustrated supra, para. 6·024.
!Ill See Section 4, infra, "Effect of Arbitration Clause", and for a modem example,see Crestar
Ltd. v. Carr (1987) 37 BLR 113, see infra, para. 6·077.
90 In addition to the cases illustrated below, see the cases ofMill.sv. Bayley (1~13) 2 H. & C.
36; Canty v. Clarke (1878) 44 Up.Can.Q.B. 222;Murray v. Cohen (1889) 9 Ms. W.R. (Eq.)
124, all illustrated post, Section 6(5), paras. 6·176-6·177, and see also Miller v. London
County Council, illustrated infra, para. 6-041.
APPROVAL BY THIRD PERSON 749
men ts on the certificate of the architect's approval of each stage, with the final
balance due on his certificate that the whole had been completed to his satis-
faction. On completion, the contractor claimed for additional work not in the
contract, and the architect supplied the owner with the necessary price adjust-
ments to the contract sum for the varied work, but never gave a certificate of
satisfaction. Held, by the Court of Common Pleas, a certificate of satisfaction
for the whole of the work was a condition precedent to payment of the final
balance, and all the architect had done had been to make the necessary mon-
etary adjustments for the variations: Morgan v. Birnie (1833). 91
(2) C. con't:acte~ to execute work according to plans and a specification,
and to the satisfaction of B. or any other architect whom the building owners
might appoint. Held, by the Court of Session, that there had been a valid
reference to B., which excluded the need for proof as to the sufficiency of the
work: Chapman v. EdU'lburgh Prison Board (1844).92
(3) A building contract provided that no instalments should be payable 6·037
unless the plaintiff should deliver to the defendant a certificate signed by the
defendant's surveyor that the work was in all respects well and substantially
performed. The defendant appointed his own father surveyor. The builder
alleged fraud in withholding the certificate, and sued for work done. Held, by
Pollock C.B., the action was not maintainable without a certificate, and the
builder's proper remedy was a separate action for fraud, and not an action on
the contract: Milner v. Field (1850). 93
(4) A building contract provided that the work should be paid for by instal-
ments, with 90 per cent. paid for on completion to the architect's satisfaction,
and 10 per cent. three months thereafter; additions and alterations were not
to be executed without the architect's order in writing, with disputes as to this
referred to an umpire. The architect ordered additions. The builder brought
an action against the ownerforthe 90 per cent. on completion, but without the
certificate of satisfaction, in which he alleged, inter alia, that the architect had
not ascertained the amount of the additions and that the balance of the
account was unpaid. The owner argued that the builder was not entitled to
payment as he had not obtained a certificate of completion to the architect's
satisfaction. Held, by the Court of Common bench, following Milner v. Field
that the obtaining of a certificate was a condition precedent: Glenn v. Leith
(1853).~
(5) A. agreed to supply coke of a certain quality, and to the satisfaction of
the company's inspecting officer for the time being. In the case of his not
supplying coke of the quality required, and to the satisfaction of the com-
pany's officer, the company might refuse to accept, and buy elsewhere. A.
contended that the inspector was the company's servant, and relied on Dall-
man v. King,95 pleading that the inspector should have been reasonably satis-
fied. Held, by Parke B., that the satisfaction of the inspector was a condition
precedent: Grafton v. Eastern Counties Railway (1853). 96
91 9 Bing. 672. A certificate, once granted, would have been conclusive, however-see infra.
92 6 D. (Ct. of Sess.) 1288. (Note: This Scottish case, and the two other Scottish cases of
Muldoonv.Pringle(1882) 9R. (Ct. ofSess.) 915 and Ayr Road Trusteesv.Adams 1883) 11
R.. (Ct. of Sess.) 326 set out in the next section, proceed upon the basis that the promise to
do work to the satisfaction ofB was in effect a submission to arbitration. This, in the sense
of arbitration proper, is not the basis of the English cases.)
93
5 Ex. 829. (Note:The latter part of this decision was really a pleading point at that time, and
would not be justified today in the light of subsequent cases. See Section 5, "Recovery
without Certificates", infra.)
94
21 LT.141; 1 Com. Law Rep. 569.
~ lliustrated supra, para. 6·024.
% 8 Ex. 699. See also Munro v. Butt (1858) 8 E. & B. 738, ante, Chap. 5, Section 1.

750 APPROVAL, SATISFACTION AND CERTIFICATES [CHAP. 6
6·038 (6) It was provided by Clause 11 in a ship-building contract that the con-
sulting engineer should have power to make additions to or deductions from
the works and that "the value of all such additions, deductions, alterations
and deviations should be ascertained and added to or deducted from the
amount of the contract price, as the case may require". An instruction in writ-
ing was to be a condition precedent to recovery. There was also a clause that
any dispute as to the value of such additions, alterations, etc., should from
time to time be referred to the consulting engineer, whose decision,valuation
or award, interim or final, was to be conclusive and binding upon both parties
to the contract. Held, by the Court of Queen's Bench, that the ascertainment
of value by the engineer under Clause 11 was a condition precedent: West-
wood v. Secretary of State for India (1863). 97
(7) A contractor undertook to carry out any variations ordered by the clerk
of works and countersigned by the bursar within the original contract period,
unless an extension of time was similarly given and countersigned. The
decision of the inspector under the contract with respect to the quality and
value of the works and the time within which they should be completed was to
be final and without appeal. The contractor sued for the balance due on the
inspector's final certificate, but no extension of time had been given and the
owner sought to set off liquidated damages for delay. Held, by the Court of
Queen' Bench, in the absence of an extension of time the contractor was lia-
ble for the damages. Jones v. St. John's College Oxford (1870). 98
6·039 (8) A lump sum contract for a railway provided that every certificate in
writing of the engineer-in-chief should be binding and conclusive on the
owners and the contractors, and final except where otherwise provided, and
that "all the accounts relating to this contract between the company and the
contractors shall be submitted to and adjusted and settled by the company's
engineer-in-chief, and his certificate of the ultimate balance of the account
shall be final and conclusive on both parties without any appeal". There was an
alternative for arbitration, but neither party availed themselves of it. The con-
tractors brought a claim for additional payment on the grounds that the con-
tract had understated the amount of work to be done and that the engineer
had verbally promised to pay more than the contract sum. Held, by the Court
of Appeal, that in the absence of fraud or an arbitration the certificate of the
engineer-in-chief was a condition precedent to the determination of the sum
which the company was to pay, and the contractor could not recover any fur-
ther payment beyond the amount certified: Sharpe v. San Paulo Railway
(1873).w
(9) A contract provided that: "the contractor and the director will be bound
to leave all questions or matters of dispute which may arise during the pro-
gress of the works or in the settlement of the account to the architect, whose
decision shall be final and binding upon all parties. The contractor will be paid
on the certificate of the architect." Held, by the Divisional Court, that before
the contractor could recover anything from the company, there must be a
certificate of the architect as to what was due: Stevenson v. Watson (1879). 1
(10) By a written ageement, a tenant of a furnished house agreed at the
expiration of the tenancy to deliver up possession of the house and the furni-
91 7 L.T. 736. (Note: This and cases (8) and (9), infra, are cases where the AJE's function
under the clause in question was very close to, if not actually, that of a true arbitrator.)
9ll L.R. 6 Q.B. 115. Illustrated more fully post, Chap. 10, para. 10·031.
99 L.R. 8 Cb.App. 597, at p. 605. See also Cantyv. Clarke (1878) 44 Up. Con.~_;~· 222, illus~
trated infra, para. 6-176. ' H.L:C. 811, and see Lloyd Bros. v. Milward, illustrated infra, para. 6-068. For a fuller dis-
1 4 C.P.D. 148.
r
SECT. 3] APPROVAL BY THIRD PERSON 751
ture in good order, and in the event of loss, damage, or breakage, to make
good or pay for the same, the amount of such payment, if disputed, to be
settled by two valuers. Held, by the Divisional Court, that the settlement of
t?e amount of the payment by the valuers was a condition precedent to the
nght of the landlord to bring an action in respect of the dilapidations: Bab-
bage v. Coulburn (1882).2
(11) A building contract provided: "(1) The works shall be completed in all 6·040
respects ... on or before the 16th day of December, 1901, to the satisfaction of
the surveyor ... to be testified by a certificate under his hand ... (4) ... The
contractor shall be paid by the council at the rate of 80 per cent. of the value of
the work done in e.ach month, an~ th_e balance one month after completion of
the contract. Provtded that the distnct council shall not be required to pay to
the contractor any sum exceeding the value as valued by the said surveyor or
o!
other offi.c~r of so much the works as shall have been executed by the con~
tractor dunng the precedmg month and shall have been certified ... to have
been ~mpleted to his satisfaction". The contractor sued for the final balance
producing only the earlier interim certificates. Held, by the Court of Appeal'
that the contract made a certificate by the surveyor that the work had bee~
compl~ted to his satisfaction a condition precedent to the payment of the
retention money: Wallace v. Brandon and Byshottles Urban District Council
(1903).'
(1?) A ~uilding.c.ontract provided (Clause 26) that: "The certificate of the
architect lS a condition precedent to the contractor's right of action against the
employer." It was further provided (Clause 27) that: "The architect is to be
the sole ar~itrator or umpire between the employer and the contractor and is
to determine any question, d~spute or ~erence that may arise either during
the progress ~f the work or m determ1n1ng the value of any variations that
ma~ ?e made 10 the work contracted for, and the certificate of the architect's
dec1s1on upon such question, dispute or difference shall be final and binding
betw~en the employer and contractor, and without further appeal whatso-
eve~. The: contractor, who ?ad been fully paid by the employer upon every
cer~ifi.c8;te issued by the architect, and had not asked for arbitration under the
ar~1tration clause, sought to recover additional payment by bringing an
a~tion. Held, ~y the Earl of Reading C.J., that in the absence of fraud or collu-
s1on or other nnproper conduct. between the employer and the architect the
presence of the arbitration clause did not affect the requirement of a certifi-
cate and the contractor could not succeed in his action: Eaglesham v. Mc Mas-
ter (1920).'
(13) Cl~use 41 of a building contract provided for the release of one-half of 6·041
the reten~o~ moneys ?n ~e architect's certificate of completion, and for the
balance w1th1n a certa~n time thereafter. Clause 42 provided that no sums of
money should be considered to be due and owing to the contractor, nor should
the contractor make or enforce any demand on account of any work executed
unfess the eng~neer should have certified or recommended the amounts to be
paid. The certi~cate of completion was given, but no Clause 42 certificate for
'.~ payment was given (probably because of a substantial claim for liquidated
v ),
'.'.%
'
,f\
~~-·
damages for delay by the owner, which the court ultimately held to be invali-
I<\·
:r 2
3
9 Q.B.D. 235.
"<i Hudson, Building Contracts (4th ed.), Vol 2, p. 362.
i • [1920] 2 ~.B. 169. (Note: In this case, since it was expressly provided that the certificate of
the ~rchitect was to be a co~di~on prec.eden! to the contractor's right of action, it was
obvmus that he could not mamtam an ~ction ';1thout the certificate: Scottv. A very (1856) 5
cusS1on of Eaglesham's case, see post, Section 9(3), paras. 6·226-6·227.
 752 APPROVAL, SATISFACTION AND CERTIFICATES [CHAP.
dated; )5 Held, by the Du Parcq J ., that, notwithstanding the failure of the
owner's claim for liquidated damages and the issue of the certificate of com-
pletion, the contractor's claim was premature and coul~ not, in t~e absencd of
the Clause 42 certificate, succeed: Miller v. London City Council (1934).
[Note: This was a harsh contract, with the ar~hitect's decision~ on e~t~nsion
of time and liquidated damages final a~d "'.rt~out appeal. His dec1s1<;>n on
these was invalidated only by reason of 1ts tmung and not on the ments. In
effect both sides lost.]
(14) A term of a main contract incorporated into a sub-contract7 provided
that payment respecting any work comprised in the. sub-conti:act would 7:ot be
due until receipt by the main contractor of the architect's certificate rel~ting to
the work. Judgment creditors of the sub-contractor sought to garnish the
money owed by the main contractor, after the main contract and sub-contract
work was complete but before any certificate relatin? ~~ the sub-contract
work had been issued by the architect. Held, by the Divisional Cour~, there
was no debt capable of being garnished by the judgment creditor until acer-
tificate was issued: Dwilop and Ranken Ltd. v. Hendall Steel Structures
(1957).'
6°042 (15) The order from a main contractor .to an exca:'~tion sub:contractor
stated: "This order is all based on unit pnces. Quanttties comptled by the
Dept. of Transport engineer in charge of the work and allowed by the Dept. to
{the main contractor) will be the final figure in making l?ayments to {the su~-
contractor)." The sub-contractor alleged that the engmeer had made mis-
takes in measuring the quantities. Held, by the Ontario Court of Appeal, fol-
lowing Sharpe v. Sao Paulo Railway, that since dishonesty was not rmputed,
the sub-contractor was bound by the engineer's measurements: Croft Con-
struction Co. v. Terminal Construction Co. (1960). 9
(16) By Clause 30(1) of the pre-1980 RIBA/JCT -~ntracts, interim valu-
ations were to be made for the purpose of ascertaining the amount to be
stated as due in interim certificates, for which the contractor was entitled to be
paid within 14 days from presentation of the certificate. The amount stated as
due was to be the value of work properly executed and materi~s and g?ods
delivered, less retention of previous payments. A local authonty architect
issued an interim certificate from which he had made two relatively small
deductions not justified by the contract, which the contractor poi.nted ou~ to
the council, but the architect declined to increase the amount certtfied, which
the council had paid. The contractor's bondsmen, who had taken over the
contract, then purported to terminate it for non-payment of "the amou~t due
on any certificate" under the terms of Clause 26(1)(a) (the contractors ter-
mination clause for non-payment) which they argued should have b~en the
larger but wicertified amount. Held, by the Cou.~ of Appeal, that since an
architect's certificate under Clause 30 was a condition precedent to payme1;1t,
a termination based on a larger sum than that certified coµld not be valid:
Lubenham Fidelities Ltd. v. South Pembrokeshire Cowity Council (1986). 10
6·043 While this last decision of the Court of Appeal was obviously right, it is
submitted that it should have been decided as a matter of interpretation of
s See the case illustrated on this post, Chap. 10, Section 3(5), para. 10·090.
6 50 T.L.R. 479.
7 For the term in the sub-contract, see post, Chap. 13, Section 4(3).
s [1957] 1 W.L.R. 1102. This case is doubted f!OSt,_ Section 6(~),_paras. 6·190-6·1~1, ~n the
ground, inter alia, that the effect of the arb1trat1on clause (if incorporated, which 1s not
entirely clear) seems to have been overlooked. ~>·'.
9 20 D.L.R. (2d) 247, Canada. ' Certificates".
io32BLR 39.
6 SECT. 3] APPROVAL BY THIRD PERSON 753
the wording of the termination Clause 26, itself, rather than by the con-
dition precedent interpretation placed by the court on the payment
Clause 30. The Court accepted that there was no authority on the point. In
addition there was present the wide "open up review and revise" wording
of the RIB A/JCT arbitration clause, which the Court correctly held would
permit early arbitration as to the inadequacy of any sums certified, but the
possible interpretative effect of the arbitration clause, in removing the
finality of the certificates altogether, does not appear to have entered into
the Court's reasoning. The Gilben-Ash case in the House of Lords, 11
which had finally and authoritatively held that interim certificates under
these forms of contract using the identical Clause 30 wording were not
binding on the owner, who would be entitled to raise any bona fide set-off
or counterclaim against sums so certified in the converse situation, was not
discussed in the judgment, nor was Lord Diplock's statement of general
principle in that case. 11a On the question of the lack of previous authority
noted by the Court of Appeal, it should be appreciated that, with the poss-
ible exception of Glenn v. Leith (where the report is not very complete as
to the terms of the contract), nearly all the cases illustrated supra contain
clear express indications of finality. No such wording is present in the
RIBA/JCT forms (indeed Clause 30(8) of the form in question provided
expressly that no interim certificate should be conclusive ·evidence that
work was in accordance with the contract). If correct, the decision means
that the architect's interim payment certificates under the RIBA/JCT
forms of contract, and indeed many other standard forms, will be binding
on the contractor, but not on the owner, in proceedings for summary judg-
ment. This part of the reasoning in the Lubenham case cannot be sup-
ported on principle or authority, it is submitted. 12
The following cases are illustrations of the courts taking the opposite 6·044
view, so that obtaining the required satisfaction or certificate was not a
condition precedent.
ILLUSTRATIONS
(1) A. covenanted to light a town to the satisfaction of B.'s surveyor, to
keep the lamps burning for a certain time with certain burners, and to pay a
certain sum on default. B. covenanted, if"A. did well and effectually light the
lamps and fulfil all his covenants", to pay A. certain prices. Held, by the Court
of Common Bench, that the covenant to pay was separate and severable, and
that the performance by A. of all his covenants was not a condition precedent
to his right to recover, by action on B.'s covenant, the price of gas supplied:
London Gas Light Co. v. Chelsea Vestry (1860). 13
(2) In a contract for the supply and erection of electric plant it was provided
that the contractors were to be paid in three instalments on delivery, on test-
11
[1974] A.C. 689.
n, Cited and discussed supra, para. 6-005.
12
See the analysis of the case, (1987) 3 Const. L.J.172, and see infra, Section 6(7), "Interim
13
2L.T.217.
754 APPROVAL, SATISFACTION AND CERTIFICATES [CHAP.
ing and six months later: "the said respective instalments shall.be paid within
fou'rteen days after the production of the certifi~ate of the .engtnee! that such
instalments are respectively due and payable. !he engineer reJected two
deliveries, which the contractors disputed. An actl~n w~ brought by th~ con-
tractors for the unpaid balance of the purchase pnce without produ~tlon of
the engineer's certificate. Held, by the Court of Session, that the action was
competent. Per the Lord President: ."It is possible to phrase a con~?ct so that
the possession of an engineer's certificate should be made a cond1tton prece-
dent to any action whatsoever. All I can say is that that has not been done
here.": Howden & Co. Ltd. v Powell Duffryn Steam Co. (19.12). 14
[Note: This cannot be regarded a~ a st:ong case, h?wever, smce the contract
also made it clear that disputed reJectlons or certificates could be ta.ken to
arbitration and the Court of Session was principally concerned with the
implement~tion of that intention.]
(3) Clause 2 of a building contract provided that the ov.:ner would pay !~e
contractor the contract sum of £575 or such other sum as trught be payable at
the times and in the manner specified in the condition~"· Clause 25(a) of the
conditions provided that the Contractor should be e?-titled to a monthly cer-
tificate from the architect of the amount due·to htm from the owner and,
within three days of its issue, to payment by the ?wner. lf_eld, by the Natal
Provincial Division, Clause 25(a) set out the machinery which the contrac~or
would normally put in motion but, viewing the contract as a whole, a certifi-
cate was not a condition precedent to a right to sue: Errico v, Lotter (1956). 15
In the light of the principles stated by Lord Diplock in the Gilbert:Ash
case,16 the decision itself, and more modem cases smce the last ed1tton
(where even final certificates have now been held ~ot to.prevent se~-offs,
defences or counterclaims by the owner17), both rec1proc1ty and the inten-
tions of the parties to modern construction projects suggest, ~at the .L.ord
President's short observation in the Howden case and the Errico decis~on,
supra, are not only mo_re in line with modemjudi~ial and ~dustry thin~-
ing, but can in fact be reconciled with m~y e.arh~r ~PP?smg c~ses, Vir-
tually all of which contain some express or 1mphed 1nd1c~tio~s o~ mtended
finality external to the satisfaction provision itself. If t?is
VI~W ts correct,
mere provisions for payment on a certificate of sattsfactlon, w~ether
interim or final, will not be a condition precedent to pay~en:, w~th ~r
without an arbitration clause, in the absence of some further 1ndicatton m
the language of the contract. 173
(3) Whether Employer Bound by Certificate, Satisfaction or Approval
Here the two possible views are, firstly, that the satisfaction, approval or
certificate is intended to be the only, or the ov~rridin?, requir.em~nt as to
the sufficiency of the work or, secondly, that this requirement 1s either not
1• 1912 S.C. (Ct. of Sess.) 920, Scotland. is 1956 4 S.A. 139, South Africa.
16 Quoted supra, Section 1, para. 6-005.
11 See the cases infra, Subsection (3).
n. See, however, the cases and discussion infra, paras. 6· 190--6·193.
6 SECT. 3] APPROVAL BY THIRD PERSON 755
a condition at all, or is an added protection to the owner, so that to recover
the builder must additionally satisfy all other contractual provisions defin-
ing the work to be done. 18 In the last case, if the owner can show, despite
the satisfaction, approval or certificate having been obtained, that the
work is nevertheless not in accordance with the contract, then he is not
precluded from suing for breach of contract, or from setting up this alle-
gation as a defence to a claim by the builder for the price of the work.
It will be seen that the more modem cases show a distinct trend, in the
; j absence of sufficiently explicit wording, to regard satisfaction and certifi-
l ; cation provisions as being at best in the "added protection" category, so
that the owner will not be prevented from raising substantive defences
even against a final certificate. 19
This is not to say, of course, that "conclusive evidence" or other explicit
wording in relation to a certificate ( today in England this will usually be in
relation to the final certificate) will not be given effect by the courts, and
until 1976 the RIBA/JCT main contract forms in England contained pro-
gressively more explicit and strict provisions20 designed to confer greater
and greater immunity on the contractor for subsequently discovered
defective work, unless notice of arbitration was given within a very short
period of the final certificate. 21 These provisions have provoked a number
of cases in which the question was whether the arbitration clause, with its
express "open up review and revise" powers, was intended to override the
wording of finality used in relation to the certificate. These cases, turning
on very explicit wording, were ultimately resolved in favour of the con-
tractor,22 but the wording was very considerably modified in favour of the
owner in the 1977 and post-1980 R!BA/JCT standard forms, as well as in
the 1973 ICE form,23 and these latter versions of the final certificate pro-
visions seemed less likely to provoke disputes. 23a The older forms of con-
tract still survive in many areas, both domestically and overseas.
The cases below are principally concerned with difficulties created by 6·047
more generalised wording, and either do not involve an arbitration clause
or, if one is present, the interpretation arrived at by the court has avowedly
not been dependent upon it. 23 b It may also be noted that in earlier cases the
18
See the passage in the last paragraph of the quotation from Devlin J. set out supra, para.
6·032.
19
Billyackv. Leyland [1968] 1 W.L.R. 471; Simpson's Ltd. v. Pigott Construction Ltd. (1974)
40 D.L.R. (3d) 47; Prince Albert Pulp Co. v. Foundation Co. of Canada (1976) 68 D.L.E..
(3d) 283; Dabous v. Zuliani (1976) 68 D.L.R. (3d) 415; National Coal Board v. William
Neill and Sons (St Helens) Ltd. [1985] Q.B. 300; all referred to and illustrated infra in this
subsection, and see also Crestar Ltd. v. Carr (1987) 37 BLR 113, C.A., illustrated infra,
20
Section 4, "Effect of Arbitration Clause."
21
See Oause 30(7) of the post-1963 forms and the provisions in the earlier pre-1963 forms.
Ironically, it has recently been held, contrary to widespread belief over many years, that
time can be extended for such an arbitration under the "hardship" provisions of Section 27
of the Arbitration Act 1950; McLaughlin. and Harvey PLC v. P. & 0. Developments Ltd.
(1991) 55 BLR 101,perGatehouse J.
22
See Section 4, infra.
2.1 See supra, Section 1, paras. 6·002-6·003 and see also C.C.P.P. para. 30--25.
2.1a But see Colbart Ltd. v. Kumar, considered infra, para. 6· 185.
2.lb The cases involving arbitration clauses are separately considered infra, Section 4.
 756 APPROVAL, SATISFACTION AND CERTIFICATES -LCHAP.
courts were particularly ready to hold an owner bound by a satisfaction
provision where the owner's defence against a certificate was based on an
allegation of unauthorised variations ordered by his NE.24
The following are cases where a certificate or satisfaction has been held
binding so as to prevent substantive defences being raised against pay-
ment by an owner or in sub-contracts by a main contractor.
ILLUSTRATIONS
(1) The builder agreed to repair certain houses "according to the specifi-
cation and drawings prepared by A", the works "to be done with the best
materials ... according to the drawings, specifications ... and to the full satis-
faction of the building owner or his architect". There was no provision as to
certificates. The architect ordered certain alterations and the builder com-
plied. The architect certified his satisfaction on the completion of the altered
work. Held, by the Couit of Common Pleas, that in an action by the builder
against the owner for the money agreed to be paid, no evidence could be
received from the defendant that the work was not done according to the
original plans and specifications: Harvey v. Lawrence (1987). 25
[Note: A small deduction from the contract sum was allowed for the value
of reclaimed lead to the contractor, no doubt since such a set-off would not
involve questions of satisfaction.]
(2) A building contract provided that extras should be ordered in writing,
but no claim should be made for extras without production of the written
order; that certain proportionate payments should be made from time to time
on the certificate of the architect, whose opinion as to value was to be final;
and that if any dispute arose as to the meaning of the specification or contract,
he was to define its meaning; and that his decision as to the nature, quality and
quantity of the works executed or to be executed should be final, and also his
decision as regards the value of extras. The architect gave a certificate that a
certain sum, which included extras, should be paid. Held, by the Court of
Common Pleas, that the certificate was conclusive, and prevented the quest-
ion whether or not there had been a sufficient order in writing for the extras
from being raised: Goodyear v. Weymouth Corporation (1865).26
6°048 (3) An Irish engineering contract provided that no extra work should be
executed without an order in writing; that such extra works should be valued
by the engineer, whose decision as to value should be final; that accounts of
extras ordered should be sent in within one month; that, in default of their
being so sent in, the owners should not be bound to pay for the extras con-
tained in them; that the engineer should be exclusive judge of the execution of
the works and of everything connected with the contract; and that the certifi-
cates of the engineer should be binding and conclusive on both parties. The
engineer gave a final certificate, which included the price of extras. The
owners refused to pay the part of the price relating to such extras. The con-
tractors brought an action on the certificate. The owners set up the defences
that the extras had not been ordered in writing, and that the accounts for them
24 See also post, Chap. 7, for this subject.
is 15 L.T. 571.
26 35 L.J.C.P.12. See also post, para. 7·099. (Note: This and the following are ex.ampIes of the
type of case where the analogy to arbitration is very close.)
6 SECT. 3] APPROVAL. BY THIRD PERSON 757
had not been sent in within one month. Held, by the Irish Court of Queen's
Bench, on demurrer, that both defences were bad as the certificate was bind-
ing on both parties: Connor v. Belfast Water cor:imissioners (1871).21
. (4) L. contracted to erect a pier for the H. Company. The contract provided
that payments should be made on production of the engineer's certificates.
The contract furth~r provided th.at no extra work should be paid for unless L.
should produce written orders signed by the engineer and countersigned by
the chamnan of the company. The engineer was to furnish monthly certifi-
cates of the value of ~e work executed, and L. was to be paid 85 per cent. of
thes_e amounts f?rthw1th, and the_ balance three months after the giving of a
certificate of sa~~factory compl~t:Ion of the work, provided that, within three
months of the g1vmg of such certificate, L. should have delivered to the engin-
eer a full account of all claims which he might have upon the company and
that the engineer should have certified the correctness of the account.' The
engineer gave his final certificate, in which he certified for extra work which it
was alleged, had not in fact been done, and also for extra work which had be~n
· done, butforwhich no signed and countersigned orders had been given. Held,
by the Court of E:x~hequer C:hamber, that the final certificate precluded the
company from r~~nng t~e pomt whether particular extras had been done, or
had been done without signed and countersigned orders: Laidlaw v. Hastings
Pier Co. (1874).28
(5) ~xtras were to be paid or allowe_d for a~ the_price fixed by the building
owners surveyor. The surveyor certlfided 1n his final certificate sums in 6-049
respe:t ?~ matters which the owner contended were not extras at all. Held, by
th.e D1V1s1onal Court, that the owner was bound by his surveyor's certificate:
Rlchards v. May (1883).29
(6) !he builder sued for the price under a contract and for extras, producing
a certificate for that amount from the architect. The decision of the architect
was to be fi,nal and w_ithout appeal. The defence set up was that the architect
had. by m1~take certified for work not done and improperly done; that his
certificate included extras for an amount over £10, the orders for which had
not b~en countersigned as required by the contract; and that he had not made
sufficient allowances for work not done. Held, by A. L. Smith I., that it was not
competent for the defendants to go behind or quarrel with the certificate on
any of the grounds alleged: Lapthorne v. St. Aubyn (1885).30
(7) The defendant contracted to alter the plaintiff's mansion house the
work done and materials supplied to be good and substantial in accord;nce
with ~e spe~ifications, but~ every particular to the satisfaction ofthe plaintiff
and ~is archrtect, whose ce,:Uficate was to be final and binding on the contractor,
but ~ any defects were. discovered within 12 months after the giving of the
certdicate, the owner m1ght recover the cost of making them good. The stone
used was subsequently found defective and not adapted for external use.
Held, by t~e Court o~ Common Pie~, that the covenant to supply good work
and matenals accordmg to the specification was subordinate to the clause as
to the satisfaction of the architect, and that after such certificate no action
could ~ maintained except ~thin the 12 months provided for; and that
though 1t was hard on the plaintiff, yet, if he employed an architect who
27
5 Ir.L.R.(C.L.] 55.
2l!Hudso~, Building Contracts (4th ed.), Vol. 2, p. 13; see also post, para. 7· 100, following and
approvmg Goodyearv. Weymouth Corporation,supra, and followed in McCarthyv. Visser
(1905) 22 Cape.of Good Hope Rep. 122, illustrated infra, para. 6· 163.
29
10 Q.B.D. 400, illustrat~d mo~e fully post, Chap. 7, Section 2(5), para. 7·100.
30
1 Cab. & El. 486; followmgLmdlaw v. Hastings Pier Co. supra. Illustrated more fully P"'
7·101. ' ....
 758 APPROVAL, SATISFACTION AND CERTIFICATES [CHAP.6
did not know his business and certified when he ought not to express his satis-
faction, he was bound by his architect's mistake in the absence of fraud, which
was not here imputed: Bateman (Lord) v. Thompson (1875). 31
6°050 (8) The defendants contracted with the plaintiff, a railway company, to sup-
ply rails of a certain pattern and sample, to be inspected by the engineer. The
contract stated that his inspection (which was to be at the manufacturer's
works) was not in any way to commit the company to the approval and accept-
ance of any rails which when delivered should not be strictly in accordance
with the drawings and specification. There was also a provision that the entire
contract was to be executed in every respect to the satisfaction of the engineer
who should have the power of rejecting any rails he might disapprove on any
ground whatever, and whose decision on any points of doubt or dispute that
might arise in reference to the contract should be final. There was no provision
as to certificates. The rails were delivered and found satisfactory by the engin-
eer, and paid for, but after half of them had been laid it was discovered that
they were defective. The company sued for breach of contract. Held, by the
Common Pleas Divisional Court, that the company had no right of action, as
it was the intention of the parties on the construction of the contract to make
the satisfaction of the engineer final, and to take away any subsequent right of
action: Dunaberg Railway v. Hopkins (1877). 32
(9) A builder agreed to do work to the satisfaction of an inspector. The
owner sued the builder for defects. The inspector had failed to inspect, but
had given certificates. Held, by the Court of Session, that the owner could not
recover from the builder for defects in work done under the eye of the inspec-
tor: Muldoon v. Pringle (1882). 33
(10) A. contracted to construct a bridge for road trustees. The work was to
be done to the satisfaction of one of a firm of engineers. A resident inspector
appointed by the engineer was to superintend the work. A. was to maintain
the bridge for one year. In fact, the resident inspector was appointed by the
trustees, and was subject to their orders. On completion of the bridge, the
engineer, on reports of the resident inspector, gave his certificate, and the
final instalment of the price was paid. More than a year afterwards the
trustees brought an action against A., alleging that the work was not accord-
ing to contract. Held, by the Court of Session, that, the trustees having taken
the appointment of the resident inspector into their own hands, his knowl-
edge was their knowledge, and that the certificate having been given on
reports by him, and not on any fraudulent representations by A., the trustees
were not entitled to reopen thematter:Ayr Road Trusteesv. Adams (1883). 34
6-051 (11) The whole of the works were to be carried out to the entire satisfaction
of the architect. The contractor was entitled to be paid the final balance due at
the end of four months after the architect should have given his certificate in
writing that the works had been completed according to the contract, and the
certificate of the final balance due was to be conclusive evidence of the works
being duly completed. Defects appearing within the four months were to be
made good. It was further provided that the final certificate should not relieve
>t Hudson, Building Contracts (4th ed.), Vol. 2, p. 36 (affd. by the Court of Appeal);following
Goodyear v. Weymouth Corporation (1865) 35 L.J.C.P. 12. See, however, the valuable
analysis of this leading case by Piers Ashworth Q.C. in National Coal Board v. William
Neill & Son (St. Helens) Ltd., illustrated infra, para. 6·058.
n 36 L.T. 733; following Goodyearv. Weymouth Corporation (1865) 35 L.J .C.P .12; and Bate-
man (Lord) v. Thompson, supra.
» 9 R. (Ct. of Sess.) 915.
34 11 R. (Ct. of Sess.) 326.
SECT. 3] APPROVAL BY THIRD PERSON 759
the contractor from liability for "any fraud, default, or wilful deviation" from
the contract until four years from completion. Defects were discovered dur-
ing the four years due to slovenly workmanship, but not made with the object
of benefiting the contractor or saving his pocket. Held, by Denman J., the
owners were precluded from setting up the defects against the contractor:
London School Board v. Johnson (1891). 35
(12) A contract provided for a house in South Africa to be built to the
satisfaction of the owner and an inspector of housing. The owner was also
entitled to require renewal or replacement of work which was in his opinion
defective. Further, the builder undertook to maintain the works for three
months after completion. The owner and inspector were satisfied, and a final
certificate given. More than three months later the owner sued for latent
defects. Held, by Reynolds and Jemett JJ., following Bateman (Lord) v.
Thompson, supra, that the undertaking of the builder to supply good
materials and workmanship was subordinated to the satisfaction of the build-
ing owner and inspector. The owner's right to require renewal or replacement
of defects could only be exercised before the satisfaction was given, and the
obligation to maintain was to maintain in the condition existing at the time
satisfaction was expressed: Bruens v. Smith (1951). 36
(13) By Clause 2 of a building contract the contractor undertook to carry 6·052
out the works as detailed in the specification and drawings in accordance with
the contract. By Clause 3 the work was to be to the entire satisfaction in all
respects of the engineer. Clause 7 provided "when the works have been com-
pletely executed according to the provisions of the contract and to the satis-
faction of the engineer the date of such completion shall be certified by him,
and such date shall be the date of commencement" of the period of mainten-
ance. There was a defects liability clause in usual form operating during the
maintenance period, and by Clause 16 a provision that no certificate for
interim payment should be considered conclusive evidence as to the suf-
ficiency of the works or materials. The clause for interim payments provided
for 90 per cent. of the value of work and 95 per cent. on satisfactory com-
pletion. There was an arbitration clause, but one expressly excepting matters
left to the decision or determination of the engineer.37 Completion was certi-
fied under Clause 7 as to 11 out of 17 blocks of buildings (as the.re was power
to do). Serious breaches of contract were discovered after the expiry of the
maintenance period on the 11 blocks, and the engineer's representative
refused to certify completion of the remaining six blocks. The owners sued for
damages. Held, by the Privy Council, after considering the Bateman case,3s
the Newton Abbot case,39 Harvey v. Lawrence4° and the Petrofina case4• (a)
that little help was to be derived from other contracts decided on different
wording; (b) that though Clause 7 did not contain the words "final and con-
clusive" the decision of the engineer under that clause was intended to be
binding on the parties and hence the matter was not subject to arbitration; (c)
that a certificate under Clause 7, being a certificate that the works had been
completed in accordance with the contract and also to the engineer's satisfac-
35
Hudson, Building Contracts (4th ed.), Vol. 2, p.176. See also McCarthy v. VLl'ser 1905) 22
Cape of Good Hope Rep. 122,illustrated,ante, Chap. 5, para. 5·046 and infra, Section 6(2),
para. 6· 163.
36
1951 (1) S.A. 67, South Africa. See also Gorfinkel v. Januarie 1954 (1) S.A. 88, South
Africa, illustrated supra, para. 6·030.
37
For the clause, see infra, Section 4, para. 6·081.
38
Supra, para. 6·049.
39 Infra, para. 6·055.
40
Supra, para. 6·047.
41
Infra, para. 6-055.
 760 APPROVAL, SATISFACTION AND CERTIFICATES [CHAP. 6
tion, extinguished any further liability on the part of the contractor save only
the obligation of the contractor under the defects liability clause to put right
repairs as he might be called upon to do within the maintenance period; and
(d) that, no defects having appeared or been brought to the contractor's
attention within the maintenance period in respect of 11 blocks, the contract-
or was entitled to the full price of those blocks, although in the case of the
remaining six blocks the owner was entitled to damages: Ata ul Haq v. City
Council of Nairobi (1959). 42
[Note: This case was criticised in a note in the ninth edition on the ground
that the real purpose of Clause 7, namely to start the maintenance period
running and to release the first instalment of retention, appeared to have been
disregarded. This criticism was adopted by Edmund Davies L.J. in Bil/yack v.
Leyland.43 The next following New Zealand case seems somewhat easier to
support on its express wording.]
6·053 (14) A contract provided that the work should be done to the reasonable
satisfaction of the architect, and for a certificate of completion to be given
when the architect had approved and passed the work as complete, and that
from the date of such certificate the contractor was to be liable for maintenance
of the works only. The final payment certificate releasing the retention was
not to absolve the contractor from his liability for defective work due to
fraudulent conduct on his part and which appeared after the period had
expired. There was an arbitration clause which it was held did not apply .44 No
certificate of completion was in fact ever given, but the architect ultimately
gave his final payment certificate, after discussing certain defects with the
contractor which he was told had been rectified, but which he did not check
for himself. Held, by the Court of Appeal of New Zealand, that on the facts
there had been no fraud by the contractor; that the certificate should be
treated as the certificate of satisfaction; and that the owner was accordingly
bound by the certificate: Stratford (Borough of) v. Ashman (1960). 45
(15) By Clause 2 of a building contract the contractor was to hand the works
over to the owner fully completed in every respect to the satisfaction of the
architect to be signified by a certificate of completion, and by Clause 26 the
two instalments of retention money became payable one month and three
months respectively after this certificate. It was further provided that the cer·
tificate of completion should not prevent the architect at any time before the
expiry of the three·month period of maintenance and the issue of the final
certificate from rejecting defective work or materials. Held, by the Court of
Appeal of New Zealand, that the relevant certificate of satisfaction was that
on completion before the maintenance period began, and that, the arbitration
clause not being on its true construction applicable, 46 the owner was bound by
the certificate unless the defect appeared within the relevant period. Held,
also the architect having given the final payment certificate in error only 47
days after the completion certificate, the contractor was not entitled to the
final instalment of retention: Major v. Greenfield (1965). 47
[Note: 1hls case would seem of doubtful authority at the present day in
view of the absence of any "conclusive evidence" or similar wording or other
indications of finality, such as had existed in the Stratford case. It seems incon·
sistent with the other later cases infra, and to have been decided partly on a
42
28BLR 76.
43
[1968] 1 W.L.R. 471, at pp. 476-477, illustrated infra.
• 4 See the case illustrated on this infra, Section 4, para. 6·082.
4S [1960] N.Z.L.R. 503.
46
Doubted on this point infra, Section 4, para. 6·083.
47 [1965] N.Z.L.R. 1035. Further illustrated infra, para. 6·083.
SECT. 3] APPROVAL BY TmRD PERSON 761
special interpretation of particular wording in the arbitration clause doubted
infra.47•]
. (16) Structural defects in government housing blocks, due to a considerable 6·054
inadequacy of cement in the concrete, were identified some years after com·
pletion, and the owners sought to invoke the arbitration machinery in the
contract to recover the cost of repairing the defects. Clauses 102 to 105 of the
contract were in substance identical to Clauses 61 to 63 of the pre·1973 ICE
(fourth edition) conditions, and also to Clauses 61 and 62 of both the third and
fourth edition F1DIC conditions. By Clause 102 no certificate other than the
maintenance certificate was to be deemed to constitute approval of any work
or to be tak~n as an admission of due performance of the contract. By Gause
103 the certlficate was to state that the works had been completed to the arc hi·
tect's satisfaction. By Clause 105, notwithstanding the issue of the certificate
the contractor was to remain liable for the fulfilment of any obligatio~
"incur~ed un~er the provisio~s of the contract" and remaining unperformed
at the time of issue of.the certificate. There was an arbitration clause with the
usual "open up review and revise" power, but the Judge held that defective
work w~s excepted from arbitration under a "one-off" provision in the con-
tract which made the architect's decision final under a different clause which
the owner had never sought to invoke. The contractor argued that the main-
tenance c~rtifica~e was conclusive. Held, by the Hong Kong Court of Appeal,
that notwithstaning that the contract nowhere stated that the maintenance
cer~cate was conclusive or ~al and binding, while those expressions were
used m the "one·off'' clause with regard to an architect's decision given under
that cl~use, the implication from the negative language of Clause 102 was that
the maintenance certificate did constitute approval of the work and was to be
take~ as an admissio? of due perform~ce of the work; Clause 103 supported
~he Vlew that the certificate was conclusive; and there was difficulty in constru·
ing Clause 105's reference to obligations "incurred under the provisions of
the contract" and remaining unperformed at the time of the certificate as
applying to a liability to pay damages for a deficiency of cement in the con·
crete, and accordingly the certificate was binding and conclusive: Attomey-
General of f!ong !(_ong v. Wang Chong Construction (1990). 48
. [Note: Th1~ ~ec1s1on _covers traditional ICE wording discussed by the editor
1n some deta1l m 1974 in The International Civil Engineering Contract and in
the commentary _on the ICE Fourth Edi~on in Building and Civil Engineering
S!andardFonns 1n 1969, and the obscunty of the wording was noted and criti-
cised both there and in the tenth edition of this book, at pp. 489-492. Since
then, however, Lord Diplock's statement of principle in the Gilbert·Ash
case, 49 requi~g cle~r _wording if a party is to lose his contractual rights, would
suggest that this decision of the Hong Kong Court of Appeal is to be regarded
as at best doubtful. It was also a noteworthy accident of the "one·off" wording
of this particular contract that the dispute was held to be excluded from the
operation_ of the ar~itration clause with its wide "review and revise" power.so
The case 1s of considerable potential importance since its reasoning would
seem to apply to the recent FIDIC Fourth Edition contract as well as to its
predecessor, with the notable difference that those contracts do contain an
applicable review and revise power in the arbitration clause.]
47
" See para. 6·082.
4
s (1991) 7 Const. L.J. 310.
4
~ Set out supra, para. 6·005.
50
For the important potential effect of this see supra, paras. 6·002-6·003 and post, Section 4,
paras. 6.060---6·062.
 762 APPROVAL, SATISFACTION AND CERTIFICATES [CHAP. 6
6·055 The following are examples where the courts have taken the view that
the owner remains free to dispute the quality of the work despite a certifi~
cate or approval.
ILLUSTRATIONS
(1) S. contracted to make and deliver to B. certain iron rails of an agreed
quality. The rails were to be inspected before delivery by B.'s agent, who
could approve and accept such as he should think fit. The rails were so
inspected and approved. Held, that the stipulations were distinct, and that the
approval of the agent under the second stipulation was no proof that the first
stipulation (as to quality) had been complied with: Bird v. Smith (1848). 51
(2) The defendants agreed to build a number of houses for the plaintiffs in
accordance with plans and specifications, the work to be to the satisfaction of
the local surveyor and sanitary inspector. They were satisfied, and the plain-
tiffs sold the houses at a profit, but the houses were not in fact built in accord-
ance with the specifications. Held, by Roche J., that the approval, not being
expressed to be final under the contract, was merely an added protection, and
the plaintiffs, who had paid compensation to the purchasers, could recover
the difference between the actual value of the houses as completed and the
value had they been properly built: Newton Abbot Development Co. Ltd. v.
Stockman Brothers (1931). 52
(3) A charterparty contained a clause that a steamer was to be in every way
fitted for a voyage, and another that the captain was bound to keep the tanks
always clean. By Clause 27 it was further provided that the steamer was to be
clean for the cargo in question to the satisfaction of the charterer's inspector.
The inspector's requirements as to cleaning were complied with and he was
satisfied. Held, by the Court of Appeal, that as to cleanliness of the tanks the
shipowner's obligation under Clause 27 was superadded to his other obli-
gations as an additional protection to the charterers, and the shipowners were
accordingly liable for damaged cargo: Petrofina S.A. of Brussels v. Compag-
nia Italiana, etc. (1937). 53
6·056 (4) A developer/contractor sold a house in the course of erection, under-
taking by Clause 1 of the contract to "build and complete in a workmanlike
manner and in accordance with the specification hereto annexed". The speci-
fication provided that "excavation, concreting ... will be carried out in
accordance with by-laws of the local authority and to their satisfaction".
Clause 2 provided that the owner should pay the contractor the second half of
the purchase money "on the issue of the certificate of habitation by the local
authority which certificate shall be conclusive evidence of the completion of
the said dwelling-house". The local authority issued its certificate of habita-
tion. The foundations had not in fact been properly constructed and infringed
the by-laws, and major underpinning work had to be carried out. When sued,
the builder pleaded: (a) that the certificate under Clause 2 was an indepen-
dent reason why the purchaser was barred from claiming; (b) that the pro-
51 12 Q.B. 786.
52 47 T.L.R. 616. The case was mentioned by Devlin J. without disapproval in Minster Trust
Ltd. v. Traps Tractors Ltd. [1954] 1 W.L.R. 963, at p. 973. -~>
53
53 T.L.R. 650.
APPROVAL BY THIRD PERSON 763
vision for local authority satisfaction in the specification overrode the
obligation to comply with the by-laws; and (c) that the express requirement
fo: co~ormity with the by:laws negatived any implied term as to the design or
smtabil1ty of the foundations. Held, by Edmund Davies L.J.,S4 (a) that the
Clause 2 cer!ificate was a certi:fi~te designed to regulate the time of payment
and was ~?t intended to be a certificate as to the quality of the work 55; (b) that
the proVIston for the local authority's satisfaction was an added protection for
the purchaser and that, following the Newton Abbot and Petrofina cases, it did
not override the express obligation to carry out the work in a workmanlike
manner; and ( c) there was nothing in the contract inconsistent with the three-
fold implied undertakings of quality referred to by Denning M.R. in Hancock
v. Brazier (Anerley) Ltd.56: Billyack v. Leyland (1968).57
(5) A construction contract provided that: "Neither the Final Certificate
nor payment th~reunder ... shall relieve the Contractor from responsibility
for faulty matenals or workmanship which appear within a period of one year
o!
fro?1 the date substantial completion and he shall remedy any defects ...
wht~h appear within such periods." Defects appeared five years after the final
certificate and payment.58 Held, by the Ontario Court of Appeal, following
Hancock v. Brazier & Anerley,59 the contract was not sufficiently clear to
excuse the defendant for liability for damages for later defects: Simpson's
Ltd. v. Pigott Construction Ltd. (1974).60--{i1
(6) A cost-plus contract for a pulp mill provided: "The engineer when he 6·057
finds such work acceptable under the Contract and the Contract fully per-
formed will promptly issue a Final Certificate over his own signature stating
that the work under the contract has been completed and is accepted by him
under the terms and conditions thereof." By agreement with the owner, the
latt~r took over responsibility for the remaining part of the work, and the
engineer duly certified satisfaction and acceptance in his final certificate.
Held, by the Supreme Court of Canada, the owner was not prevented from
claiming damages in reduction of the amount due for work done, on the
ground that there had been excessive or imeconomical expenditure by the con-
tractor: Prince Albert Pulp Co. Ltd. v. Foundation Co. of Canada Ltd.
(1976).•
(7) A construction contract provided that the issuance of the final certifi-
cate should constitute a waiver of all claims by the owner otherwise than un-
der ~he terms of the maintenance clause and that the acceptance of the final
certificate should likewise constitute a waiver by the contractor of all claims
except those previously made by him. The final certificate was issued and two
years later defective work by the contractor caused a fire in the building and
d~age to contents.63 Held, by the Ontario Court of Appeal, following the
Sunpso'! 's Ltd. case, that the final certificate did not preclude the owner from
recovenng damages: Dabous v. Zuliani (1976). 64
54
Doubting and adopting the criticism of the Ata ul Haq case, supra.
55
Contrast the decision on similar wording in London School Bd. v. Johnson supm pee,
6·051. ' ' .
S6 See ante, Chap. 4, para. 4·120.
SJ [1968J 1 W.L.R. 471.
58
See this case illustrated more fully ante, para. 5·056.
59
[1966] 1 W.L.R. 1317. Illustrated ante, para. 4·120.
60-lii 40 D.L.R. (3d) 47.
62
68 :O,L.R.. (3d) 283. No! is there clear language of finality in this case, it is submitted.
63
This case 1s more fully illustrated ante, Chap. 5, Section 2(5), paras. 5·053-5·058.
64
69 D.L.R (3d) 415.
 764 APPROVAL, SATISFACTION AND CERTIFICATES [CHAP.
6·058 (8) Clause 4(i) of the 1956 BEAMA standard form of electrical contract
required all work under the contract to be executed in the manner set out in
the specifications and to the reasonable satisfaction of the owner's enginee~.
There was a provision for a maintenance period, and there was also an arbi-
tration clause in general terms, but with no "open up review and revise"
express power. The contractors completed the work and the engineer issued a
certificate stating that the work had been done to his satisfaction and author-
ising final payment of the contract sum. Later, certain of the structures
erected by the contractors under the contract collapsed, and the board
brought an action for damages for breach of contract. The contractors con-
tended that the provision for the satisfaction of the engineer and the issue of
his final certificate following the ending of the maintenance period was con-
clusive as to the completion of the works in accordance with the contract.
Held, by the deputy High Court judge (Piers Ashworth Q.C. ), distinguish!ng
Harvey v. Lawrence, not following Lord Bateman v. 7:hompson and apply1.ng
the Petrofina case and Billyack v. Leyland, that there is no rule of law ~r prin-
ciple of construction applicable to building contracts that, where work 1s to be
carried out to the satisfaction of an architect or engineer, the contractor's
obligation is discharged if the architect or engineer is in fact satisfied; and that
in the present case the requirement of satisfaction was _a superadded prot~c-
tion for the owner. In the present contract, the wording of the arb1trat1on
clause was so general as to afford no assistance in the interpretation of any of
the other clauses: National Coal Board v. William Neill (1985)65
[Note: The above is a valuable and carefully researched judgment, and
reviews all the relevant foregoing cases. It should be compared with the Court
of Appeal's very similar decision, in another case involving an arbitration
clause in general terms coupled with a final certificate provision, in Crestar
Ltd. v. Carr. 66 ]
In considering to the above cases, the great importance of the House of
Lords' decision in the Gilbert-Ash case in 197467 should be borne in mind.
That case decided that, in the absence of the clearest wording, the issue of
interim certificates for payment in construction contracts, although no
doubt as a fact evidencing satisfaction by the NE at that time, would not
prevent any defence or set-off being raised by the owner against the sums
certified.68
6·059 An attempt was made in the tenth edition to rationalise the cases by
reference to the use of the word "and" in provisions requiring both con-
tract compliance "and" the satisfaction of the NE,69 or by possible distinc-
tions between the owner or his NE, on the one hand, and fully
independent third party certifiers such as local authorities or statutory
inspectors, on the other.70
It is submitted, however, that these do not really afford satisfactory
explanations of the earlier cases, the great majority of which will be found
6S [1985] 1 Q.B."300.
66 (1987) 37 BLR 113, illustrated infra, Section 4, para. 6·077. . .
67 Gilbert-Ash (Northern) Ltd. v. Modern Engineering Ltd. [1974] A.C. 689, analysed in detail
in (1974) 90 L.Q.R. 21, reproduced in C.C.P.P., Chap. 15. See also the important case of
NE! Thompson v. Wimpey Construction (1987) 39 BLR 65, inf:a, para. 6·2~0.
611 See the discussion supra, paras. 6·002-6·010. For Interim Certificates, see mfra, Section
6(7), paras. 6· 186 et seq. . :· _.,
69 See the discussion of this in National Coal Board v. William Neill [1985] Q.B.~300, at p. 319.
10 See references to this in Edmund Davies L.J.'s judgment in the Billyack case.
6 SECT. 3] APPROVAL BY THIRD PERSON 765
to contain express or implied indications of finality. The judgments in the
Petrofina case, as analysed by Piers Ashworth Q.C. in the William Neill
case, showed that the underlying basic obligation in a charterparty to sup-
ply a seaworthy ship would have been invaded by an interpretation of
binding satisfaction, just as the Court noted in the William Neill case that
the underlying basic obligation to supply good work and materials would
be invaded if a certificate or satisfaction provision binding in a construc-
tion s~tting. These views lend additional support to the guiding principle
enunciated by Lord Diplock in the Gilbert-Ash case, namely that the
courts will be slow to attribute to provisions of this kind a result which
deprives a contracting party of basic common law rights upon a breach of
contract by the other party. Another explanation of some earlier cases
may be what haS been previously described in this edition as a "balance of
harshness" principle, namely that where the contract is explicitly clear
that one of the parties is to be bound permanently, that may be thought to
justify interpretations holding the other party bound in a converse
situation.
Contrary to what was submitted in the tenth edition (where it was sug-
gested that the modem tendency in construction contracts was to accord
satisfaction provisions over-riding force), it seems in the light of more
recent cases that satisfaction, approval or certificate provisions, in the
absence of an arbitration clause, will not, without the clearest wording,
deprive either party of their common law rights; and it is also suggested
that this presumption, at the present day, accords more closely with the
intentions of both parties to construction contracts in the United King-
dom, and for that reason is a welcome development.
SECTION 4. EFFECT OF ARBITRATION CLAUSE
(1) Generally
In the previous Sections of this chapter, approval, satisfaction or certifica- 6·060
tion provisions have been considered in cases where there was either no
clause for independent arbitration at all, or where there was no clause
applicable to the dispute in question, or in one case, where an arbitration
clause in general terms was expressly stated by the Court to have had no
influence in either direction on the interpretation of the final certification
provision before the Cour111.
It remains to c0nsider the possible effect of an arbitration clause on the
interpretation of a satisfaction or certifying provision which might other-
wise be binding. It is sometimes ·argued that satisfaction or certification
provisions should be considered and interpreted independently, and that,
. depending on their construction, the arbitrator, at least under a perfectly
71
National Coal Board v. William Neill Limited [1985] 1 Q.B. 300 illustrated sup,a para.
6·058. ' '
 766 APPROVAL, SATISFACTION AND CERTIFICATES [CHAP.
general arbitration clause, will then be bound to apply that construction
and hold himself bound or not bound, as the case might be:
"But if it appears from a proper construction of the contract that the certifi-
cate is intended to be conclusive, I do not see how the [general] wording of
Clause 30 [the arbitration clause] can affect the constru~tion-the ~bitra!or
would first have had to decide the issue whether the certificate or sat1sfaction
was conclusive, and ifhe came to the conclusion that it was he would have had
so to rule and refuse to go behind it."72
6·061 However, the same judge later stated "but the wording of the arbi-
tration clause may assist in the interpretation of other clauses of the con-
tract, including the certification and satisfaction clauses",73 and the cases
do unquestionably show the courts relating the wording of the one pro-
vision to the other before arriving at their final conclusion as to finality, it is
submitted.
Thus, in a case very similar to the William Neill case, with a similarly-
worded arbitration clause without any "open up review and revise" word-
ing, together with a provision for the final certificate to create a "debt due"
within 14 days, of its issue, Fox L.J. said in the Court of Appeal:
"Having regard to the width of the arbitration provision and the absence of
any express provision as to the conclusiveness of certificates, I am ~ot pre-
pared to infer that the parties intended to prevent the owners referrmg mat-
ters to arbitration after the end of the 14-day period. "74
A persuasive example where an arbitration clause may establish the
intention to override otherwise binding requirements for a certificate, it is
submitted, will be where the widely found "open up review and revise"
power is expressly conferred on the arbitrator, as in many Engli~h main
contract forms. This particular wording has produced a number of rmport-
ant decisions in England on the various pre-1976 versions of the RIBN
JCT main contract standard forms, during a period when immunity of the
contractor for defects discovered after the final certificate was the overtly
expressed objective of the draftsman. 7""
6·062 Another important example, but where the arbitration clause was in
general terms and again contained no "open up" power, is to be found in a
leading case in 1919, where the contract categorically required an order in
writing containing the expressed opinion of the engineer that. the work
was not original contract work, together with a special form o~ engineer's
instruction acknowledging that the work was an extra, as a condition of
any claim for extra payment by the contractor. 75 There, the contractor
n Ibid. at p. 310 per the deputy High Court judge Piers Ashworth Q.C.
73 Ibid, at p. 310. 74 Crestar Ltd. v. Carr (1987) 37 BLR 118, at p. 124.
74 ' See the cases collected infra, paras. 6·068 et seq.
1s A common feature of many modern U.S. contracts, incidentally.
6 SECT. 4] EFFECT OF ARBITRATION CLAUSE 767
received an oral instruction, but the engineer in good faith refused to give
the necessary written instruction, believing the work to be part of the ori-
ginal contract. The contractor complied with the oral instruction and the
matter was referred to arbitration, where the arbitrator awarded
additional payment. On a case stated, however, the owners argued that, in
the absence of the appropriate order in writing, the contractor must fail,
and this argument succeeded in the Court of Appeal. However, the House
of Lords allowed the appeal, holding that the award of the arbitrator must
be treated as the equivalent of an order in writing, and that he was entitled
to disregard the strict contractual requirements, otherwise the arbitration
would be entirely useless76 ; "As far as the contractor's claims to be paid for
the extra work he actually executed is concerned, the arbitration would, if
the Court of Appeal be right, be little better than an expensive farce. 77
There is no doubt that the poor draftsmanship of construction con-
tracts, which has always been their principal feature, has frequently led to
considerable difficulties in reconciling the terms of arbitration clauses
with the satisfaction or certification provisions elsewhere in the contract.
These require to be resolved if, as is often the case, one of the parties
wishes to stand by the NE's decision and raises objections to an arbitrator
re-opening and dealing with the dispute on its merits:
"... the issue in this case reflects what appears to bea perennial problem as to
the relative effects in different forms of contract and in regard to different
worded clauses of provisions dealing with final certificates and arbitration. "78
(2) The '"Crouch" View
The tenth edition submitted that, whenever any conflict between 6·063
an arbitration clause and a certification or satisfaction provision was
resolved in favour of the overriding effect of the arbitration clause, then
if for any reason the dispute between the parties came before the courts
rather than before an arbitrator ( as can, of course, easily happen in
common law systems for many different tactical reasons, including par-
ticularly the desire of contractors and their advisers to avail themselves of
summary judgment remedies), then the courts would in such cases have
the same powers as an arbitrator to review satisfaction or certification
decisions and deal with disputes on their merits, (unless, of course, an
opposite intention is indicated by appropriate Scott v. A very-type word-
ing). 79 While there was, and remains, clear Court of Appeal authority to
that effect, followed directly in New Zealand and by the Full Court of New
South Wales, as well as further English High Court and Court of Appeal
16
Brodie v. Cardiff Corporation [1919] A.C. 337, at p. 351, per.Lord Finlay L.C., illustrated
infra, para. 6·071.
77
Ibid. at p. 357,per Lord Atkinson.
78 Cresta, Ltd. v. Carr (1987) 37 BLR 118, at p. 125,perSheldon J., C.A. See also the com-
ments of the High Court of Australia in Grantv. Trocadero Buildings Ltd. (1938) 60 C.L.R.
1, at pp. 26-27, 31.
19
(1856) 5 H.L. Cas 811. See po_st, Chap. 18, Section 2(4)(a).
 r'
768 APPROVAL, SATISFACTION AND CERTIFICATES ·. tvHAP.
authority,80 the English Co~t of Appeal in an interlocutory case in 1984
expressed the view, as one of a number of reasons for granting a stay for
arbitration when related court proceedings were already in place, that the
traditional near century-long "open up review and revise" wording in
many English standard form arbitration clauses did not have this effect,
but was intended to confer a discretion to review AfE's decisions on arbi-
trators only, and not upon the courts. The remarkable consequence of this
view would be that if, for accidental or otherwise good reasons, a construc-
tion dispute came to be litigated in the courts, a whole range of decisions,
opinions and certificates of the architect contemplated by the wording of
nearly all construction contracts, most of which had never previously been
considered binding at all, would now become binding upon the courts, who
would have no jurisdiction to enter into the merits of such decisions as an
arbitrator would be able to do.
To date, the Crouch case81 has been mentioned on numerous occasions
in the English courts without disapproval,82 but does not appear to have
been directly in point, nor has it been challenged directly. The Court of
Appeal had itself required the point to be argued by counsel, and the judg-
ments in the case all stated that there had been no previous direct auth-
ority on the point. This last statement was certainly per incuriam.
Moreover, the notion that an arbitrator was intended by the "open up
review and revise" wording to have a special discretion to apply standards
of his own not available to the courts seems both dubious in principle and
inconsistent not only with the concept of arbitration in common law coun-
tries but also with any possible intention of the parties, particularly in view
of the entire absence of any such argument by any litigating party in the
near century which has followed the Court of Appeal decision.in which the
opposing viewpoint was first clearly enunciated.83 It should be added that
the. Court of Appeal gave no indication of being aware that the Crouch
view, if correct, must inevitably provide a fertile opportunity for tactical
obstruction and advantage to those parties, usually although not always
owners, whose cases lack merit but had the support of an architect's opin-
ion, decision or certificate in their favour. 84
6-064 An exhaustive historical analysis and criticism of the legal basis of the
decision and of the anomalies inherent in the Crouch view has been put
80 Robins v. Goddard (1905] 1 K.B. 294; Johns & Son Ltd. v. Webster & Tonks [1916] 35
N.Z.L.R. 1020; Piggottv. Townsend (1926) 27 S.R. (N.S.W.) 25; and seeAdcock's Trustee
v. Bridge Rural District Council (1911) 75 J.P. 241,per Phillimore J ., and Neale v. Richard·
son [1938J 1 All E.R. 753, C.A.
81 North Regional Health Authority v. Crouch Construction Ltd. [1984] Q.B. 644.
52 See a number of authorities conveniently collected by Cole J. in New South Wales in KBH
Constructions Ltd. v. PSD Developments (1990) 21 N.S.W.L.R. 348.
a, Robins v. Goddard [1905] l K.B. 294, illustrated infra, para. 6·069, and analysed in extenso
with later cases in C.C.P.P., paras. 17-13 to 17-'23.
54 See, for a powerful early response by Judge John Davies Q.C., emphasising the difficulties
likely to be created, Partington & Son (Builders) Ltd. v. Tameside Metropolitan Borough
Council (1985) 32 BLR 150 (although, as stated, Crouch has been mentioned without dis-
approval in many subsequent cases where it was not directly in issue. See particularly,
perhaps, Ashville Investments Ltd. v. Elmer Contractors Ltd. [1989} Q.B. 48&,;}::.A.)
---::::\
4]
0
6 SECT. EFFECT OF 1-.._ ..&ITRA TION CLAUSE 769
forward in C.C.P.P.,85 but, until fully reconsidered, it must rank as a third
possible view of the effect of any arbitration clause which contains this
particular wording upon provisions for satisfaction or certification. How-
ever, it was always clear from the Court of Appeal's judgments that the
Crouch reasoning applied only to arbitration clauses which expressly con-
ferred the special "open up review and revise" power on the arbitrator,8.'ia
although some lower courts at first appear to have thought that it might
apply to arbitration clauses generally.s6
Possibly as a result of (fully justified) contractor pressures, but more
probably indicating dissatisfaction by all parties, arbitration clauses are
now beginning to appear in "one-off" contracts in England where the
"open up review and revise" power is expressly conferred by the parties
on the courts as well as on arbitrators. 87 The "Crouch" interpretation was
in fact anticipated and nullified by express wording in one Commonwealth
standard form. 88
Since the Crouch case was decided a new Section 43A of the English
Supreme Court Act 1981 (introduced in 1990 by Section 100 of the Courts
and Legal Services Act) has enabled the parties to confer upon the High
Court any powers available to an arbitrator; this may indicate a belated
recognition by the authorities of the anomalies and injustice created by
the ~ecision, but since this section is only to apply by consent of the parties,
the inference must be that the legislators have still failed to understand the
tactical and procedural consequences of the Crouch interpretation, which
are to benefit a party whose case is without merit but who has had the
s~pport ?f the a:chitect's decision or certificate, by effectively enabling
hnn to disfranchise the other party from access to the courts. (This will
occur particularly in cases where summary judgment is appropriate, or
where court proceedings with their available third party procedures are
desirable for multipartite disputes.) Section 43a's anticipation of a volun-
tary surrender of this advantage by consent appears to be unrealistic
unless its intention is to encourage "anti-Crouch'' arbitration or othe;
clauses in the original contract before any dispute has arisen. It would
seem from this provision that the anomalous consequences inherent in the
Crouch interpretation have eventually become clear to the English court
authoritie~, and since it appears to lack any possible consensual basis, as
well as bemg C?Dtrary to clear authority in England and the Common-
wealth, there seems no reason for any other jurisdiction to follow it.
85
See C.C.P.P., Chap. 17. 85a As, e.g. the ICE as well as the RIBA/JCT clauses.
86
See Benstrete Cof!Struction Ltd. v. Angus Hill (1987) 38 BLR 117, where the Crouch view
was held not applicable to the generally worded arbitration clause in the RIBA/JCTminor
works contrac_t by ~ Court of Appeal siE?Iificantly presided over by Lord Donaldson M.R.,
w~o _had presided m the Crouch case itself. Benstrete is clearly inconsistent with a later
op1mon expressed by Sir :William Stabb Q.C. in Finnigan Ltd. v. Sheffield City Council
(1988) 43 BLR 130, which must be regarded as per incuriam, and incorrect, it is
SUbillltted.
87
See, e.g. Rosehaugh Stanhope v. Redpath Dorman Long (1990) 50 BLR 69.
88
See Clause 37(4) of the Singapore private sector SIA 1980 contract, (C.C.P.P., p. 613),
drafted by the editor.
 770 APPROVAL, SATISFACTION AND CERTIFICATES [CHAP. 6 SEcr.4]
(3) Distinction between Certifier and Arbitrator
6°065 When considering the earlier cases, it may help to bear in mind the differ-
ence between an arbitrator in the full sense and a certifier. Essentially, the
certifier in a construction contract will often be performing an adminis-
trative rather than a judicial function, and when doing so there may often
be no formulated dispute before him at all, as when certifying completion
or payment. He has been described as a "preventer of disputes" in contra-
distinction to an arbitrator, whose function can only arise once a dispute is
in existence. 89 He is not under the same obligation to afford the parties or
their representatives a full hearing and receive evidence from them. 90 (The
status and duties of certifiers are discussed in Section 9, infra.)
Thus each contractual provision, particularly in earlier contracts, may
need to be carefully scrutinised to see into which category the person
named falls. It should be borne in mind that a certifier does not become an
arbitrator merely because it is provided that he shall "adjudge" what is
due,91 or because he is stated to be the "exclusive judge" of some matter.92
If the word "arbitrator" or. "arbitration" is not used, there must, at least in
the context of a construction contract, be some inference, and certainly no
contrary indication, that what is intended is a proper hearing of the cases
of the opposing parties and of their witnesses and evidence, it is submitted.
ILLUSTRATION
6·066 The wording of a clause was: "If ... any dispute shall arise ... as to whether
the works have been properly executed or completed or as to delay in such
completion or as to extras to or deviation from the works either the owner or
the builder may apply to appoint an architect to decide the same ~nd su_ch
architect after such in_vestigations as he may consider proper may by hts c~rtt~-
cate in writing decide such dispute and declare what payment or deduction ts
to be made ... and such decision and declaration shall be conclusive and bind-
ing on both the owner and contractor." Held, by McGregor C.J., th~t sU?-ce
there was no indication of a judicial hearing, the clause was not an arbitration
clause: Pierce v. Dyke (1952). 93
In modern contracts it is usually easy to judge whether the intention is
to make a person a full arbitrator, but it has already been seen that in
earlier English contracts it was not unusual to confer both the powers of a
certifier and of an arbitrator upon the A/E, very often in different
8!lSee, e.g. Laidlawv. Hastings Pier Co. (1874),Hudson,Building Contracts (4th ed.), Vol.2,
p.13, and Re Carus-Wilson and Greene (1886) 18 Q.B.D. 7.
oo See the discussion and passagefromDevlinJ. in the Minster Trustcase,supra, paras. 6-031-
6·032 and infra, para. 6·121, and the cases, paras. 6·122 et seq.
91 Northampton Gaslight Co. v. Parnell (1855) 24 L.J.C.P. 60; 15 C.B. 630.
92 Kennedy v. Barrow-in-Furness (Mayor of) (1909), Hudson, Building Contrgcfs (4th ed.),
Vol. 2, p. 411. "fr
93 [1952] 2 W.I.R. 30, Jamaica. See the fuller discussion post, paras. 18·061 et seq.
EFFECT OF ARBITRATION CLAUSE 771
clauses. 94 In more modern contracts in England, however, this is now vir-
tually unknown, since under the Arbitration Acts, as previously indi-
cated,95 it has been possible since 1934 to revoke the appointment of an
arbitrator on the ground of an interest known to the parties at the time of
making the contract, and the 1934 statute was, in fact, specifically aimed at
this type of contractual provision, which had been particularly common in
local authorities' contracts.
(4) Review of Earlier Cases
(a) Generally
It will be seen that where the contract provided in general terms that the 6°067
arbitrator was to have a wide jurisdiction over all disputes, and indeed
even in some cases where it was clear that he bad specific jurisdiction over
a matter governed by an approval or certificate, the courts initially
appeared to feel some difficulty in allowing the merits of the dispute to be
finally resolved by an arbitrator in the face of a previous certificate or the
absence of one96 but it soon became clear that, once the courts were satis-
fied that an arbitrator had jurisdiction to go into a matter, they would not,
in the absence of a clearly expressed intention, allow his findings to be
emasculated by any failure of the draftsman specifically to provide the
necessary procedural machinery to enable him to give substantive effect
to his decision, or overcome formal difficulties created by the specific pro-
visions of the contract relating to the original certifier's decisions97:
"I read the case of Brodie v. Cardiff Corporation,9 8 where this matter was
very fully considered, to mean, in substance, this: where an arbitrator having
jurisdiction has to decide that something ought to have been done by the
architect or engineer which was not done, if the tenns of the reference are
wide enough to enable him to deal with the matter, he may by that decision
himself supply the deficiency, and do that which ought to have been done. " 99
"Itis because I am impressed with the effect of the two authorities which have
been cited that I am able to agree with the view which has been expressed by
my brethren. I cannot read either Brodie v. Cardiff Corporation 1 or Neale v.
94
See, for a relatively modem example, Neale v. Richardson, illustrated infra, para. 6·073.
9
s See supra, Section 1, paras. 6·022-6·026.
96
See, for instance, the decision.of Farwell J. in Robin11 v. Goddard [1904] 2 Ch. 261, sub-
sequently overruled by the Court of Appeal, [1905] 1 K.B. 294; the decision of the Court of
Appeal in Brodie v. Cardiff Corporation, overruled by the House of of Lords (Lord Sum-
ner dissenting), [1919] A.C. 337; and the passage from the judgment of Greer LJ. in Pres-
tige v. Brettell (1938) 55 T.LR. 59, cited infra. See also C.C.P.P., paras. 17-11-17-12.
rn See Brodie v. Cardiff Corporation; Prestige v. Brettell; Neale v. Richardson, infra. See also
for this principle Hatrick (N.Z.) Ltd. v. Nelson Carlton Con11truction [1964] N.Z.L.R. 72,
illustrated post, Section 5, para. 6·123.
98
[1919] A.C. 337, infra, para. 6·071, and see post, para. 7·068.
99
PerSlesserLJ.inPrestige & Co. Ltd. v.Brettell[1938]4AllE.R.346;55T.L.R 59, atp. 62.
1
See supra.

772 APPROVAL, SATISFACTION AND CERTIFICATES ,---"HAP. 6 SECT. 4]
--··
Richardson2 except as expressing the view that in the opinion of the House of
Lords in Brodie v. Cardiff Corporation, and in the opinion of this Court in
Nealev. Richardson,an arbitrator to whom a matter is remitted in the form it
was in this case, has the power to dispense with the conditions precede~t _and
to order that, notwithstanding the non-performance of those cond1t1ons
precedent, a liability may be established on which money may be order~d to
be paid. It is because of the decisions in those two cases that I am constramed
to concur with the judgments given by my brethren. " 3
(b) Arbitrator not bound by A/E's certificate
6·068 The following are examples of cases where the arbitrator was held to be
empowered under the arbitration clause to reopen a matter declare? by
the contract to be dependent upon the architect's certificate, or to disre-
gard the absence of one. While most of the cases deal with certificates and
certifiers, it should not be forgotten that provisions for mere approval or
satisfaction without any certificate come equally within the principles laid
down. 4
ILLUSTRATIONS
(1) Certain locomotives and boilers were to be built unde1:" the inspection
and to the satisfaction and approval of the purchasers' engmeer. The pur-
chasers were to pay one-half of the purchase price upo1:1 his certifica~e ~at the
locomotives had been delivered in perfect order, with the remammg two
quarters two and four months later. There was an arbi!rati~n cl~use stating
simply that all disputes were to be settled by the two sides engmeers or an
umpire. The engineer refused to give the certificate, or any reason for not
doing so, and the arbitrators .made an award in favour of the sellei:5. The
buyers moved to set aside the award, relying on the absence of the certificate.
Held, by the Court of Appeal, that the dispute w~s ~ithin the arbitrators'
jurisdiction under the clause and the award of the pnce m favour of the s~llers
should stand: Re Hohenzollern Actien-Gesellschaft & City of London Con-
tract Corporation (1886).5
(2) Clause 20 of a form of contract provided that the certificate of the archi-
tect or an award of the referee appointed under the contract showing the final
balance due to the contractor should be conclusive evidence of due com-
pletion of the works and the contractor's entitlement to receive payment of
the final balance. Clause 22 provided that disput~s be~we~n the ow~er or !he
architect on his behalf and the contractor, ( descnbed 1n wide terms 1nclud1ng
disputes arising from the withholding by the architect of any certificate to
which the contractor might be entitled) should be referred to a referee, whose
award should be the equivalent of a certificate of the architect. Disputes arose
2 [1938] 1 All E.R. 753, infra, para. 6·073.
l Per Greer L.J. in the Prestige case, supra, at p. 64.
4 In addition to the cases illustrated below, see the Privy Council decision of Molloyv. Liebe
(1910) 102 L.T. 616,post, Chap. 7, para. 7·067. . . .. .
s 54 L.T.R. 596; 2 T.L.R. 470. See also the very similar Scottrsh dects1on m Howd~n & Co. v.
Powell Duffryn Steam Co. [1912] S.C. (Ct. of Sess.) 920, illustrated supra, Section 3, para.
6·044, where arbitrator's jurisdiction was also upheld.
,·'
/"'>
EFFECT OF P. "TRATION CLAUSE 773
between the owners and the contractor as to whether the works had been duly
completed, and as to authorisation of and charges for certain extras. The
architect subsequently issued his final certificate, upon which the builder
brought an action to recover the sum certified. Held, by the Court of Appeal,
that on the true construction of the two clauses the contract contemplated the
issue of certificates by the architect only before disputes had arisen, and by the
referee thereafter. Once a dispute arose, the architect's jurisdiction to certify
disappeared and the award of the referee must be substituted for it. Since,
however, the builder had not obtained an award of the referee his action must
fail: Lloyd Bros. v. Milward (1895).6
(3) Clause 30 of a building contract entitled the contractor to be paid on the 6·069
certificates of the architect. It further provided that: "no certificate shall be
considered conclusive evidence as to the sufficiency of any works or materials
to which it relates, nor shall it relieve the contractor from his liability to make
good all defects as provided by this contract." There was an arbitration clause
providing that any dispute as to any matter or thing arising from the contract
or its construction should be referred to an arbitrator who should have power
to open up, review and revise any certificate, opinion or decision and to deter-
mine all matters submitted to him as if no such certificate, opinion, etc., had
been given. The architect issued certificates, upon which the contractor sued
the building owner. No application was made to stay the ac;tion and have it
referred to arbitration. The building owner sought to counterclaim, alleging
defective work outside the maintenance period. Held, by the Court of
Appeal, overruling Farwell J., that even if the last part of Clause 30 referred
only to the liability to make good defects under the maintenance clause within
the maintenance period/ the arbitration clause was sufficiently wide to en-
able an arbitrator to go behind the certificates and consider the owner's
counterclaim. Since there was no provision malting the award of the arbi-
trator a condition precedent to bringing an action, the defendant was free to
raise his counterclaim in the action, in the absence of any application to refer
it to arbitration, and the court could accordingly consider the merits of the
counterclaim in the same way that the arbitrator could do: Per Collins M.R.:
"If something which purports to be conclusive is made subject to revision, it
loses its quality of finality." Robins v. Goddard (1905).8
(4) Gause 16 of a contract in the then standard RIBA form empowered the 6·070
architect during the progress of the works to order the removal and replace-
ment of any work not in accordance with the contract. Clause 17 was a defects
liability clause in the usual form requiring defects to be made good during the
maintenance period. There was an arbitration clause almost certainly in the
same terms as in Robins v. Goddard,& but it expressly excluded architect's
decisions under Clause 16 from its ambit. Defects due to materials used
appeared in the work shortly after completion and the architect gave notice to
replace them under Clause 17. The owner sued in the courts for the cost of
6
Hudson, Building Contracts (4th ed.), Vol. 2, p. 262. Contrast the earlier case of Clemence
v. Clarke (1879), Hudson, Building Contracts, Vol. 2, p. 54, illustrated infra, para. 6·079.
This was a very special type of contract not encountered at the present .day in the United
Kingdom. The same or similar forms of contract were also considered in Murray v. Cohen
· (1889) 9 N.S.W.R. (Eq.) 124, illustrated post, Section 6(5), para. 6·177, Kirsch v. Brady
(1937) 58 C.L.R. 36 (Australia), illustrated infra, Section 6, para. 6·165; and Grant v.
Trocadero (1938) 60 C.L.R. l, illustrated post, Chap.18, Section 3(2). See also Milestone &
Sons Ltd. v. Yates Brewery Ltd. [1938] 2 All E.R. 439, andPigottv. Townsend infra, para.
6·071.
7
As FarwellJ. had held at first instance. See C.C.P.P., paras. 17-13 to 17-14.
8 [1905] 1 K.B. 294. (See particularly per Stirling L.J.). See the case analysed ingreatdetailin
C.C.P.P., paras.17-13 to 17-17.
& See as to this C.C.P.P., para. 17-18.
 774 APPROVAL, SATISFACTION AND CERTIFICATES [CHAP. 6
repair. The contractors contended that the owner was bound by the archi-
tect's actions under Clause 16. Held, by Phillimore J., that an arbitrator, or, if
no arbitrator, the courts, was entitled to review the decision under Clause 17.
In his opinion, Clause 16 was intended to apply to matters arising in the
immediate course of building requiring executive rather than judicial action,
and once a part of the work was finished and the contractor had moved on
from it without the architect condemning it, the owner, although he had lost
his rights under Clause 16, still retained his rights under Clause 17: Adcock's
Trustee v. Bridge Rural District Cozmcil. (1911). 9
(5) A builder undertook to carry out work in New Zealand "to the entire
satisfaction of the architect". The arbitration clause was in wide terms, with a
power to open up, revise and review in terms identical with Robins v. God-
dard, and applied to all matters "not otherwise distinctly provided for by any
of the foregoing clauses" of the conditions. There was not, as in Robins' case,
an express provision that no certificate should be considered conclusive evi-
dence as to the sufficiency of the work. The architect certified completion, and
the contractor sued in the courts on the final certificate. Held, by Cooper J.,
following Robins v. Goddard, that the owner was free to defend and prove
that the work was not in accordance with the contract:Johns & Son v. Webster
& Tonks (1916).'°
6·071 ( 6) A contract11 provided that no charges for extra work should be allowed
unless ordered in writing by the engineer in a particular form acknowledging
that it was an extra, and that the owner should not become liable to pay for the
same unless such an instruction had been given in writing. The arbitration
clause was in wide terms, covering, inter alia, objections by the contractor to
any decision or certificate of the engineer, and provided for arbitration either
at the time of a dispute or otherwise at the end of the work at the discretion of
the arbitrator. The engineer orally ordered certain work to be done which the
contractor contended was extra work, but the engineer disagreed in good
faith and therefore refused to order it in writing. The contractor carried out
the engineer's instructions, under protest, and the matter was referred to arbi-
tration at the end of the contract. It was then argued that the absence of a
written instruction was fatal to the claim. Held, by the House of Lords, that
the arbitrator had power to award sums for extra work notwithstanding the
absence of orders in writing: Brodie v. Cardiff Corporation (1919). 12
(7) Clause 27 of a contract in New South Wales provided that a certificate of
the architect or an award of the referee or arbitrators showing the final bal-
ance due or payable to the builder "shall be conclusive evidence of the works
having been duly completed and that the builder is entitled to receive pay-
ment of the final balance ... ". By Clause 29, "in case of any dispute or differ-
ence arising during the progress of the works or after the determination,
abandonment or breach of the contract or as to any matter or thing arising
thereunder ... or as to the withholding by the architect of any certificate to
which the contractor might claim to be entitled or as to the amount of any
certificate, final or otherwise", then either party could give notice referring
the dispute to arbitration. The architect gave his final certificate and the con-
tractor brought an action for the amount due. The owner disputed the sum
certified on the ground of there being defective work, but did not, as he might
9
75 J.P. 241. See the comment on this case ante, Chap. 5, Section 1, paras. 5·017-5·018 and
see the full analysis of it in C.C.P.P., para. 17..:.18-19.
ig [1916] N.Z.L.R. 1020, New Zealand.
11
This important case is more fully illustrated with citations from the judgmen...ts.post, Chap.
7, para. 7·068 and is also discussed in C.C.P.P., para. 17-21. -,;.
12 [19191 A.C. 337.
SECT. 4] EFFECT OF ARBITRATION CLAUSE 775
ha~e done, apply for a stay, and instead pleaded a set-off by way of cross-
act1on for damages. The contractor argued that, since there had been no ref-
erence to arbitration, the certificate was conclusive, but the owner argued
that, once the dispute had arisen and been notified, the conclusive effect was
re~oved a!ld the matter became one for decision by the arbitrator, and that
fa1hng arbitration the court had jurisdiction to entertain the set-off and
counterclaim. Held, by the Full Court, citing and following Collins M.R. in
Robins v. Goddard, a person who agrees to arbitration on any matter is not,
~less the a~ard of an arbitrator is made a condition precedent to the bring-
ing_ of an action, debar~ed from pursuing his common law right to bring an
~ctlon and, no ~~eps_ having b~en taken for a refe~ence to arbitration, all ques-
tlons of fact ansing in the actlon must be determined in the ordinary way by a
jury: Piggott v. Townsend (1926). n
(8) A building contract provided that the contractor should be entitled to 6·072
paymen~ from time to time under certificates to be issued to the contractor by
the architect. It also contained a clause that if any dispute should arise as to
the 7onstru~on of the contract or as to the withholding by the architect of any
certificate, 1t should be referred to an arbitrator, who should have power to
open up, review and revise any certificate. The contractor claimed that the
architect had under-certified, and terminated the contract under an express
t~rm for "withholding" a certificate. The arbitrator, upon a certain construc-
tion of the contract, held that there had been no under-certification. Held, by
the House of Lords, upon a case stated, that his view on the question of con-
struction was incorrect; that there had been under-certification· and that the
arbitrator should have revised the last certificate in such a way a; to entitle the
contractor to the sums claimed, and that the termination had been valid: E.R.
Absalom v. G. W. (London) Garden Village Society (1933).t4
(9) A building contract provided for payments to be made by the owner to
the contractors from time to time during the progress of the work upon certifi-
cates to be granted by the architect. There was also an arbitration clause
which provided for arbitration by an agreed independent arbitrator in case of
any dispute or difference as to any matter or thing arising under the contract
(except as to certain matters left to the sole discretion of the architect) or as to
the withholding by the architect of any certificate to which the contractors
claimed to be entitled, but there was no express "open up review and revise"
power. The architect refused to issue a further certificate, and the contractors
gave the employer notice of dispute by a letter which, after setting out that
there was an amount of £10,667 due to them which ought to be certified,
stated: "We are only concerned with the failure or refusal [of the architect] to
issue a certificate, and as in effect there is now a difference or dispute under
the contract, we give notice ... " (to refer such dispute to arbitration). The
arbitrator by his award ordered that the employer should pay to the con-
tractors the sum of £7,500. Held, by the Court of Appeal, that the terms of the
contract were sufficiently wide to give the arbitrator jurisdiction to order pay-
ment of the sum of money foi which in his opinion a certificate ought to have
been granted by the architect: Prestige & Co. Ltd. v. Brettell (1938).is
(10~ A building contract pro"?ded that payments should be made by four 6·073
equal instalments upon the certificate of the architect. The architect was also
n 27 S.R. (N.S.W.) 25. This case appears to have escaped the attention of text·books in the
past including the tenth edition. It is also a direct contrary authority to the Crouch
interpretation, supra, para. 6·063.
14
[1933] A.C. 592.
IS [1938] 4 All E.R. 346; 55 T.L.R. 59.
 776 APPROVAL, SATISFACTION AND CERTIFICATES [CHAP. 6
named as the arbitrator under a clause which provided that, in all cases of
dispute arising out of the contract, the decision of the architect should be
binding upon the parties. The builder, following the building owner's taking
possession, asked the architect for his final certificate for the last instalment,
but this was refused, and the architect purported to appoint another architect
to act as arbitrator. This was objected to by the builder, and, following con-
tinued refusal by the architect to issue any further certificate, the builder
brought an action in the courts, to which the defendant objected that the
builder had not obtained a certificate. Held, by the Court of Appeal, tha,t the
arbitration clause was sufficiently wide to empower the architect in his capac-
ity as arbitrator to determine whether a certificate should have been given,
and that since he had refused to act and the defendant had taken no steps to
have a new arbitrator appointed under Section 5 of the then Arbitration Act,
the court could assume the powers which the arbitrator would have had and
determine whether a certificate should have been given: Neale v. Richardson
(1938).'°
[Note: It may be inferred from the report that the architect had refused the
certificate on the merits in his capacity as certifier, and had, perhaps under-
standably, suggested another architect to act as arbitrator.]
6·074 (11) Clause24{f) oftheRIBAstandard form of contract17 provided that the
final certificate of the architect should, save in certain circumstances, be con-
clusive evidence of the sufficiency of the works and materials. The architect
issued a final certificate, which was honoured by the owners, but subsequently
remeasured the works, and he and the owners then contended that there had
been an overpayment of £1,000 upon the final certificate. The contractor,
when this sum was claimed by the owners in an arbitration, argued that the
final certificate was conclusive, the excepted circumstances not being appli-
cable. Held, by Devlin J., that Clause 27 of the conditions, which referred all
disputes to arbitration and empowered the arbitrator to open up, review and
revise any certificate and to determine all matters in dispute as if no such
certificate had been given, overrode the express wording of Clause 24{f) and
that the arbitrator was accordingly not bound by the certificate: Windsor
Rural District Cowicil v. Otterway & Try Ltd. (1954). 18
[Note: This case could have been, but was not, decided on the ground that
the dispute between the parties did not relate to "the sufficiency of the
Works". It is to be noted that this eminent judge's decision stood for 12 years
until it was finally disapproved by the House of Lords in East Ham Borough
Council v. Bernard Swiley Ltd.,19 followed by the later decision of the House
of Lords on the (by then strengthened) wording of the post-1963 RIBA/JCT
final certificate clause in Kaye Ltd. v. Hosier & Dickinson Ltd.20 These cases
reversed the Windsor case, holding that the express "conclusive evidence"
wording of the final certificate clause overrode the "open up review and
revise" powers in the arbitration clause.]
6·075 (12) A contract for the sale of a yacht pennitted the purchaser to give notice
of rejection if a survey by the purchaser disclosed material defects, unless the
defects were remedied. An arbitration clause in general terms specifically
included disputes as to whether the vendor had satisfactorily remedied
defects. Held, by the Court of Appeal, the clause entitled the arbitrator to
decide whether there were any defects at all requiring to be remedied, and the
16 [1938] 1 All E.R. 753; 54 T.L.R. 539.
17 1939 (1950 revised) edition.
is [1954] 1 W.L.R. 1494,per Devlin J.
, 9 [1966] A.C. 406.
20
[1972] 1 W.L.R. 146. Both cases are illustrated infra, para. 6·085.
SECT. 4] EFFEcr OF ARBITRATION CLAUSE 777
vendor was not bound by the plaintiff's survey or notice in a case where he
denied the existence of any defects: Docker v. Hyams (1969).21
(13) By Clause 22 of the post-1963 RIBA/JCT standard form, the contract-
or was to pay or allow to the owner liquidated damages for delay "if the archi-
tect certifies in writing that in his opinion the [Works) ought reasonably to
have been compl~~ed" bx the stated contract (or as extended) completion
dat~. By the trad1t1onal open up review and revise" wording of the arbi-
tra!ion clause, Clause 35(3), the arbitrator was given power to award any sum
which o.ught to ha".e been the subject of a certificate and to open up, review
and revtse any certificate, etc. The architect issued a final certificate in which
(wrongly) he had reduced the amount certified by the amount of liquidated
damages, and he had not yet issued a Clause 22 certificate when the contractor
issue~ a _w-rit for the full balance ?efore the deduction. Subsequently the archi-
tect did issue the Clause 22 certificate. The owners applied to refer the action
to arbitratio~, but the contractors opposed a stay on the ground that, at the
date ofthe writ, t!1ere wa~ no Clause 22 certificate and hence no dispute. Held,
by Forbes J., a dispute did already exist between the parties, namely as to the
proper amount of the extension of time to be given, and a stay should be
?ranted. ,!'er Forbes J: "The arbitrator has the power to decide this question
rrrespecttve of whether there has been an architect's certificate under Clause
22. He also has power to award any sum due ... ": Ramac Construction Ltd. v.
Lesser Ltd. (1975).22
(14) By Clause 30(7) of the (1973 revised) RIBA/JCT contract the final 6·076
certificate was, except in certain inapplicable situations, to be "conciusive evi-
dence in any proceedings" that the works "have been properly carried out
a_nd completed in accordance with the terms of the contract". Contractors for
site clearance and ?rainage and foundation works were required to return
and r~medy defec!1ve work during the defects liability period, which they
duly did, ~nd a certificate of making good defects and ultimately a final certifi-
cate was issued. The contractors' return had, however, delayed later con-
tractors for the building work, whom the owners were compelled to
c_ompensate, and the owners claimed these and other damages as consequen-
tial loss. The contra:tors reli~d on the terms of Clause 30(7). Held, by Judge
New_ey Q.C:, f~llow1ng th; vtew expressed by Lord Diplock in Kaye Ltd. v.
Hosier~ Dickinson Ltd., that the final certificate was conclusive only as to
the qu~ty or state _of the "."orks at the time it was given, and not as to previous
c?mpliance at all ttmes with other obligations in the contract, and therefore
did not preclude the owner's claim for consequential loss: H. W. Nevill (Sun-
blest) Ltd. v. William Press & Son Ltd. (1981).24
[Note: Th~s ~ell?easoned judgment was fully entitled, it is submitted, to
tre~t the ma1onty Judgmen~ in. the Kaye case, in view of the express reser-
v~ttons. ther~ made,. as not binding, and to prefer Lord Diplock's persuasive
~sen~1ng v~ew, which acco_rds far 1n:ore clearly with the language and the
likely mtentton of the parties. Architects are contractually required, as a
Zl [1969] 1 W.L.R. 1060.
22
[1975] 2 Lloyd's Rep. 430, followed by the Court of Appeal in Henry Boot Ltd. v. Croydon
Hotel Lt1. (1985) B.L.R. 41, and the similar decision on the Australian E5b contract by
Smart J. tn Compton Pty. Ltd. v. Umpty Pty. Ltd. (1988) 7 A.C.L.R. 38, Sup. Ct., N.S.W.
C?ntrast,. how~ver, Ori: the wording of the F.A.S.S. sub-contract forms, Brightside Kilpa-
~rick Engm~ermg Services v. Mitchell Construction and Savage Brothers Ltd. v. Shillington,
illustrated mfra, para. 6·088. See aJso, for a further decision where the architect's decision
on extension of time was su~j_ect to review, KBH Constructions Ltd. v. PSD Developments
n (1990) 21 N.S. W.L.R. 348, illustrated post, Chapter 10, Section 3(2), para. 10·069.
[1972] 1 W.LR. 146, at p. 167, illustrated infra, para. 6·085.
24
20 B.L.R. 78.

APPROVAL, SATISFACTION AND CERTIFICATES [CHAP. 6
778
matter of administration, to give final certificates at the appropriate. time, and
it would seem unreasonable to expose them to the dilemma which would
result if the effect of doing so would be to confer a wide rang~ of im1;1unities
on the contractor for all past defaults, beyond approval of the 1mmed1ate cur-
rent state of contract compliance at that time. It ~s ~ubmitted that this ca~e is to
be preferred to an earlier official referee's dec1s1on that the final ~ertificate
concluded questions of completion to time as well as to the quahty of the
workP]
6·077 (15) Clause lO(ii) of the RIB A/JCT minor works contract pro~id~d that 95
per cent. of the value of the works shoul~.?e certi:fi~d ~nd paid w1thm 1~ d~ys
of practical completion and Clause 10(01) that, within 10 days of certifying
that defects had been ~ade good at the end of the three-month period after
practical completion, the architect should issue a final certificate certifying
the final balance of any amounts remaining due, and that such s~ should
after 14 days be a debt payable by the owner to ?1e contractor (orv1ce ".ersa).
Clause 15 was a very short arbitration clause 1n gener8:l terms, b~t with no
express "open up review and revise" power. No penultunate_ce~cate was
issued, but, on the expiry of the three-month penod, the architect 1s~ued the
final certificate. The contractors issued a writ, and the owners applied for a
stay for arbitration alleging defective work, over~ha~ging an~ other .matters.
The contractors relied on the final certificate as b1nd1ng, and 10 parncular on
the wording that it should create a debt due after 14 days. Held, by the Court
of Appeal, confirming the deputy High Cour1; judge, ther~ was no e~press
provision which made the certificate of the arch1tec~ conclusive, and th~ debt
payable" wording was not sufficient to do so. Having r~~ard to the width of
the arbitration clause and the absence of express proVISton for the conclus-
iveness of the certificate, it could not be inferred that the parties intended to
prevent the owners referring matters of dispute to arbitration after the 14
days: Crestar Ltd. v. Carr (1987).26
(c) Arbitrator bound by A/E's certificate
6,078 The following are examples of cases where a certificate was held to be
binding ( or its absence fatal) despite the existence of an arbitration clause:
ILLUSTRATIONS
(1) A contract provided that no sum should be considered as due nor any
claim be made unless the engineer should certify that the contractors w~re
reasonably entitled thereto. The owner was also given power to deternnne
the contract in certain events, and thereupon the engineer was to fix ~he
amount earned by the contractor, and the value of any tools or matenals
taken by the owner, and the amount due was to remain in the owner:s hands
until 12 months after completion of the works, with power to the engmeer by
his certificate to authorise the deduction of any damage suffered by the
owner. There was also an arbitration clause in. wide terms for the reference
25 N. Fairweather Ltd. v.Asden Securities Ltd. (1979) 12BL.R.40,perSir Willi~mStabb Q.C:.
26 37 B.L.R. 118. See also the very similar case (where, however, the generality o~ the arbi-
tration clause was expressly discounted as an interpretative factor by ~,~ Judge) of
National Coal Board v. William Neill [1985] 1 Q.B. 300, illustrated supra, Sec hon 3, para.
6-058.
~ ..
SECT, 4] EFFECT OF ARBl'IRATION CLAUSE 779
of disputes (including disputes as to any certificate) to the engineer. The
owners terminated the contract, and it was conceded that they were entitled
to do so. Following the determination, the contractors submitted an account
and the engineer appointed a day to proceed with the reference of their claims
under the arbitration clause. He amended his notice of this to make it plain
that instead he would be acting under the termination clause. The contractors
refused to attend, and subsequently filed a bill in equity for an account. Held,
on Appeal in Chancery, that in the absence of any certificate of the engineer,
or proof that it had been fraudulently withheld, their claim must fail. Per Lord
Chelmsford L.C.: "If the parties have provided for the settlement of disputes
... by ... arbitration ... such a stipulation cannot be urged as an answer to
either party 'Yho prefers to resort to the courts, nor can it deprive the tribunals
of the country of their jurisdiction, whatever remedy may be open to the par-
ties against whom proceedings are instituted. But where the contract provides
for the determination of the claims and liabilities of the contractors by the
judgment of some particular person, this would be incorrectly called ... arbi-
tration as no dispute can exist in such a case, everything being dependent
upon the decision of the individual named, and until he has spoken no right
can arise which can be enforced either at law or in equity. I think that (the
engineer) stands in this relation to the plaintiffs in this case.": Scottv. Corpor-
ation of Liverpool (1858). 27
(2) A contract in the same form as that in Lloyd Bros v. MilwarcP provided 6,079
by Clause 18 that a certificate of the architect or an award of the referee show-
ing the final balance due was to be conclusive evidence of the works being
duly completed and of the contractors' entitlement to the final balance. By
Clause 20, disputes between the owner or the architect on his behalf and the
contractors were to be referred to arbitration (the disputes being described in
wide tenns, including the withholding of any certificate to which the contract-
or might be entitled). The architect issued his final certificate, which included
the value of extras, and the contractor brought an action upon it. The owner
contended ( among other things) that no written order had been given for the
extras. Held, by the Court of Appeal, that the arbitrator's jurisdiction would
arise only if a dispute arose, whereupon the architect would have no jurisdic-
tion to certify. There having been no dispute between the parties at the time
the certificate was given, it was conclusive and bound the owner: Clemence v.
Clarke (1879).~
[Note: Certain remarks of Grove J. in the above case may have suggested
that, on the wording ofthe arbitration clause, the owner would have no right to
arbitrate if he wished to dispute an amount certified by the architect (that is,
where there was no dispute between the architect and the contractor), and
were so interpreted by the New Zealand Court of Appeal inMajorv. Green-
field, illustrated in.fra. That view was not, however, taken by the Court of
Appeal in Lloyd Bros v. Milward illustrated supra, where a contractor suing
on the architect's certificate failed in his action due to a dispute with the owner
preceding the certificate.J
(3) A contract provided that .disputes "touching any matter or thing arising 6·080
under or out of the contract unless provided for in the foregoing clauses"
should be referred to an arbitrator. A previous clause provided that extra
27 28 L.J.Ch. 230.
28
(1895),Hudson, Building Contracts (4th ed.), Vol. 2, p. 262, illustrated supra, para. 6·069.
29
Ibid., at p. 54, considered and applied in Lloyd. Bros. v. Milward, illustrated supra, para.
6·06~ (where there had been a dispute prior to the certificate). See, however, per Latham
C.J. ~n Kirsch v. Brady (1937) 58 C.L.R. 36, who held obiter on a similar clause that, had the
architect's certificate in that case been valid, it would have been open to arbitration.
 780 APPROVAL, SATISFACTION AND CERTIFICATES [CHAP. 6
work should be "measured and valued and certified for by the architect and
the amount added to or deducted from the contract sum". Payment was to be
at the discretion of the architect upon his certificates during the progress of
the works, with the retention balance to be certified by a final certificate six
months from the certificate of completion. The final certificate was to be con-
clusive evidence that the contractor was entitled to receive payment of that
final balance. The contractor was dissatisfied with the architect's valuation of
admitted extras in his certificate of the final balance and sought to refer the
matter to arbitration. Held, by the Court of Appeal, Rigby L.J. dissenting,
that the dispute was one of the matters excepted from the arbitration clause:
Re Meadows and Kenworthy (1896). 30
[Note: Rigby L.J., in a persuasive dissentingjudgment, pointed out that the
wording in relation to the final certificate made it binding on the owner but
not on the contractor. However, the report indicates that an appeal to the
House of Lords was dismissed.]
(4) Clause 26 of a contract provided that the certificate of the architect was
to be a condition precedent to the contrator's right of action against the
owner; Clause 27 provided that the architect was to be sole arbitrator and
determine any dispute that might arise either during the progress of the work
or in determining the value of variations, and his certificate of his decision
upon such dispute was to be final and binding. The contractor alleged that
further sums beyond those certified were due to him. He made no application
for arbitration under Clause 27, but brought an action. Held, by Earl Reading
C.J ., that in the absence of the certificate, or of fraud or collusion, the action
must fail: Eaglesham v. McMaster (1920). 31
6·081 (5) Clause 6 of an engineering specification provided that excavations
should be timbered with suitable timber or alternative forms of sheeting other
than timber as and where necessary to the satisfaction of the engineer. An
arbitrator found that the engineer unreasonably required timbering in places
where excavation by machine and battering the sides of trenches to a slope
was practicable, causing additional expense. The contractor claimed the
expense as a variation. Held, by Diplock J., that provided his decision was
honest the engineer's requirement was conclusive: Neodox Ltd. v. Swinton &
Pendlebury Borough Council (1958). 32
(6) An arbitration clause governed disputes "otherwise than such matters
or things hereinbefore left to the decision or detennination of the Engineer".
The contract had required the engineer to certify completion of the work to
his satisfaction so as to start the maintenance period running. 33 Held, by the
Privy Council, that the certificate was intended to be a binding certificate of
satisfaction, and consequently was excepted from the arbitration clause: Ala
ul Haq v. City Council of Nairobi (1962). 34
(7) A contract in South Africa provided that the final certificate should ~e
conclusive evidence, in terms identical for all practical purposes with that 10
Windsor Rural District Coimcil v. Otterway & Try. 35 The arbitration clause
provided, however, that all disputes were to be referred in the first place to the
3llHudson, Building Contracts (4th ed.), Vol. 2, p. 265.
31 [1920] 2 K.B. 169. For a discussion of this case, see post, Section 9(3), paras. 6·226-6-227.
n 5 BLR 38. Illustrated more fully post, Chap. 7, para. 7·039.
13 See fuller illustration, supra, Section 3, paras. 6·051-6·054.
34 28 BLR 76, P.C., illustrated supra, para. 6·052.
Js [1954] 1 W.L.R.1494,supra, para. 6·074.
SECT. 4] EFFECT OF ARBITRATION CLAUSE 781
a,:chit~ct, whose decisio_n was to be binding, except that the contractor could, if
~ssatisfied,. ref~r the d1sp_ute to arbitration within 14 days. The owner's only
nght to arb1tr.ation aro_s~ if the architect failed, within 14 days of being asked
to ~o so, to gt"."e a de:1s1on. Th~ arbitra~or had the same power to open up,
revi~w and re vis: certificates as 10 the Windsor case. The architect gave a final
certificate at a tune when there was no dispute between the parties. Sub·
sequently th~ owner sought to dispute the certificate and claimed that he
s~ould ~e ~ntitled to refer his dispute to the architect and, if no decision were
~ven. ~thin 14 d~ys, refer the matter to arbitration. Held, by Hill J., dis·
ttn~u1s~mg the Windsor case, that on the wording the owner had no right to
arbitration and the final certificate was conclusive: Ballantine v. Western
Hotels (Pty.) Ltd. (1960).'"
(8) A ~ontract provided that, from the date of the architect's certificate of 6·082
completion, 1?e c<;>ntractor should be liable for the maintenance of the works
only. ~e a~bt!ration cla~se was in general terms, including all matters "if not
ot~erw1se distinctly provided for by any of the foregoing provisions", none of
~hich was relevant. The contract also provided expressly for liability to con·
t1nue after the final certificate for defects due to fraudulent conduct of the
contractor. The architect did not certify completion at the beginning of the
maintenance period, but did issue a final certificate for the balance due at the
end of P1e period. The owner wished to allege defective work. Held, by the
Cou_rt of Appe3! of ~ew Zealand, that the certificate should be treated as a
certificat~ of satisfaction. While there was no affirmative provision that the
final certificat.e was to be conclusive, the arbitration clause ( distinguishing the
Joh~ an.ct W1ndso,: cas~) con!ained no "open up review or revise" power,
and, m view of the Judge s findmg of no fraud, the certificate was binding on
the owner: Stratford Borough v. J.H Ashman Ltd. (1960).37
(9) A contract for the sale of a house in the course of erection contained a
de~ects ~lause for a limited period after completion, which was to be to the
s~tisfaction of the purchaser and her surveyor, who were in fact satisfied. Any
dis~ute as to such defects ~as t~ be referred to arbitration, and the (arbi·
tration) _clause was to contmue 10 full force and effect notwithstanding the
compl~tion ?f the sale.an1 conveyance. Held, by Nonnan Richards O.R., that
the satisfactron was btndmg and defects outside the period were not within
the scope of the clause and could not be pursued in proceedings before him:
Kent v. Saltdean Estate Co. Ltd. (1964).38
(10) A contract provided for a certificate of satisfaction at the commence· 6·083
ment of th~ maintenance period.39 The arbitration clause provided that in the
event of disputes between the owner and the architect on his behalf and the
cont,:actor (other th~n ce~ain identified but inapplicable matters in which the
arcJ:iite~t had a full discretion under the conditions) they should be referred to
arb1trat1on. The owner disputed the certificate, alleging defects. Held, by the
Court of Appeal of New Zealand, following observations of Grove J in Clem·
encev. Clarke4° and no~ing the decision of the English Court of App;al in East
Ha'!" B?rough Counctl v. Bernard Sunley, 41 that the italicised words in the
arb1trat1on clause were not apt to cover a dispute between the owner and
6
l 1960(4) S.A. 137, South Africa.
37
[1960] N.Z.L.R. 503.
33
114 L.J. 555, disapproved and not followed by the Court of Appeal in Hancock v B w:
Brazier (Aner!ey) Ltd. [1966] 1 W.L.R. 1317. See ante, Chap. 5, Section 2(6), paras.5-oSi
5·058, for both cases more fully illustrated and discussed.
39
See fuller illustration, supra, Section 3, paras. 6·051-6·054.
: (1880), Hudsons, Building Contracts (4th ed.), Vol. 2, pp. 54, 62-63.
[1965) 1 W.L.R. 30.
 782 APPROVAL, SATISFACTION AND CERTIFICATES [CHAP. 6
his architect where a certificate had been given in such a way that there was no
dispute between the architect and contractor, and consequently the arbiR
tration clause did not oveqide the certificate: Majorv. Greenfield (1965). 42
[Note: It is respectfully submitted that this decision must be regarded as
very doubtful. Unlike the Stratford case, there were no express or implied
indications of finality in the wording, which were present at two points in that
case. The Court appears to have relied partly on a general principle that an
architect's satisfaction should be the overriding criterion for contract comR
pliance, and partly on a special interpretation placed upon the wording of the
arbitration clause, which the Court held prevented any access whatever to
arbitration on the part of the owner where he sought to dispute the architect's
certificate (that is, where there was no contractor/architect dispute). In regard
to the latter, the Court relied on Grove J.'s observations in Clemence v.
Clarke, not apparently noting that in that case the arbitration clause provided
for disputes between the owner or the architect on his behalf and the contract-
or, or the fact that the later decision of the Court of Appeal, on identical
wording, in Lloyd Bros v. Milward was directly inconsistent with those obser-
vations (which were riot advanced by the other members of the Clemence
Court). Both the Clemence and Lloyd Bros cases, of course, also contained
"conclusive evidence" wording. It is submitted that the word "and" in the
expression "between the employer and the architect on his behalf" needs to
be read as "or", since it is difficult to believe that a draftsman who intended to
prevent owners from disputing their architect's certificates in arbitration
would choose to do so by such oblique means. Furthermore, the architect
might well himself be in dispute with the contractor after giving the certificate
and wish to support the owner if a serious defect, or an error in regard to the
sums certified, were subsequently found. See also the views of Viscount Dil-
horne on this point in the Gilbert-Ash case.43
6·084 (11) On completion of a school for a local authority, the architect issued his
final certificate under Clause 24(f) of the (1950 revised) RIBA form of con-
tract (identical with that in Windsor Rural District Council v. Ottenvay &
Try). By Clause 24(f) the final certificate was to be conclusive evidence as to
the sufficiency of the works save as regards defects which a reasonable exam-
ination would not have disclosed. By Clause 27 (the arbitration clause) the
arbitrator had full power to open up, review and revise any certificate, etc., of
the architect and to decide any matter before him, as if no such certificate had
been given. Subsequently to the final certificate, part of the stone facing of the
buildings fell, revealing widespread faults in the fixing of the stone to the
structure. The arbitrator found that these faults were due to breaches of con-
tract by the contractors, and that while the defects could have been detected
on the sort of visits an architect might be expected to make during the carrying
out of the work, they could not have been seen at the end of the defects liabil-
ity period at the time for giving the final certificate. The owners, relying on the
Windsor case, contended: (a) that the final certificate was not conclusive,
being overridden by the arbitration clause; and (b) that even if it was, the
words of the exception referred to an examination at the end of the defects
liability period at the time of giving the final certificate, and not during the
carrying out of the works. Held, by the House of Lords, (a) per Lords
Dilhorne, Grant, Upjohn and Pearson (Lord Cohen dissenting), that the
final certificate was final and conclusive and bound the arbitrator unless the
exception applied (reasoning of Devlin J. in Windsor case disapproved),
but (b) (Viscount Dilhome dissenting), that the saving referred to inspec-
tion after work was complete (per the majority, after the defects liability
42
[1965] N.Z.L.R. 1035.
4l [1974] A.C. 689, at p. 709.
SECT. 4] EFFECT OF ARBITRATION CLAUSE 783
period, per Lord Pearson, after practical completion) for the purpose of issu-
ing the final certificate, so that on the facts the exception applied and the
contractors were liable for the defects: East Ham Borough Councilv. Bernard
Sunley Ltd. (1966).~
[Note: The more important consequence of the above decision was the
initial overriding effect accorded to the specific "conclusive evidence" word-
ing of the final certificate clause, notwithstanding the apparent force and
width of the "open up review and revise" power in the arbitration clause. The
value to owners of the exception as interpreted in this case had already been
overtaken by the date of the House of Lords decision, by newer more wide-
ranging wording in Clause 30(7) of the 1963 RIBA/JCT contracts, extending
the clause to defects discoverable on inspection at any reasonable time during
the carrying out of the works - a remarkable testimony to both the dom-
inating influence of producer interests over the RIBA/JCT standard forms,
and the speed of their amendment in that interest.]
(12) By Clause 30(7) of the 1963 RIBA/JCT contract corresponding to 6·085
Clause 24(f) of the pre-1963 forms, supra, the final certificate was to be "con-
clusive evidence in any proceedings under this contract ... (whether by arbi-
tration or otherwise) ... "that the works had been properly carried out, unless
notice of arbitration was given before the final certificate by the owner or
within 14 days of it by the contractor. About the time of practical completion
there had been a dispute as to the quality of the work and the contractor had
issued proceedings in the courts for payment on interim certificate, and the
owner had obtained leave to defend as to a balance. These proceedings were
adjourned but still outstanding at a time when the architect issued a final cer-
tificate for £2,360, on which the contractor issued a further writ, to which the
owner responded with the same defence. Neither side gave notice of arbi-
tration at any stage. Held, by the House of Lords (Lord Diplock dissenting),
that since the owner had not issued a notice of arbitration before the final
certificate, it was binding on the courts in both of the two actions and the
owner was precluded from alleging defective work. There was no need to
imply any limitation, as had been contended, of the effect of the certificate to
subsequent proceedings. Per Lord Pearson, to protect his position in the court
proceedings, the owner could always have issued a purely formal notice of
arbitration in such a case: P.M. Kaye Ltd. v. Hosier & Dickinson Ltd. (1972). 45
[Note: Apart from the fact that the relevant clause was amended almost
immediately in the 1973 revision so as to avoid this (by any standards extra-
ordinary) decision, and any retrospective effect of the architect's final certifi-
cate, this case (which would seem to defy any imaginable presumed intention
of the parties and to carry a contractual immunity for defective work to
almost bizarre lengths, and which it is impossible to believe could have
accorded with the architect's own intentions when certifying) should be
treated as of extremely limited authority, it is submitted, since the judgments.
of the majority expressly indicate doubt as to the correctness of their decision
in the light of the argwnent (not apparently previously advanced but put for-
ward by Lord Diplock during the hearing) namely that the certificate should
on its wording be regarded as conclusive only as to the condition of the work
at the time the certificate was given, and not as to its past compliance at all
times with contract requirements. The case is now only of importance, it is
submitted, in relation to a doubtful "temporary disconformity" theory which
excuses defective work during construction provided it is subsequently recti-
fied.46 Lord Diplock's view as to the intended effect of this certificate, which it
44
[1966] A.C. 406.
45
{1972] 1 W.L.R.146.
4
6 See this doubted ante, Chap. 5, paras. 5·027-5·028.
 784 APPROVAL, SATISFACTION AND CERTIFICATES [CHAP. 6
is submitted is fully justified both on the basis of the practical context in con~
struction contracts and on the strict principles of interpretation of exemption
clauses,47 was convincingly followed by Judge Newey Q.C. in Nevill (Sunblest)
Ltd. v. William Press,48 not following an earlier and doubtful official referee
decision of Sir William Stabb Q.C. 49 ]
6·086 (13) By Clause 32 of a contract with a railway authority, a wide range of
defined types of dispute was referred to the Chief Engineer of Railways,
whose decision was to be final and conclusive, with a right of appeal on a
limited class of matters to "the award or determination or decision" of either
one of two other officials, "and the arbitrator so appointed shall be the sole
arbitrator of the matters ... referable by way of appeal". By Clause35 "no suit
or action shall be brought ... to recover any money for or in respect of any
breach of contract ... unless and until the contractor or the Commissioner
shall have obtained a certificate or award from the Chief Engineer ... for the
amount sued for". The authority purported to determine the contract, and the
contractor sued for moneys due and damages. The South Australian Supreme
Court (MitchellJ.) had held that Clause 32 was invalid as an attempted ouster
of the Court's jurisdiction, and that Clause 35 was linked with it and shared its
fate. Held, by the High Court of Australia, that whatever the position about
Clause 32, a provision making a certificate or award a condition prec_edent to
an action was not an ouster-of the court's jurisdiction, and Clause 35 was a
sufficient answer to the contractor's financial claims. Since there had been no
act of prevention or interference by the owners, and since certifiers generally
must inevitably have to decide matters previously considered by themselves
and could not be wholly independent, there were no grounds on which the
need for the certificate could be dispensed with: South_Australian Railways
Commissioner v. Egan (1973). 50
[Note: The High Court reached this decision with obvious regret and
expressed the view that the provisions in question were highly oppressive in
perhaps uniquely critical terms - see infra, paragraph 6·137.]
6·087 (14) In an informally concluded sub-contract with a number of inaccurate
references to documents, it was finally held that the parties had contracted
under the terms of the FASS "Green Form" of nominated sub-contract, and
had agreed a contractual completion date. By Clause S(a) of that form, the
contractor was not entitled to claim loss or damage for delay by the sub-con-
tractor unless a certificate in writing had been issued by the architect to the
effect that the sub-contract works ought reasonably to have been completed
within the specified or an extended period. When sued for a balance due, the
-main contractor sought to deduct damages for delay, although up to that time
the architect had declined to issue the certificate. Held, by the Court of
Appeal, upholding the master and the judge, that a stay should be refused:
Brightside Kilpatrick Engineering Services v. Mitchell Construction Ltd.
(1975)."
[Note: This case may not be the last word on this commonly found pro-
vision in English building sub-contracts. Unfortunately the Court of Appeal's
judgment makes no mention whatever of the terms of the FASS sub-contract
arbitration clause (presumably incorporated), which was in general terms
although with no "open up review and revise" provision, together with an
47 See ante, Chap. 1, paras. 1·231-1·233.
46
Illustrated supra, paras. 6'017 and 6·076.
49
Fairweather v. Asden Securities, also referred to supra, paras. 6·074-6·077.
~47 A.L.J.R.140. ~~--
s, [1975] 2Lloyd's Rep. 493. See, for a contrary decision, Port Glasgow Magistra't'esv. Scottish
Construction Co. Ltd. 1960 S.L.T. 319,illustratedpost, Chap. 10, Section 3(2), para. 10·070.
SECT. 4] EFFECT OF ARBITRATION CLAUSE 785
added term that certificates binding under the main contract should be bind-
ing in the sub-contract. The equivalent (Clause 22) delay certificate of the
architect in the main contract did not bind the arbitrator under that contract.52
Nor did the court consider the possible reciprocal or converse effect if, for
example, the architect had issued a Clause S(a) certificate. Would the sub-
contractor have been bound to pay damages for delay beyond the date certi-
fied by the architect, or could he have disputed that date before an arbitrator?
It seems even less likely that the parties should, in the case of the highly
specialised work often found in nominated sub-contracts, agree to make an
architect, with possibly no expertise in the specialist field concerned, the final
judge of delay disputes between main and sub-contractors. For these reasons
it is difficult to see why a stay should not have been granted to decide whether
deduction was permissible on the contractor's cross-claim, even if on strin-
gent terms. It is also of the nature of many sub-contracts that intermediate
failures of due diligence before the actual sub-contract completion date will
inflict at least as serious disturbance and economic loss on the main contractor
as any final failure to complete. Clause S(a) therefore in any event provides an
inept remedy having regard to the practical requirements of sub-contracts. It
seems possible that the decision only related to the question of temporary
finality, and was not intended to prevent the owner subsequently commenc-
ing a separate arbitration to detennine his entitlement to damages.
(15) An architect issued a certificate summarising his extensions of time 6-088
under Clause 23 of the RIB A/JCT conditions, with an accompanying letter to
the main contractor which showed details of the various extensions, including
those for delays caused by nominated sub-contractors. He also wrote to the
relevant nominated sub-contractor, informing him of the period which had
been allowed for his work against the period of extension claimed, and
expressly referring to the main contract provision (Clause 27(D)(ii)), which
required him to certify the extent of sub-contractor delays in order to enable
damages for delay to be recovered as required by Clause S(a) of the "Green
Form" sub-contract. The main contractor in an arbitration relied on this cer-
tificate to claim damages for delay in substantial excess of the balance due to
the sub-contractor. The latter disputed the form of the certificate. Held, by the
Northern Ireland High Court (Higgins J.), applying Token Construction v.
Charlton Estates, 53 that the letter was not sufficient to constitute a certificate,
and, following the Brightside case, that in the absence of a valid certificate, an
arbitrator under the "Green Form" sub-contract had no power to rule on the
merits and award damages, and the sub-contractor was entitled to payment of
the balance: Savage Brothers Ltd. v. Shillingston (1985). 54
[Note: This "certificate" failed only as a matter of form, and the subjective
intentions of the architect could not have been in doubt. It should, of course,
have specifically certified and not left for inference, however obvious, the
date by which the sub-contractor should have completed his work. All the
relevant points (in contrast to the Brightside case) were fully considered in the
light of the doubts expressed in the Hudson 1979 Supplement as to that case,
and the matter was clearly fully argued. Nevertheless, as stated in the note to
the Brightside case above, the consequences of this view in the reverse situ-
ation of a valid certificate being given perhaps need consideration before the
interpretation of this particular sub-contract can be regarded as finally con-
cluded, it is submitted.]
:.2See Ramac v. Lesser, illustrated supra, para. 6-075, and see also Henry Boot v. Croydon
Hotel (1985) 36 BLR 41.
3
~ Illustrated infra, para. 6·158 and post, para. 10.075.
54
5 Const. L.J. 295, Northern Ireland High Court, illustrated further post, para. 10·076.
 786 APPROVAL, SATISFACTION AND CERTIFICATES [CHAP.
(5) Summary of the Law
6·089 The cases in this and the last preceding section do indeed show, as stated
by Sheldon J. in the Court of Appeal in 1987," that the relative effects of
final certificate (and indeed any other satisfaction) provisions, on the one
hand, and arbitration provisions, on the other, have presented the courts
with "a perennial problem" for well over a century. Rather than indicating
unavoidable difficulties in interpreting such provisions, however, this only
serves to emphasise yet again the consistently poor standards of drafts-
manship of construction contracts over this long period, since nothing is in
fact simpler than to draft an arbitration clause so as to set out expressly
those matters which are to be excluded from an arbitrator's jurisdiction
and which it is desired should be finally decided by other persons or in
some other way.56 Alternatively, it is simple to provide expressly in a satis-
faction or certification provision that it should or should not bind an
arbitrator.
Fortunately, however, there is now an authoritative statement of prin-
ciple to the effect that, without sufficiently clear wording, parties will not
be presumed to forego their common law rights through the medium of
such provisions.57- 58 It is submitted that the courts are entirely justified in
doing so in the context of construction contracts, where defective work
can be rapidly covered up and if undetected can be expected to maximise
contractors' profits, so that strong commercial pressures exist both on
main and sub-contractors to avoid policies of meticulous contract com-
pliance. This background will mean that properly advised owners are
inherently unlikely to agree to an immediate immunity for defective work
( and for practical purposes the elimination altogether of any period of
limitation) as a result of either interim certificates or any final certificate
which may be needed for obvious administrative purposes to record the
ultimate balance due to the contractor. By the same token, contractors at
the present day are extremely unlikely to see any advantage in placing
themselves permanently at the financial mercy of an owner's certifier.
6·090 On the other hand, there is no principle of law which invalidates pro-
visions conferring finality on the decisions or certificates of an owner or of
his A/E, even where the latter is "in-house" and a salaried employee of the
owner. As has been pointed out, in England arbitrators (but not certifiers)
have since 1934 been capable of being removed at the discretion of the
court on grounds of inherent partiality, notwithstanding that the degree of
their interest was fully k.nown at the time of contracting (as, for example,
that of an "in-house" salaried employee of the owner would be). In
addition, it seems only a matter of time before an attempt is made to
15
Quoted supra, at para. 6-061.
56
Compare Clause 37(3) provisos (a) to (i) inclusive of the post-1980 Singapore private sec-
tor SIA contract, C.C.P.P., at pp. 612-613.
51
-!!s See supra, paras. 6·004-6·005 per Lord Diplock in the Gilbert-Ash case, and, it is clear
from the later English cases in this and the preceding section 3 that the Couits are now
following this as the guiding principle. · Rosehaugh Stanhope v. Redpath Dorman Long (1990) 50 BLR 69.
6
SECT. 4] EFFECT OF ARBITRATION CLAUSE 787
invoke the English Unfair Contract Terms Act59 in order to avoid the im-
~°:nities _for defe~tive work created by the many final certificate pro-
v1s1ons still extant m England which expressly provide for that result.
It has been noted that the particular area of construction contracts
wher~ draftsmen have in recent years sought to impose finality expressly
have ~eluded most _notably final certificate immunity for defective work
(sometrmes cosmetically balanced by a denial of contractors' financial
claims not advanced by that time, which in practice would hardly be likely
to embarrass any contractor), but, no doubt in view of the imminence of
the unfair contract terms legislation, the finality of these provisions has
been wholl~ abandoned by the ICE domestic English contracts and, it was
thoughtuntilrecently, largely abandoned by changed wording in the more
recent post-1976 JCT/RIBA standard forms of main contract.60 One area,
however, where _strenuo~s a~te~pts" are being made by contemporary
draftsme1: to achieve ~ality hes ma temporary finality" (so as to enable
summary mt~rloc_ntory Judgment to be obtained in full) which it is sought
to accord to mtenm payment provisions in both main and sub-contracts
with in some cases ~xtreme~y complicated internal procedures for adjudi~
cators an~ the holdmg of disputed moneys in trust. These reflect particu-
larly the lffiIIlense producer pressure on the current standard forms in
E~gl~nd, ":11~ have given rise to a profusion of reported cases where little
pnnc1ple 1~ mvolved and the question at issue is merely the detailed
mterpretat1on of express provisions designed to reduce or eliminate the
possibility of any defence or set-off by a paying party at the interim pay-
ment stage.61 Indeed, in some "one-off" cases of management contracts
and sub-contracts, where the employer will himself be a main contractor
the draftsmanship may seek to accord temporary finality to cross-claim;
by the paying party against the party doing the work. 6 b Other areas of
certification, which at J?resent are n~t usually permanently withdrawn by
the draftsmen from ultrmate detenrunation on the merits by an arbitrator
or the courts, include the provisions for termination of the contract by the
own_er, and for the ~eduction of liquidated damages for delay in final com-
pletion, although 1t has been seen that in some English sub-contracts
imp~ecise draftsmanship ~ay suggest, very probably unintentionally, a
~a~ty accorded to the main contract architect's opinions as certified by
him m that last context.62 ·
Howe~er, the ~ajori.ty o_f the cases illustrated in Section 3 and the pre- 6·091
sent section are likely, m view of the prevalence of arbitration clauses to
be concerned with the interaction of the powers conferred on the as AJE
certifie: on questio~s of value, quality of work, or comple~ion, and those of
the arbitrator appointed under the arbitration clauses in those contracts to
decide disputes between the parties on those matters.
9
j See ante, Chap. 1, paras. 1·238 et seq. But see the case of Colbart v Kumar (1992) 59 BLR
doubted in (1993) 9 Corst. L.J. 7, there referred to. · ' '
60
See supra, Section 1, paras. 6·002-6·003.
61
See infra, Section 6(7), paras. 6·204-6·205.
610
62
See the Brightside case, illustrated supra.
 788 APPROVAL, SATISFACTION AND CERTIFICATES [CHAP.
It is suggested that the following broad principles emerge from the cases
(after allowance for the presumption against finality already referred to):
(a) An arbitration clause in general terms, a fortiori if it empowers the
arbitrator to open up, review and revise any opinion or certificate,
or specifically mentions disputes arising on the withholding of acer-
tificate, will, in the absence of a clear indication to the contrary,
empower the arbitrator to disregard a certificate or the absence of
one. 63
(b) Once an arbitrator is held to have jurisdiction to hear the merits of a
claim, any purely technical difficulties in the way of giving full prac-
tical effect to his decision arising out of formal or procedural
requirements of the contract in relation to the certifier are likely to
be disregarded, the implication being that all necessary powers
have been conferred on the arbitrator to enable him to give practi-
cal effect to his decision.64
6·092 ( c) On the other hand, express words of exclusion in the arbitration
clause may make it plain that a particular matter the subject of a
certificate or approval is not within the arbitration clause.65
( d) There may be cases where, even in the absence of words of
exclusion in the arbitration clause, the clause will not prevail over
the provision for approval or a certificate. Thus the use of the words
"final" or "final and conclusive" or "conclusive evidence" in
relation to a satisfaction or certificate may override an arbitration
clause, however widely expressed, even in a case where the latter
expressly permits the arbitrator to reopen certificates. 66 See also the
use of the word "only", and the exclusionary effect .of a remedy
limited to cases of fraud, as eliminating liability for defective work
after expiry of the maintenance period.67 Again some contracts in a
very special form may not contemplate any overlap of jurisdiction
between certifier and arbitrator, the latter's jurisdiction arising
only if a dispute has arisen prior to the certifier having acted,68 or
because, in addition, the right of arbitration was never available at
all to the particular party seeking to dispute the certificate.69
6J Re Hohenzollern (1886), Hudson, Building Contracts (4th ed.), Vol. 2, p. 100; Howden &
Co. Ltd. v. Powell Duffryn Steam Co. (1912) S.C. (Ct. of Sess.) 920; Prestige v. Brettell
(1938) 55 T.L.R. 59;Robins v. Goddard [1905] 1 K.B. 294; Winds-or Rural District Council
v. Otterway [1954] 3 All E.R. 721; Brodie v. Cardiff Corporation [1919] A.C. 337; Neale v.
Richardson [1938] 1 All E.R. 753; 54 T.L.R. 539; Cresta Ltd. v. Carr (1987) 37 BLR 117 and
see National Coal Board v. William Neill [1985] Q.B. 300.
64 Brodie v. Cardiff Corporation; Prestige v. Brettell, supra; and compare the "extras in writ-
ing" cases in Section 2, supra. See also post, Chap. 7, Sections 2(4)(t) and 2(5).
65 Re Meadows & Kenworthy; Borough of Stratford v.J.H. Ashman;Ata ul Haq v. City Coun-
cil of Nairobi, supra.
66 East Ham Borough Council v. Bernard Sunley [1966] A.C. 406, and the subsequent cases
on the pre-1976 RIBA/JCT standard form wording in Clause 30(7).
67 See Borough of Stratford v. J.H. Ashman Ltd., supra. -:.
68 Lloyd v. Milward; Clemence v. Clarke; Ballantine v. Western Hotels (Pty.) Ltd., supra.
69 Ballantine's case, supra.
6 SECT. 4] EFFECT OF ARBI'IRATION CLAUSE 789
(e) In the more usual case where the arbitration clause overrides the 6·093
certifying clause, the plaintiff can normally, if he wishes, proceed by
action and, unless the action is stayed, the court will have the same
powers of review as the arbitrator. 70--71 There was undoubtedly a dic-
tum to the contrary by Lord Cohen in the House of Lords and by
Salmon L.J. in the Court of Appeal in the East Ham case, and
Viscount Dilhorne there also expressed the view that Robins v.
Goddard did not establish or support this proposition. The ques-
tion was, however, very much on the fringe of the argument and
reasoning in that case, and neither Neale's nor Adcock's cases was
cited nor the New Zealand case of Johns and the Full Court of New
South Wales in Piggott, both of which expressly followed Robins v.
Goddard. It is submitted with the greatest respect that these dicta
are not consistent with authority. Furthermore, it is submitted that,
on principle:
(i) to allow contracting parties to clothe· an arbitrator with judicial
powers which the courts are not also to possess infringes a
basic principle of English law by ousting the jurisdiction of the
courts to that extent;
(ii) it is wholly unrealistic to attribute to the parties an intention
to restrict the power of the courts to entertain the full merits
of a dispute simply because they have, when providing for the
tribunal which they contemplate will normally deal with their
disputes, taken pains to make clear that that tribunal should
have that power - had it indeed been the intention to confer
an exclusive jurisdiction, the clause would at the very least,
it is submitted, have been couched in Scott v. Avery form.72;
and
(iii) such a ruling would be catastrophic in its consequences, to no
possible advantage, in the many cases where the courts, for
good reason, decide to exercise their discretion and refuse a
stay for arbitration, or revoke the appointment of an arbi-
trator, so that the matter may be dealt with in the High Court.
The foregoing paragraph ( e ), including subparagraphs (i), (ii) and
(iii) above, is identical with the tenth edition written in 1970.73 The
views there expressed are, of course, at variance with, and indeed
prophetically anticipate and reject, the later obiter views of the
71
10-- Robins v. Goddard [1905] 1 K.B. 294, at p. 321, per Stirling L.J.; Adcock's Trustee v.
Bridge Rural District Council (1911) 75 J.P. 241; Johns v. Webster and Tonks [1916]
N.Z.L.R. 1020; Piggottv. Townsend (1926) 27 S.R., N.S.W., 25; Nealev. Richardson [1938]
1 All E.R. 753,per Scott L.J. and see now these authorities further analysed and discussed
in C.C.P.P., Chap. 17, and the very important relevance of the ultimate Gilbert-Ash
decision to give leave to defend as opposed to a stay in this context.
7
1. See for this post, Chap. 18, Section 3(2)(g)(iii), and see also South Australia Railways Com-
missioner v. Egan (1973) 47 A.L.J.R. 140, illustrated supra, para. 6·086.
73 See the tenth edition, pp. 447-8.
 790 APPROVAL, SATISFACTION AND CERTIFICATES [CHAP.
Court of Appeal in its interlocutory judgment in 1984 in North
Regional Health Authority v. Crouch Construction Ltd.14
6-094 By the normally accepted canons of binding authority in England
( as well as principles of the consensual interpretation of contracts
based upon the presumed intentions of the parties, and also in the
light of the proper r6le and function of arbitrators in common law-
systems) it is respectfully submitted that the Crouch view or dictum
(that an arbitrator appointed under an "open up review and revise"
type of arbitration clause is thereby empowered by the parties to
exercise a special undefined and exclusive discretion to review an
NE's certificates or decisions, so that the courts, if seised of a dis-
pute themselves, are precluded from considering the merits of such
disputes at all where the A/E can be shown to have dealt with the
matter by certificate or administrative action) was, apart from
objections on consensual or policy grounds, simply not open to the
Court of Appeal. The "open up review and revise" wording has
since been said by Sir John Donaldson M.R., who presided in the
Crouch case itself, to create "what one might describe as an internal
arbitration clause which enabled the parties in that internal arbi-
tration to seek to set aside or revise the architects' certificate".75 It
may be noted that counsel in the Crouch case were expressly
instructed by the Court to argue the point, and would not otherwise
have done so; and also that the "Crouch view" was eventually
expressed in almost tentative terms by Sir John Donaldson in that
case. Thus he described the jurisdiction of the courts to reopen dis-
putes on the merits as "probably more limited than that of an arbi-
trator", and made the statement that "our view, if accepted, will
virtually give any party a right of veto on any attempt to by-pass the
arbitration clauses".76
However, while the Crouch view remains unreconsidered, 77 it
represents an entirely new view of the effect of one particular type
of arbitration clause which not only cuts down, often in an impre-
cise and unpredictable way, the jurisdiction of the courts to deal
with the disputes under any "open up review and revise" contracts
of which they may happen to be seised, but which also elevates to a
qualified status of finality many certificates or decisions of the A/E
which hitherto have never been thought to involve any finality
at all.
74 [1984] Q.B. 644. The authorities to the contrary are discussed comprehensively in CCP.P.,
Chap. 17, and see the criticisms supra, Sub-section (2), "The Crouch View", paras.
6·063-6·064.
75 Bemtrete Comtruction v. Angus Hill (1987) 38 BLR 115, at p. 118.
1G [1984] Q.B. 644, at pp. 674F, 675A.
77 It has now been mentioned without disapproval but never directly challenge:d in a number
of cases: see, e.g. in all three judgments in the Court of Appeal in Ashville Inllt!stment.s Ltd.
v. Elmer Contractors Ltd. [1989] Q.B. 488 and see supra, paras. 6·063-6·064.
6 SECT, 4] EFFECT OF ARBITRATION CLAUSE 791
·,
I
(f) In the ab~ence of ·~op~n up review and revise" wording (and so of 6·095
any possible apphcatlon of the Crouch view), simple generally
eXJ?ressed arbitration clauses will not prevent the courts, if seised of
a dispute, from dealing with it on its merits and in spite of, for exam-
ple, a final certificate.1s
(g) This will not be so, however, if the arbitration clause is in Scott v.
Aver( form, o: the wording of the contract is otherwise held to
req~e that, failing a certificate, an award of the arbitrator must be
obtained as a condition precedent to an action.79
(h) ?ne par~cular form of nineteenth century contract, expressly mak-
ing a certificate ?ran award of the arbitrator a condition precedent,
was ev~ntually 1nte1:Preted as conferring exclusive jurisdiction on
the certifier and arbitrator respectively, the latter's arising and the
former's l~psing, depending on the moment when the dispute
80
arose: This se~ms on close analysis a difficult and (on occasions
~ery likel~ t~ arise in construction contracts) an impractical distinc-
tion, an.d it 1s submitted that at the present day such a provision
would, ~n the. absen~e of clear wording, usually be interpreted as
co~~mng a simple right of appeal by either party from a certifier's
dec1s.1~n to the ~bitrator, but in any case as a Scottv. Avery-type of
pro~1s1on e~clud1ng the coll!t's jurisdiction in the absence of a sup-
portmg certificate at the least, or if not an award.
(i) I t IS
. submitte.d that no special problem exists (so as to deprive the
o~~r one-sidedly of the right to arbitration from a certifier's
d~cision) by reason of the quite commonly found formula referring
d1sput~s between the owner "and" (or "or") "the A/E on his
beh~lf , on the one hand, and the contractor, on the other. More
~pec1fic wording showing that it is the contractor only who in effect
ts to have the option whether or not to dispute the A/E's decision or
certificate will be required, it is submitted s,
SECTION 5. RECOVERY WI'IHOUT CERTIFICATE
(1) Generally
A~art from the existence of an overriding arbitration clause, or cases of 6·096
waiver or estoppel, there are certain circumstances in which the necessity
78
National Coal ~oard v. William Neill Ltd., illustrated supra, Section 3, para. 6·058· Ben-
19 strete Construction Ltd. v.Angus Hill (1987) 38 BLR 115, C.A. See also Re Hohenz~llern.
E~gl~sham v. McMa~ter, Lloyd Bros. v. Milward; South Australian Railways Com-
m/.Sswner v.Egan; all Illustrated supra.
80
Lloyd Bros. v. Milward, illustrated supra
81
See th~ notes, supra, to Clemencev. Clark~ and the decision in Majorv. Greenfield and see
fe~ V[;;cou nt D1lhome in Gilbert-Ash (Northern) Ltd. v. Modern Engineering (Bristol)
, ) 741A.C.689,atp. 709,followedbySmartJ.inCompton&Somv. UmptyPty. Ltd.
(1988 7 A.C.L.R. 38, at p. 40, Sup. Ct., N.S.W.).
 792 APPROVAL, SATISFACTION AND CERTIFICATES [CHAP. 6 SECT.
of obtaining a binding certificate can be dispensed with, or an existing
certificate can be disregarded. The rhetoric of many of the earlier
decisions suggested that these circumstances were limited to cases of certi-
fiers with an undisclosed interest; fraud or collusion of the certifier with
one of the parties (usually, of course, the owner); or acts or breaches by ~e
owner, under the "prevention principle", having the effect of preventln~
the issue of the certificate ( as, for example, by failing to appoint an archi-
tect on death or retirement82). The prevention principle has also been
stated as the reason for dispensing with a certificate in the context of acts
of interference or collusion on the part of the owner. 83 The essential fea-
ture of the prevention principle in this context is that it operates rather like
an estoppel, preventing reliance on a certification provision, and does not
by itself confer a right to damages. . .
It is clear, however, that these categories may be confusing and too fun-
ited. Thus, even in the older cases, unimpartial conduct of a certifier short
of fraud was held sufficient to invalidate certifiers' decisions.84 So conduct
of the certifier which, while subjectively entirely honest is, objectively
regarded, unfair and oppressive, has been held to invalidate an engineer's
certificate under a typical contractual termination provision85 Equally,
unjustifiable refusal of the certifier to carry out his function at all may
dispense with the need for a certificate or enable one to be dis~egarded.86
Finally, where the contract sufficiently indicates the matters which the ~er-
tifier should consider or the principles which he should apply when certify-
ing, his taking into consideration of matters extraneou~ to his proper
jurisdiction, a fortiori of course if known to and concurred m by the owner,
may invalidate his certifying decisions.87
6·097 Apart from the procedural advantage under the prevention princi?le of
dispensing with the need for a certificate, which may have been eqwtab~e
in origin, it should be noted that where the owner can be seen to be m
breach of an implied term, as in many cases of collusion or improper influ-
ence, damages for breach of contract will in principle be re~overable. Al-
though these may in some cases only be equivalent to the pnce of the work
112Compare Croulffice Ltd. v. London Borough of Lambeth {1986) 33 BLR 20, infra, para.
6· 120. See the many other examples of prevention in Section 2, supra.
s1 Compare Panamena Europea v. Leyland [1947} A.C. 428, infra, para. 6· 132.
M Pawley v. Turnbull (1861) 3 Giff. 70; Hickman v. Roberts [1913) A.C. 229 (~lthough the
latter case may also have been based on improper interference). See infra, paras.
6·143-6·144.
ss Canterbury Pipelines v. Christchurch Drainage Board [1979] 2 N.Z.L.R. 347 (an unusual
decision in the N.Z. Court of Appeal), infra, para. 6·134.
66 Hothamv. East India Co. (1787) 1 Tenn. R. 638;Kellettv.New Mills Urban Council(1900)
Hudson, Building Contracts ( 4th ed.), Vol. 2, p. 298; Wattsv. McLeay (1911) 19W.L.R. 916,
Canada· Neale v. Richardson [1938) 1 All E.R. 753. See infra, para. 6·147.
m Collier;. Mason (1858) 25 Beav. 200; Peters v. Quebec Commis_sioners (18?9 19 S.C.R.
685 Canada; Panamena Europea v. Leyland (1947) A.C.428; City of Osha»:.r;.v. Brennan
Pa~ing [1955} S.C.R. 76; Re Daystone Estates Leases [1962} Ch. 78, the latter illustrated
supra, Section 2, paras. 6·017; and see infra, paras. 6·149-6·151.
5] RECOVERY WITHOUT CERTIFICATE 793
done,88 this will not always be an academic distinction, as where a con-
tractor, paid in full, sought to advance an "acceleration" claim for dam-
ages where an extension of time certificate was said to have been wrongly
withheld as a result of departmental interference. 89
It will be seen that the judgments have sometimes expressed themselves
inconsistently on this admittedly often procedural point, while in preven-
tion cases they have often failed to identify their reasons for invalidating a
certifier's decision with any real precision. On the procedural point, there
is little doubt that where there is owner involvement to a degree which can
be shown to amount to breach of an implied term on his part, either an
> action to enforce the contract while disregarding any certificate or its
absence, on the one hand, or an action for damages or even for rescission,
on the other, will be equally available to the plaintiff. 90
f;
It should be pointed out that, whatever the contractual position of the
parties, a certifier guilty of fraud or fraudulent collusion will be liable in
1, tort for deceit to either party, in addition to depriving his certificates or
approval of binding effect. On the other hand, it is now clear that a certifier
will not be liable in negligence (that is, in tort) to the contractor while
''
acting in that capacity, nor indeed will an A/Ebe so liable to the contractor
·;t
for the negligent discharge of his other duties. 91 Nor will an owner be liable
" to a contractor for negligence by his A/E when acting in a certifying capac-
ity, since while there will be an implied term that the A!E will be indepen-
\ dent and impartial while acting in that capacity, there will be no warranty
as to his competence or that he will act reasonably when exercising a dis-
cretionary function under the contract, as opposed to those functions per-
formed by him merely as agent of the owner.92
Since unjustified refusal of the certifier, unfair or unimpartial conduct, 6·098
or taking wrong matters into consideration ( and varying degrees of owner
participation, encouragement or taking advantage) may all be present in
the same case, and since the precise reasoning relied upon is only rarely
stated with precision by judges applying the prevention principle, cases
involving any or all of these characteristics will be discussed together com-
pendiously in Subsection (5), "Conduct Not Amounting to Fraud or Col-
lusion", infra, and a summary will be attempted in Subsection (6).
88
See, e.g. Smith v. Howden Union (1890), Hudson, Building Contracts (4th ed.), Vol. 2,
p. 156; Panamena Europea v. Leyland [1947} A.C. 428; and per MacFarlan J. in the Perini
Pacific case, infra.
89
See Perini Pacific v. Commonwealth ofAustralia [1969} 2 N.S. W.R. 530, infra, para. 6·133,
and the analysis "there made by MacFarlanJ. of the leading Panamena case in the Court of
Appeal as well as in the House of Lords.
90
See, e.g. per Scott L.J. in Leyland Ltd. v. Panamena Europea (1943) 76 Lloyd's Rep.113, at
p. 124, infra, para. 6· 150, and see, per Goddard L.J. infra, para. 6· 148.
91
Pacific Associates v. Baxter [1990] 1 Q.B. 993; Edgeworth Construction Ltd. v. Lea (1991)
53 B.C.L.R. (2d) 180, C.A., British Columbia, see ante, Chap. 1, paras. 1·293 et seq. and
para. 1·379, and see (1990) 5 Const. L.J. 207.
92
See, e.g. per Vinelott J. in London Borough of Merton v. Leach (1985) 32 BLR 51, at p. 78,
and see also per Diplock J. in Neodox Ltd. v. Swinton and Pendlebury Borough Council
(1958) 5 BLR 38, at p. 47. See infra, paras. 6·112-6·113.
 794 APPROVAL, SATISFACTION AND CERTIFICA'IES [CHAP.
As a final note of caution, contracts with binding certification provisions
which are not open to review by an arbitrator or the courts are compara-
tively rare at the present day. As a result, modern authority on dispensing
with certificates is unlikely to be encountered frequently. The principal
area where draughtsmen in England still remain concerned to impose
finality at the present day is in the case of interim payment certificates, but
since this finality takes the form of preventing set-off by the payer, and is
therefore usually in favour of the contractor, and in any case temporary,
modern authority is equally unlikely to be found from this source. Indeed,
in one case in the Court of Appeal, it has been suggested that the prin-
ciples in the leading Panamena case, where there was no arbitration
clause, would not apply to certificates which could be challenged in arbi-
tration,93 but this seems doubtful, particularly if, as the Court of Appeal
also held in 1986, interim payment certificates under the English RIBA/
JCT standard forms are a condition precedent to payment, notwithstand-
ing the presence of the arbitration clause in those fonns. 94
(2) Disqualification on Ground of Interest
6°099 In the first place, an interest will not disqualify if it is known to the com-
plaining party at the time of contracting.95 This is implicit in all the cases,
and is recognised by the specific exception made in the case of arbitration
by the Arbitration Acts.96
ILLUSTRATIONS
(1) It was objected by contractors that the engineer was disqualified from
deciding a question of forfeiture for delay, since their case was that he had
caused the delay himself. Held, by the Court of Session, that the parties must
have foreseen that, in accepting the engineer as arbitrator, they would be
bound although he might be a party involved in the dispute at the time of its
occurrence: Trowsdale v. ]opp (1864). 97
(2) A railway contract provided that payment was to be made on certifi-
cates by the principal engineer of the company for the time being, and in case
of disputes before completion the engineer's decision was to be final. There-
after, however, arbitration was permitted. The contractor was eventually dis-
missed for lack of due diligence, but sought a bill in equity f6r an account and
93 Croudace Ltd. v. London Borough of Lambeth (1986) 33 BLR 25.
94 Lubenham Fidelities Ltd. v. South Pembrokeshire District Council. (1986) 33 BLR 39, ana-
lysed and doubted on this point by the editor, however, in (1987) 3 Const. L.J. 172.
•s See also Matthew v. Ol!erton, supra, para. 6.022, or if waived after contract see Thornton
Hall v. Wembley Electrical Appliances [1947} 2 All E.R. 630, infra, and illustrated ante,
Chap. 2, para. 2·235. See also the discussion on the disqualification of arbitrators post,
Chap. 18, Section 4(2).
96 s. 24oftheActof1950. As to which see post, Chap.18,Section4. See,howe'{~F, the case of
Bristol Corporation v. Aird.post, Chap. 18, para. 18·131. '
w 2 M. (Ct. of Sess.) 1334; 4 M. (Ct. of Sess.) 31.
6 RECOVERY WITHOUT CERTIFICA'IE 795
?idnot apply for arbitration, alleging underpayment and bias when certify-
mg. Held, by the House of Lords, that as the contractor had agreed that the
company's e_ngineer. shou~~ be the person who should decide disputes, he
co~~ not obJe~t to his dec1s1ons on the ground of the interest arising from his
position as engmeer, of which he was aware when he agreed to the stipulation:
Ranger v. Great Western Railway (1854),98
Accordingly, before considering the cases on the types of interest which 6·100
will disqualify a certifier, it is perhaps desirable to define what sort of inter-
est _or bias an architect or engineer may properly be expected to have, and
which should consequently be in the contemplation of a contractor at the
time o! entering into a building or engineering contract. It is suggested the
following factors should be borne in mind:
'' (1) the A/E is employed and paid by the owner, whether as an "in-
house" sal_aried employee or as an independent professional in pri-
vate practice;
(2) as such he is, under the terms of the great majority of construction
; :t contr~cts, the servant or agent of the owner for the purpose of dis-
chargmg the latter's principal obligations under the contract, such
as giving all necessary information in good time, ensuring undis-
turbed possession of the site, co-ordination with any other con-
tractors, or ordering changed or additional work, or rejecting
def.ective work. Any failures on his own part in these respects,
which he may well wish to avoid admitting, may also require him to
certify extensions of time or additional payment under the terms of
the contract;
(3) in many cases, he will have given an approximate estimate of cost
to the owner before tenders are received, or have recommended
the final price as being comprehensive and reasonable, and for this
reason unwilling to see it increased;
(4) he will frequently have designed the work himself, and be reluctant
to alter or supplement that design by ordering variations, except in
cases where the owner has decided to change the work for his own
reasons. In cases where defective work may be due either to design
faults or to bad work by the contractor, he will therefore have an
obvious interest in a decision on which additional payment to the
contractor may depend;
(5) he will run the risk of losing his employment, not being paid his fees,
or not again being employed, if the originally estimated cost or the
original contract price is greatly exceeded for any reason thought to
be within his control.
It is not proposed to set out the general principles and cases on the dis- 6·101
qualification of persons exercising a judicial or quasi-judicial function on
9B 5 H.L.C. 72.
 796 APPROVAL, SATISFACTION AND CERTIFICATES [CHAP.
the ground of interest, which stem from the case of Dimes v. Grand Junc-
tion Canal Co., 99 but only to set out belbw such cases as seem to be particu-
larly relevant to building and engineering contracts.
ILLUSTRATIONS
(1) In a sale of some land the vendor's arbitrator was, unknown to the ven-
dor, a shareholder in a company materially interested in the success of the
undertaking for which the land was bought, and the umpire, chosen by the
vendor's arbitrator from a list furnished by the purchaser's arbitrator, was
also, unknown to the vendor, a surveyor employed in some matters by the
same company. Held, by Knight-Bruce V.-C., that these were not such objec-
tions to either as to afford judicial grounds for setting aside the award, al-
though "the award has been saved very narrowly indeed". In the same case,
the purchaser appointed as his arbitrator to settle the price of the land a per-
son who had previously acted as his agent iIJ. attempting to negotiate with the
vendor, and who had actually offered the vendor a specific price for the land
in question. Held, that the vendor, having appointed his own arbitrator with
knowledge of the activities of the purchaser's arbitrator, had waived his rights
to object: Re Elliott, exp. South Devon Railway (1848). 1
6·102 (2) A contract for the construction of the new GWR Railway conferred
wide powers of interim certification and determination of penalties for delay
during the construction period on the "principal engineer of the company"
for the time being, but disputes after completion could be referred to arbi-
tration. As a ground for applying for a bill in equity (without proceeding to
arbitration) the contractor, who had been dismissed for delay, relied on the
fact that, unknown to him, the engineer (Brunel), was a shareholder in the
company. Held, by the House of Lords, that this did not disqualify him or
entitle the contractor to avoid the contract: Rangerv. GWR Railway (1854).2
[Note: The report indicates that the holding of shares by engineers in
newly-formed railway companies was a common and widely known practice
at the time (see pp. 90 and 116). The judgments also indicate that Brunel's
interest as a shareholder (although not stated) was far exceeded by his inter-
est as principal engineer. The case should certainly not, therefore, be
regarded as of general application in cases of undisclosed shareholdings of
certifiers The type of shareholding and type of company might well invalidate
a certifier's decision}. 3
(3) An architect, unknown to the builder and previous to a contract being
signed, gave an assurance to the owner (but declining to bind himself by any
guarantee) that the cost of a building would not exceed a certain amount,
upon the faith of which the owner embarked on the undertaking. Held, by
Stuart V.-C., that, without alleging fraud, the architect's decision was not
binding upon the builder, if there was the smallest speck or circumstance
which might unfairly bias his judgment which was unknown to the builder
"and the court might consider itself what was properly due to the builder.":
Kemp v. Rose (1858). 4
99 (1852) 3 H.LC. 759. These were set out in the editions prior to the ninth edition. See also
post, Chap. 18, Section 4(2), and the misconduct cases, Chap.18, Section 4(3).
1 12 Jur.(O.S.) 445.
2 5 H.L.C. 72.
J Contrast Sellar v. Highland Rly., Illustration (7) infra, although that was~~ case of an
umpire.
• 1 Giff. 258.
6 SECT. 5] RECOVERY WITHOUT CERTIFICATE 797
(4) An architect sent an owner an estimate of the cost of a proposed build- 6-103
ing (£15,000) saing "which I feel sure may be relied upon as a guide to the
cost". He then obtained an estimate from a builder for £14,860, and in writing
to the ~wner said "So that you may safely rely upon the £15,000 covering
everythmg, unless you want more done than I have proposed. Indeed I can
now promise it shall not exceed that sum." The architect was, by the terms of
the contract, to be_ arbitrator in case of dispute. Held, by Lord Romilly M.R.,
that the ~n~ertaking to the owner having been concealed from the builder,
the subIIDSs1on could not be enforced: Kimberley v. Dick (1871).s
(~)A.and B., two coal.~asters, agreed that X. (who was the consulting
engineer of A.), whom failing Y. (who was the consulting engineer of B.),
should have power to prohibit B. from working certain coal if he considered
that such working was likely to injure a canal used by A. Held, by the Court of
Se~sion, that X. was not disqualified from acting under the agreement by
being employed by A. in subsequent litigation between A. and B. on a differ-
ent matter: Addie v. Henderson (1879).6
(6) Payments under a contract in Ontario were to be made on A.'s certifi-
cate. A. was a relation of and largely indebted to the owner. Of this the con-
tractor had no knowledge. Held, per Armour C.J., that these facts should
have been disclosed, and that the certificate clause was of no effect in these
circumstances: Ludlam v. Wilson (1901).1
(7)_ In a ~ispute bet~een a S~ottish railway company and the proprietor of
certain fishings, eac~ side appointed an arbitrator and the dispute was finally
referred to an umpire. It happened that the railway company's arbitrator
owned, unbeknown to the other party, a small quantity of ordinary stock in
the company. Held, by the House of Lords, that the umpire's award could not
stand: Sellar v. Highland Railway (1919).8
[Note: This of course, was not a certifier case, and clearly a stricter view
would be likely in the case of an outside arbitrator.]
While it is obviously not possible to give any comprehensive definition 6·104
?f the sort of interest that-will be held to disqualify, it is suggested that any
mterest unknown to the contractor which lies outside the factors enumer-
ated above9 will prima facie disqualify, in the absence of special circum-
stances. fu Ranger v. GWR, illustrated supra at two points, a contractor
had been dismissed for lack of progress and had filed a bill in equity alleg-
mg under-certification and invalidation of the certification provisions due
to an undisclosed shareholding in the railway company of the certifier,
Brunel. Lord Cranworth L.C. first depicted the extent of the. certifier's
powers under that contract:
5
L.R. 13 Eq. 1.
6
7 Ct. of Sess. Cas. (4th Series) (Rettie) 79. (For cases where the arbitrator or certifier had
previously expres~ed an adverse view to the contractor's claim in a dispute, see Scott v.
Carluke Corporatwn (1879) 6 R. (Ct. ofSess.) 616;Hallidayv.Duke ofHamilton's Trustees
(1903) 5 F. (Ct. ofSess.) 800;_ Crossv.1;,eeds c_orporation (1902), Hudson, Building Con·
tracts (4th ed.), Vol. 2, p. 339, m Subsection (5) mfra, para. 6· 136, "Conduct not Amounting
to Fraud or Collusion".)
7
2 Ont.L.R. 549 (Canada).
s 1919 S.C.(H.L.) 19.
9
At paras. 6·099-6· 100.
 798 APPROVAL, SATISFACTION AND CERTIFICATES [CHAP. 6
" ... he was in truth made the absolute judge, during the progress of the works,
of the mode in which the appellant was discharging his duties; he was to
decide how much of the contract price ... from time to time had become
payable, and how much was due for extra works; and from his decision, so far,
there was no appeal. After all the work should have been completed, the
appellant might call in a referee of his own as to any question as to the amount
(if any) then due beyond what had been certified. The contention now made
by the appellant is that the duties thus confided to the principal engineer were
of a judicial nature ... " 10
After considering the authorities on avoiding the decisions of judges or
arbitrators on the ground of interest, Lord Cranworth L.C., in what was
destined to be a seminal passage, then said:
"I think the principle has no application here; a judge ought to be, and is
supposed to be, indifferent between the parties. He has, or is supposed to
have, no bias inducing him to lead to the one side rather than the other. In
ordinary cases it is a just ground of exception to a judge that he is not indiffer-
ent, and the fact that he himself is a party, or interested as a party, affords the
strongest proof that he cannot be indifferent. But here the whole tenor of the
contract shows that it was never intended that the engineershoud be indiffer-
ent between the parties. When it is stipulated that certain questions shall be
decided by the engineer appointed by the company, this is, in fact, a stipu-
lation that they shall be-decided by the company. It is obvious that there
never was any intention of leaving to third persons the decision of questions
arising during the progress of the works. The company reserved the decision
to itself, acting however, as from the nature of things it must act, by an agent,
and that agent was, for this purpose, the engineer. His decisions were, in fact,
those of the company. The contract did not hold out, or pretend to hold out,
to the appellant, that he was to look to the engineer in any other character
than as the impersonation of the company: in fact, the contract treats his acts
and the acts of the company, for many purposes, as equivalent, or otherwise
identical. " 11
6·105 The above passage requires to be read in context. It should not be
treated as an authority against the now well-established proposition that a
certifier serving in that capacity and exercising his discretion under pro-
visions in the contract similar to those in the Ranger case must, notwith-
standing an unavoidable degree of interest, act independently and
without improper influence or interference by the owner (so that, as will
be seen, if that independence or impartiality is seen to have been lost by
his or the owner's conduct, his certifying decisions will be invalidated).
However, in exercising any certifying or discretionary functions under the
terms of the contract, there will be no undertaking on the part of the
owner, by contrast to his performance of his other functions when acting
as agent of the owner, that he will be competent, but only that he will be
honest and independent. 12
m Rangerv. GWR (1854) 5 H.L. Cas. 72, at p. 88.
11 Ibid. at p. 89.
12 Neodox Ltd. v. Swinton and Pendlebury Borough Council (1958) 5 BLR 34, a~·p; 47, supra,
para. 6·081 and post, para. 7·039, per Diplock J.; London Borough of Mert'iih v. Leach
(1985) 32 BLR 51, at p. 78,perVinelott J., and see infra, Section 9.
SECT. 5] RECOVERY WITHOUT CERTIFICATE 799
Some of_the early cases occupy themselves with the A/E's position as a
named arbitrator (as opposed to a mere certifier), and in such cases there
have bee~ statutory P?Wers since 1934 in England permitting revocation
?fan ~b1trators appomtment, notwithstanding that the interest in quest-
ion rmght be known at the time of a contract_ providing for arbitration of
fu_ture disputes. 13
(3) Disqualification on Ground of Fraud or Collusion
It has been held that a provision in a contract that no certificate of an 6·106
architect shall ~e set aside for any reason, or for any suggestion or charge
of fraud,_ collusion or confederacy, is valid and enforceable provided the
contract itself was not fraudulently entered into. 14 But in the absence of an
express provision of this kind, a certificate given or refused as a result of
fraud o; collusion with either party has no effect. In the next following
subsection, cases of prevention by the owner will be dealt with separately,
but, as appears from the facts and pleadings in the cases in both subsec-
tions, the borderline between the fraud and prevention cases may not
always be a very distinct one. ts
ILLUSTRATIONS
.(1 JAn ~ngine~ring contract provided that the works were to be completed 6·107
w1th1n a ~1ven tune. to the satisfaction of the engineer, and that, if not, the
owners llllght enter1nto possession of the contractor's plant and complete the
wo~ks. ~e owners w~re to pay for the works from time to time on the engin-
eer s certificate. All disputes were to be referred to the engineer. The works
were not completed within the fixed time, and, some time after the owners
gave notice of 0eirintention to enter under the agreement and cdmplete. The
contractor claimed an account of moneys due and an injunction stating that
he had don~ all that h~ had contracted to do, except what the owners had
prevented hlill from doing; that he had not been fully paid for the work which
had been done; that the engineer fraudulently and in collusion with the own-
ers withhel? certificates and certified a less amount than was due; and
requested him not to proceed, and then asked him to go on a very quick rate.
T?e ?wners demurred. Held, by Wigram V.-C., that the demurrers must be
dismissed, on the ground that the contractor would be entitled to some relief
at the hearing, and tha~ the species of fraud alleged, not being a mere general
charge, but an allegation of a fraudulent purpose in doing a particular act
gave juris~ction to the ~ourt, although the contractor had not completed th~
whole of his work: Waring v. Manchester Railway (1849).16
13
See Section 24 of the 1950 Act.
14
Tullis _v. Jacson [1892] 3 Ch. 441. See, however, per Scrutton L.J. in Czarnikow v Roth
Schrmdt & Co. [1922J 2 K.B. 47~; and Redmond v. Wynne (1892) 13 N._S.W.R. 39,.wher;
such.a!l agreement was held void as contrary to public policy. Today in England such a
prov1s10n would also attract the provisions of the Unfair Contract Terms Act 1976 (ante
Chap. 1, paras. 1·238 et seq.), it is submitted. '
15
See also Subsection (5) below, "Conduct not Amounting to Fraud or Collusion"
16
18 L.J.Cb. 450. .
 800 APPROVAL, SATISFACTION AND CERTIFICATES [CHAP. 6
(2) A builder filed a bill in equity against a company, and also (for the pur-
pose of discovery, and without claiming any relief) against their·secretary and
the engineer, alleging that the works which he had undertaken for them had
been properly completed; that notice had been duly given thereof; that the
engineer had refused to give his certificate, and "that he had so refused
because he had been desired by the company not to give his certificate, and
that in such refusal he had acted under the direction and authority of, and in
collusion with, the company". Held, by Lord Cottenham L.C., that the demur-
rers for want of equity must be overruled: "It appears to me that this is clearly
a case in which the plaintiffs cannot obtain what they are entitled to at law,
and their inability to do so has arisen from the acts of the defendants or their
agents arid whether such acts were originally from any fraudulent motive or
not, I think that to use them for the purpose of defeating the plaintiff's remedy
would constitute a fraud which this court will not permit them to avail them-
selves of.": Macintosh v. G. W. Railway (No. 1) (1850). 17
6·108 (3) A builder sued the owner, alleging that he had completed the work to
the satisfaction of the architect, and that in breach of contract the architect
unfairly and improperly neglected to certify, in collusion with the owner and
by his procurement, by means of which the plaintiff had been unable to obtain
payment of a balance due to him. Held, that the words "collusion" and "pro-
curement" imported fraud, and that the declaration disclosed a good cause of
action: Batterbury v. Vyse (1863).is
(4) A contractor in Victoria alleged that the engineer had unfairly
neglected to sign a final certificate and so neglected in collusion with the own-
ers and by their procurement. Held, that a demurrer to this allegation must
fail. It appeared that the owners had passed a resolution that a certificate
should be given, and that the engineer professed to comply and gave a docu-
ment which was useless as a certificate, but expressed his willingness to certify
if he were personally released from all responsibility. The contractors applied
to the owners to dismiss the architect and appoint another who would act
according to the contract. The owners then changed their position and
refused to do so. The jury found that there was collusion. On demurrer, held,
that though the engineer refused to give a final certificate, it was open to the
jury to find from his acts and conduct that the work had been completed to his
satisfaction, but that the contractor could not recover damages from the own-
ers unless it be alleged and proved that the certificate was refused in collusion
with the owners. Here there was evidence that once it suited them to do so the
owners had taken advantage of the engineer's refusal to certify and the con-
tractors were entitled to damages: Young v. Ballarat Water Commissioners
(1878)."
[Note: it will be noted that the pleadings in the above cases refer variously
to "prevention", "collusion", and "refusal" as well as to fraud. It will be seen
that "collusion" lacks precision in this context, and appears to have been
found to ~xist in very different circumstances in the cases in Subsections (4)
and (5) infra.]
6·109 It is immaterial whether fraud occurs prior or subsequent to the making
of the contract.
17
19 L.J.Ch. 374,pe, Lord Cottenham L.C. Despite the language used, this was really a case
of prevention or interference: cf the case of Alberta Building Co. v. City of Calgary, post,
para. 6.119.
18
32 L.J.Ex. 177. ·-
19
4 Viet.LR. 306, at p. 502; 5 Vict.L.R. 503. (The duty referred to is the duty ofhOilesty in the
context of the tortious liability for fraud.)
SECT. 5] RECOVERY WITHOUT CERTIFICATE 801
ILLUSTRATIONS
(1) Company A. entered into a contract to lay telegraph cables for com-
pany B., payment to be upon certificate of X., Company B. 's consultant engin-
eer. Subsequently company A. sub-contracted a considerable amount of the
work to X. upon terms that X. should be paid as and when payments were
received from company B. There was a conflict of evidence as to whether, at
the time of the original contract, companies A. and X. were contemplating
some such arrangement as they finally made to sub-contract the work. Held,
by the Court of Appeal, that, on either view, the second agreement was a
fraud upon company B., who could avoid the contract altogether: Panama
and South Pacific Telegraph Co. v. India Rubber, etc. Co. (1875). 20
(2) Contractors deliberately carried out defective work, organising a sys-
tem of signals when the clerk of works was approaching to inspect the works.
As a ~es ult, the final certificate was given in ignorance of the deficiencies in the
work. Held, by the Court of Appeal, that not only the contractor but also the
sureties of the contractor were liable to the owner, notwithstanding the issue
of the final certificate, and not withstanding the jury's finding that failure to
supervise properly had led to the scamping of the work: Kingston-upon-Hull
Corporation v. Harding (1892).zi
As previously stated,22 fraud by the architect renders him liable to an 6·110
action in tort by the builder ( or in an appropriate case by the owner) but
no action will lie for conduct less than fraud. 23
ILLUSTRATIONS
(1) A builder brought an action against an architect in which he alleged that
the architect, in collusion with the owner, refused to certify satisfaction, and
falsely pretended that he was dissatisfied with the work. Held, by Grove J., on
demurrer, that a good cause of action was disclosed against the architect. In
the action special damages were claimed and recovered: Ludbrook v. Barrett
(1877)."
(2) A builder sued an architect for the balance of the contract price, alleging
that the architect did not use due care and skill in ascertaining the amounts to
be paid by the building owner to the builder, but neglected and refused to
ascertain, and did not ascertain, the amount of additions and deductions to be
made in the same manner as the quantities had been taken out, and at the
same rates as they had been priced. Held, by the Co~rt of Common Pleas, that
the function of the architect required the exercise of professional judgment,
./'- opinion, and skill, and that in the absence of any allegation of fraud or collu-
20
L.R 10 Ch.App. 515.
21
[1892) 2 Q.B. 494. See also, for a case of fraud between contractor and architect, Wakefield
etc. v. Normanton Local Board (1881)44 L.T. 697, illustrated post, Chap.14, Section5 (5).
22
See ante, Chap. 2, para. 2.232.
13
See now, however, the possibility of such an action under the principle in Hedley Byrne v.
Heller, ante, Chap. 1, paras. 1·293 et seq.
';
·-~
2
• 46 L.J.C.P. 798, approved in Stevenson v. Watson, supra.
 802
sion no action would lie against him at the suit of the builder: S, 1son v.
Watson (1879). 25
6,111 But to found an action in fraud, it has been held in Queensland that the
plaintiff in that action must prove that a fraudulent misrepresentation by
word or conduct was made to him. It will not be sufficient if it is made to
someone else.
ILLUSTRATION
An architect in Queensland was alleged to have made a fraudulent rep-
resentation to a building owner to the effect that the work had not reached
practical completion, with the resul~ that the builder had not ~een paid in fu~.
Held, by Lucas J., distinguishing Ludbrook v. Barrett, this could not, m
accordance with the principles governing the law of deceit, give a caus~ of
action to the builder against the architect: Larkins v. Chelmer Holdings
(1965)."
(4) Prevention or Interference by the Owner
6·1U Given the "quasi-arbitral" nature of the certifier's function, there must be
an implied term that both parties will do nothing to prevent a true and
unfettered exercise of his powers when certifying. Thus when discussing
"the influencing of certifiers" Devlin J. said:
"The main test appears to be whether the certificate is intended to embody a
decision that is final and binding on the parties. If it is, it is in effect an award,
and it has the attributes of its arbitral character. It cannot be attached on the
ground that it is unreasonable, as the opinion of the party or t~e certificate of
one who is merely an agent probably can. On the other hand, 1t must be made
independently, for independence is the esse1,1ce of the arbit~al ~ncti?n. !f
two parties agree to appoint an arbitrator ... 1t would ~e, I t ~ , 1mphed 1n
the contract in order to give it business efficacy that neither side would seek
to interfere with his independence. If a party to a contract is permitted to
appoint his agent to act as arbitr.ator _in respe~ _of cer~ain matters under the
contract a similar term must be implied; but 1t 1s modified by the fact that a
man who has to act as arbitrator in respect of some matters, and as servant or
agent in respect of others, cannot remain as detached as a pure arbitrator
should be." 27
6·113 It will be seen that the cases rightly distinguish between the functions
and principal obligations of the owner, where the owner will warrant due
25 4 C.P.D. 148. See also Youngv. Smith {1880), Hudson, Building Contracts (4th ed.),:Vol. 2,
p. 3, and Priestley v. Stone (1888) 4 T.LR. 730. ·
26 ]1965] Qd. Rep. 68, Australia, and see, for the more mo~e~n denial ?f any du~y owed to the
contractor in negligence or under the Hedley Byme pnnctple, Pacific Assocw!es v. Baxter
[1990] 1 Q.B. 993 and in (1990) 6 Const. L.J. 207. See also ante, Chap. 1, Section 12(2)(d)
(iii), para. 1·302.
11 Minster Trust Ltd. v. Traps Tractors Ltd. [1954] 1 W.L.R. 963, at p. 974.
performance of those obligati by the A/E acting as his agent or alter
ego on the one hand, and the NE's certifying or discretionary functions
on the other where no such warranty is given:
"To the extent that the architect performs these [principal] duties the build-
ing owner contracts with the contractor that the architect will perform them
with reasonable diligence and with reasonable skill and care. The contract
also confers on the architect discretionary powers which he must exercise
with due regard to the interest of the contractor and the building owner. The
building owner does not undertake that the architect will exercise his dis-
cretionary powers reasonably; he undertakes that although the architect may
be engaged or employed by him he will leave him free to exercise his discretions
fairly and without improper interference by him."28
Similarly, in a case where a contract left a choice of working methods to
an engineer, Diplock J. said:
"His decision as to whether one method or another is satisfactory to him
must, of course, be an honest one, but it does not seem to me that the Corpor-
ation warrants competency or skill, or warrant that his decision shall be
reasonable. " 29
On this basis of liability, therefore, improper attempts by an owner to
influence a certifier in the exercise of his powers will, if the certificate is
binding, mean that damages for breach of contract are in principle recov-
erable, although mere invalidation of the certificate ( or a disregard of its
absence) under the prevention principle, for which there is a long line of
authority, will be a sufficient remedy for many plaintiffs: "I should say
myself that if they wickedly and by collusion with the surveyor prevented
him giving this certificate, I should treat the case as though he had given
it."30
A second basis for invalidating certificates under the present heading 6·114
arises, independently of breach of contract, under the prevention prin-
ciple, namely that a person cannot take advantage of the non-fulfilment of
a condition the performance of which he has himself hindered. 31 Thus, in a
very old case where a jury found that shippers' agents had wrongly and
without any pretence of justification refused to issue a certificate of short
loading when requested (upon which payment of additional freight by the
shippers had been conditioned) Ashurst J. said:
"It is unnecessary to say whether the clause relative to the certificate be a
condition precedent or not; for granting it to be a condition precedent, yet the
plaintiffs have taken all proper steps to obtain the certificate, and it being
211London Borough of Merton v. Leach (1985) 32 BLR 51, at p. 18,per Vinelott J.
19 Neodox Ltd. v. Swinton & Pendlebury Borough Council (1958) 5 BLR 34, at p. 47.
io Per Esh er M.R. inMcDonaldv. MayorofWorkington (1893) 9T.L.R.230. See also Waruv.
McLeay (1911) 19 W.L.R. 916; Hickman v. Roberts [1913] A.C. 229; Panamena Europea v.
Leyland [1947] A.C. 428, all illustrated infra, paras. 6· 117-6'120, 6·130 and 6· 132.
31 See ante, Chap. 1, paras. 1·186 et seq., and the classical statementofBlackburnJ. in Roberts
v. Bury Commissioners (1817) L.R. 5 C.P. 310, at p. 326, and see per Kelly C.B., atp. 329.
 804 APPROVAL, SATISFACTION AND CERTIFICATES [CHAP.
rendered impossible to be performed by the neglect and default of the com-
pany's agents, which the jury have found to be the case, it is equal to
performance. "32
This is a much broader principle, and can apply to many actions and
situations other than influencing of certifiers, such as a refusal to appoint a
certifier on the death or retirement of a predecessor,33 ordering extra work
so as to prevent completion to time,34 or wrongly dismissing a builder
before the certificate has been due to be given. 35 "Prevention" clearly
became a favourite plea by nineteenth century pleaders to avoid the effect
of binding certificates.36 The early.emergence of the prevention principle,
and its subsequent application in building cases, has been usefully dis-
cussed in some detail in the Court of Appeal in New Zealand.37 McMullin
J. was there prepared to hold that a refusal for incorrect reasons to make
interim payments in full, coupled with a requirement to continue working,
might infringe the principle, but the majority of the Court pointed out that
no case had been cited where the failure lay solely in the payment of
money, and expressed no opinion on this point. 38
6·115 As stated, numerous cases use language showing clearly that a conse-
quence of prevention or interference will be that the need for certificates
or their absence will be dispensed with or disregarded. 39 The damages
basis of liability has, however, also been stressed, sometimes vehemently:
"The case of refusal by the engineer ... in collusion with the building owner to
grant certificates is spoken of as an exception. It is not, however, really an
exception. In such a case the building owner and engineer fraudulently pre-
vent the contractor from ... getting the certificates, and what is recoverable
by the contractor in such a case is not really the price, but damages ... The
cases in equity ... may contain observations seeming to show that misconduct
or fraud of the architect, without collusion of the employer, will entitle the
contractor to recover the price without obtaining the certificate required by
the contract. But when these cases are looked at, nothing of the sort seems at
all events involved in the decision ... "40
Again, in Roberts v. Bury Commissioners, Blackburn J. said:
" ... he cannot sue for a breach of contract occasioned by his own breach of
contract, so that any damages he would otherwise have been entitled to for
32
Hotham v. East India Co. (1787) 1 Term.R. 638, at p. 645.
33 Croudace Ltd. v. London Borough of Lambeth (1986) 33 BLR 25.
34
Dodd v. Churton [1897] 1 Q.B. 562.
35
Smith v. Gordon (1880) 30 C.P. 553, Canada.
36 See, for further cases, supra, Section 2.
37
Per McMullin J. in Canterbury Pipelines Ltd. v. Christchurch Drainage Board [1979] 2
N.Z.L.R. 347, at pp. 369-371.
3 Ibid at p. 352.
8
39
See, e.g. the two passages fiomHotham v. East India Company andMcDonaldv. Mayor of
Workington, supra, and many of the cases illustrated infra, including the leading Pana-
mena case in the House of Lords in 1947. ,·
40
Per Vaughan Williams L.J. in Smith v. Howden Union RS.A. (1890) r,eab. & Ell.
125.
6 SECT. 5] RECOVERY WITHOUT CERTIFICA'IB 805
the breach would immediately be recoverable back as damages arising from
his own breach of contract. "40•
Notwithstanding Vaughan Williams L.J.'s expressed views, supra, it is
submitted that both remedies are equally available in cases where the
actions of the owner can be regarded as breaches of an express or implied
term. Indeed since it is today clear that there is an implied warranty by the
owner as to the honesty or independence of his certifier,41 there would
appear to be available in all cases, where necessary, a right to damages
against the owner in addition to an action for the price, and this will be the
case even where the owner is innocent of any complicity in the error or
fraud of his certifier. 42
In considering the somewhat confusing language in the following cases, 6·116
it may assist if the following categories of conduct (all likely to lead to the
same practical result of disregarding a certificate or its absence) are dis-
tinguished, namely:
(a) some act of the owner, such as dismissal of the AJE or a wrongful
termination of the builder's employment or a suspension of the
work or withholding of the site, which may indirectly have the
effect of depriving the builder of the opportunity of obtaining the
certificate. These may properly be regarded as classical cases of
prevention;
(b) a deliberate putting together of heads by the owner and A/E ( or
indeed of the contractor and A/E) in order to withhold from the
contractor certificates to which he was entitled or obtain certificates
to which he was not entitled-this would properly be regarded as
collusion and fraud on the other party;
(c) fraudulent conduct of the A/E (for example, decisions designed to
conceal his own defaults of which the owner is unaware, and has
done nothing to encourage or use to his own advantage once dis-
covered. This could only depend on an implied term warranting the
A/E's honesty;
(d) pressure by the owner, short of fraud, which did not sufficiently
recognise the. independence of the A/E's rOle-this would be
breach of an implied term not to exercise improper influence on the
certifier.
•tta(1870) L.R. 5 C.P. 310, 326.
41
See supra, paras. 6·104-6· 105, and see paras 6·097-6·098 and the statements in the Neodox
and L.B. of Merton cases there referred to.
42
See the leading case of Panamena v. Leyland [1947] A.C. 428, illustrated infra, at para.
6·132, w~ere consideration of the case in the Court of Appeal shows that the claim was put
forwar~ m both ways, as noted ~y MacFarlan J. in Perini Pacific v. Commonwealth of
Australw [1969] 2 N.S.W.R. 530, il)ustrated infra, para. 6-133. See the discussion and pass-
ages from the Panamena case infra, Subsection (6), paras. 6· 148-6·150.
 806 APPROVAL, SATISFACTION AND CERTIFICATES [CHAP. 6
6·117 It will be seen that "prevention" language is used loosely by the courts,
as also "collusion" and "fraud", in many situations where what is essen~
tially involved is interference by the owner with the certifier.
ILLUSTRATIONS
(1) An owner in Ontario, wrongly dismissed a builder, purporting to act
under a provision in the contract. In consequence the builder did not have the
architect's certificates for the work done by him. Held by the Canadian Court
of Common Pleas, that the builder could recover the sums due to him by way
of damages: Smith v. Gordon (1880). 43
(2) In an action by a builder against an owner under a contract by which the
architect's certificate was a condition precedent to payment, the builder
alleged that the owner, after the work was completed, complained to the
architect of alleged defects, and told him that he would not accept his certifi-
cate unless they were attended to and remedied. The owner denied this, and
produced evidence to the effect that there had been no communication at all
between him and the architect. Watkin Williams J. to the jury. "If you think
that the architect, acting upon his judgment, withheld his certificate, you must
find a verdict for the defendant. If, however, you are of opinion that the with-
holding of the· certificate was due to the improper interposition of the defend-
ant, and that he prevented the architect from giving his certificate, you must
find a verdict for the plaintiff." Brunsden v. Beresford (1883). 44
6-118 (3) A contractor finished the construction of certain sewers, but remained
on the site carrying out certain further work under the supervision of the
engineer. The contract sum was £2,616, and the builder had been paid £2,318.
There was a claim for extras of about £800. The engineer had set out the works
very roughly, and left their supervision entirely to a clerk of the works whose
reports he adopted, and certified thereon. He was satisfied with the works on
completion. Most of the extras had not been ordered in writing, but were
certified during the course of the works. Soon after completion, the levels
were found to be incorrect, and the engineer refused to issue any further cer-
tificates, and condemned the work. The incorrect levels were in fact due to
errors in the plans, sections and orders of the engineer. The owners then
turned the contractor off the site, and seized a very small quantity of his plant.
The contractor brought an action and the official referee held that the engin-
eer acted improperly and in bad faith, although not to the knowledge of his
employers, and had refused to exercise his honest judgment upon the quest-
ion whether any further sum was due to the plaintiff. He also held that the
owners' re-entry and seizure was a breach of contract, and gave judgment for
the plaintiff for the sums due under the contract. Held, by the Divisional
Court, that in the absence of collusion with the owners, the contractor's r~m-
edy against them was for damages for the wrongful re-entry, and not an action
for the price upon the contract itself: Smith v. Howden Union (1890). 45
4l 30 Up.Can.C.P. 553. This is a classical prevention case. For these, see also Roberts v. Bury
Commissioners (1870) L.R. 5 C.P. 310, supra, para. 6·013; Mackay v. Dick (1881) 6
App.Cas. 251, and generally the cases illustrated in Section 2, supra.
411
44 1 Cab. & Ell. 125.
47
•5 Hudson, Building Contracts ( 4th ed.), Vol. 2, p. 156. It has been seen supra\Jlaras. 6·097-
6·098, that there is now modem recognition of an implied term that the certifier will be
honest. If so, the latter part of this decision is of doubtful authority.
SECT. 5] RECOVERY WITHOUT CERTIFICA'IE 807
[Note: The work was complete, however, and what was awarded as dam-
ages was in fact the balance due for the work. This does not seem to follow
from a wrongful re-entry after completion but from the wrongful and fraudu-
lent refusal of the certificate by the A/E, which would be justified today either
?s.breach ?fan implied term or as dispensing with the need for the certificate,
1t 1s submitted.
(4) P. was employed by a rural council to construct certain works. The con- 6·119
tract provided: "that the decision of the surveyor with respect to the value
amount, state and condition of any part of the works executed or of any parf
t~ereof altered, _omitted or ~dded, and also in respect to any a~d every ques-
tion that may anse concerning the construction of this contract, shall be final
and without appeal." Disputes arose, and after protracted negotiations the
su~eyor gave.his final certificate. P. brought an action against the council, in
which he alleged that the surveyor's final certificate "was not honestly made
or given in the exercise of, or in reliance upon, his own judgment, but was
made and given by reason of the interference of and in obedience to the
directions and orders of the council". The eviden~e showed that the co~ncil
~ad asked ~or the preparation of an account by their surveyor and had
mstructed him that he should not use a day-work method of computing the
value of part of the work but should estimate quantities himself and apply a
measured rate, although he had no means of making a measurement. Held, by
Channel J., that as the council had interfered (although without any fraud on
their part) with the surveyor in the exercise of his functions as quasi-arbitrator
between the parties, the final certificate was not conclusive and binding on the
contractor, and that as the surveyor had died, the matter should be referred to
an arbitrator: Page v. Llandaff and Dinas Powis Rural Coimcil (1901);41i
(5) Builders in Alb~rta undertook to erect the city hall at Calgary for
$142,000. By a clause 1n the contract, the city council were empowered to
expel the b~ders and take P?ssession for failure to proceed with the work,
upon a certificate of the architect to that effect. The council were unable to
raise the whole of the money to pay for the hall. After two years, at a time
when ther had been pa!d $105,000 under provisions for monthly payment
upon certificates, the builders made application for a certificate for a further
$7 ,000 to the architect. Toe architect did not dispute the correctness of the
application, but refused to issue a certificate upon it. After repeated demands,
and notice that they would do so, the builders stopped work a fortnight later.
The_ architect then certified failure to proceed, and the council took pos-
session. Held, by Scott J, that the architect's refusal of a certificate for pay-
ment was, on the facts, due to instructions from the city treasurer, and not to
doubts as to_the correctne~s of the builders' application. He was accordingly
~ctuated by 1mpr~per motives whe? bo~nd to act quasi-judicially and impar-
tlallf, and the builders were not d1sent1tled from suing by the absence of a
cer~cate. Further, the council, having been given notice of the consequences
of failure to pay, were bound t_o make inquiries before acting upon the archi-
tect's certificate qf failure to proceed, had failed to do so, and could not iely
upon the certificate to justify their entry into possession, which was a breach
of contract by them: Alberta Build~g Co. v. City of Calgary (1911 ).41
(6) A clause in a building contract in Alberta provided that, in the event of 6·120
failure or delay in providing labour and materials necessary in the architeci's
Hudson, Building Contracts (4th ed.), Vol. 2, p. 316.
16_ W.L.R. ~3, Canada. N_ote the similarity of this case on its facts with Canterbury Pipe
Lmes v. Chnstchurch Dramage Board [1979] 2 N.Z.L.R. 347, illustrated infra, Subsection
(5), para. 6·134. There, however, the initiative had been the engineer's and not the owner's.
 808 APPROVAL, SATISFACTION AND CERTIFICATES [CHAP.
opinion for completion of the work, the owners might, after three days'
notice, complete themselves and deduct the cost from the co1;1tr_act sum. 1:'he
architect served notice under this clause as to defects and om1ss1ons totalling
approximately $150 on a total contract sum of $20,000. H~ld, by Beck~-, .inter
alia that the architect refrained from issuing a final certificate contaimng a
ded~ction of $150 because he was instructed by the owners and their solici-
tors, whom he had consulted, not to do so. His duty ~as, if necessary, ~o obtain
independent legal advice, and the need for a certJ.ficate could be dispensed
with: Watts v. McLeay (1911). 48
(7) The architect under a RIBA/JCT standard form was named as ''.the
Chief Architect of the London Borough of Lambeth". The contract required
the architect to ascertain or instruct the quantity surveyor to ascertain the
amount of loss and expense caused by variations or delay to the progress of
the works. After completion, the architect issued a certificate having t.he
effect of granting extensions of time, to which the contractors responded with
a "loss and expense" claim, attributable to the certified ~elay for variations.
Thereafter, the Chief Architect retired, and the council took no steps to
appoint a successor or to instruct anyone to asc_e~ain t~e amount of the c_on-
tractor's claim. Held, by the Court of Appeal, c1tmgSm1th v. Howden U~ion,
that the council's acts and omissions, including but not limited to their failure
to appoint a successor to the Chief Architect, amounted to a failure by them
to take such steps as were necessary to enable the claim for loss and expense
to be ascertained, and as such amounted to a breach of contract on their part
for which damages were recoverable, so that an interlocutory order for pay-
ment on account of damages could be made: Croudace Ltd. v. London Bor-
ough of Lambeth (1986). 49
[Note: The precise ratio of the above case is not clear. For procedural rea-
sons, refusal of a stay for arbitration had been sought in order to keep the case
in the courts and obtain an order for payment on account of damages, and,
presumably, Smith v. Howden (wh~re the archi_tect wa~ fraudulent, and t~e
owners innocent of collusion) was cited to establish the nght to damages. Dis-
pensing with the certificate and suing directly for the price wa,s considered to
be more vulnerable to an application to stay, and, for this reason, not sought
by the plaintiff, it may be inferred.]
6·121 However, it is clearly natural and to be expected that both parties, con-
tractor as well as owner, may in practice make representations to and com-
municate with the architect or certifier on the subject-matter of his
decision. Whether such representions or communications amount to
improper interference will depend upon whether they are of a character
which recognises the independence of the certifier and his ultimate
responsibility for making an impartial decision. The following case is an
excellent example of a type of perfectly proper communication between
owner and architect likely to occur in practice and which will not invali-
date a certificate. Despite some dicta suggesting that the certifier should
afford both parties an opportunity to be heard, 50 and while it may be
agreed that a certifier should certainly not refuse to hear a party wishing to
be heard, there seems no reason why the certifier should gratuitously
·~ 19 W.L.R. 916, Canada.
49
33 BLR 20. ~~-''.
so See the remarks of Channell J. in Page v. Llandaff Rural District Council {1901), Hudson,
Building Contracts (4th ed.), Vol. 2, p. 239, quoted infra, Section 9, para. 6·222.
6 SECT. 5] RECOVERY WITHOUT CERTIFICATE 809
invite representations or encourage meetings for this purpose, or should
see or hear both parties at the same time. On the other hand, he should
probably not make serious decisions, such as termination decisions, with-
out some warning, particularly if a matter is capable of remedy.s1 The
degree to which he should be prepared to hear either party will depend
upon the matter on which his approval or certificate is required. 52
ILLUSTRATIONS
(1) Clause 11 of a roadworks contract in Victoria provided that if in the 6·122
opinion of the engineer the contractor should fail to make sufficient progress
to ensure completion within the specified time, or should fail to rectify any
defective work or materials within seven days of being required to do so, or
should commit any wilful breach of contract, or do any Sunday working with-
out permission, then it should be lawful for the council by a notice under its
common seal absolutely to determine the contract (with resulting forfeitures
of the value of unpaid work and of the contractor's property). Clause 12 of the
contract provided that in the event of any breach of contract by the contractor
the engineer might estimate and assess the damage and loss, and the council
might deduct the amount from the contractor's payments, but by Clause 26, in
the event of the contractor being dissatisfied with the assessment, he could
refer it to an arbitrator. On a case stated, the contractor contended that no
action could be taken under either clause by the council without first giving
the plaintiff an opportunity of being heard and of meeting the allegations
made against him, particularly since Clause 11 might be activated for possibly
trifling omissions on his part. Held, by the Supreme Court of Victoria, there
was nothing in Clause 11 to indicate anything in the nature of a judicial, as
distinct from an administrative, function on the part of the engineer, in spite
of the words "opinion" and "judgment" used in regard to two of the grounds
of determination, and this conclusion was fortified by the fact that any dispute
could be referred to arbitration and thus become the subject of a judicial hear-
ing. Similarly in the case of Clause 12, while, apart from a right to arbitration,
the clause might suggest something in the nature of a judicial inquiry as to
damages, the right to arbitration under Clause 26 indicated that the engin-
eers's assessment was made as an officer of the council in a merely adminis-
trative capacity, and an opportunity for the contractor to be heard and make
representations was equally not required: Bysouth v. Shire of Blackbum
(1928)."
(2) An engineer certified that in his opinion the contractor had failed io 6·123
make satisfactory progress, and the owner terminated the contract under a
provision empowering him to do so. Under the contract the "reasonableness"
of the engineer's certificate was subject to arbitration. The parties concurred
in the submission of this question, and whether the contractor was entitled to
damages for wrongful termination, to arbitration. The arbitrator found that
the engineer, on the morning of the day before he certified, took steps to
encourage the contractor to carry on with the work, but that after two meet-
ings of about an hour each with the owner, at which the contractor was not
51
See,e.g. Brown andDohertyv. Wangarei County [198811 N.Z.L.R 33,see ante, para. 4·215,
but see also the Kallberg case, illustrated infra.
.12 See, in addition to the cases illustrated, Section 9, infra, "Status and Duties of Certifier".
53
[19281 V.L.R. 562, at pp. 576-577.

810 APPROVAL, SATISFACTION AND CERTIFICATES [CHAP. 6
present, and at which the owner indicated that he did not. wish the c~nt:actor
to continue and asked if the engineer would give the certificate, he did m fact
issue the certificate the following day. The arbitrator further found that on the
facts the certificate was reasonable, but that the certificate was a nullity as the
engineer had received representations from one side and not from the other,
and further held that the contractor was entitled to damages. Held, by the
New Zealand Court of Appeal affirming Richmond J .,54 (1) that the fact that
the certificate was subject to review did not mean that the certifier was not
bound to act with the impartiality and independence :equired_ of any other
cerfitier; but (2) that the evidence only showed that dunng the d1scuss1ons t~e
engineer might have been of a different opinion from the o~ner on the advis-
ability of allowing the contractor to complete the work (which wa~ not a mat-
ter with which he was concerned as certifier); (3) there was no eV1dence that
he had surrendered his independence or impartiality ~n th~ questio~ of t~e
contractor's progress or received representation~ of~ kind ~ely to bnng.this
about and in the circumstances there was no obhgatton to hsten to both sides
or giv~ the contractor an opportunity to be heard. Accordingly the owner ~as
not in breach of contract: Hatrick (N.Z.) Ltd. v. Nelson Carlton Construction
(1964)."
(3) An architect, following a long period of dislocation and strikes, forso~e
of which he allowed extensions of time, eventually came to the conclusion
that the contractors were not making bona fide efforts to resume work and
issued a notice under Clause 25(1) of the RIB A/JCT contract, stating" ... that
in my opinion you have failed to proceed regularly a1;1-d dil~gently with t~e
works and unless within 14 days ... there is an appreciable improvement in
the progress of the works the Council will be entitled to determine your
employment". The contractor contended, inter alia, that the principles of
natural justice applied to the notice, citing Hickman v. Roberts, and that they
were entitled to be given notice of the "charge" against them, to be told the
substance of the case, and to have their representations considered before
deciding to issue the notice. Held, by Megarry J, appr_ovi1;1-g ~chmong J.'s
judgment in the Hatrick case, that the rules of n?tur~l Justice did n<;1t apply.
The architect's position of independence and hts skill was the basts of the
parties' safeguards in this type of case: Twickenham Garden Developments v.
Hounslow London Borough Council (1971). 56
6,124 The following case concerns the rather special status of the engineer on
a preliminary reference of a dispute under a clause similar to (but n~t
identical with) the ICE arbitration clause, which under the terms of this
type of clause is an indispensible preliminary to a subsequent reference to
arbitration.56a
ILLUSTRATION
An engineering contract required disputes between the cou~cil or its
engineer on its behalf and the contractor to be referred to the engineer for a
54 After considering the passage from Devlin J.'s judgment in the Minster T~t. case, quoted
supra, Section 3, para. 6-032, Hickman v. Roberts, supra, and other authontt~~-
ss [1964] N.Z.L.R. 72,per Richmond J.; [1965} N.Z.L.R. 144, C.A. ' 51
Sb [1971] Ch. 233. si, For these clauses see further post, paras. 18·045-18.047.
/\,
RECOVERY WITHOUT CERTIFICATE 811
written decision. The decision was to be final and binding unless the con-
tractor gave notice of arbitration within 14 days. The contractor failed to carry
out part of the work, and after many requests that he should do so, the council
gave him notice under the contract, and that if he failed to comply another
contractor would be employed to do the work. When he did not comply, the
council engaged another contractor and then demanded payment of the cost
from the contractor, which he disputed. The engineer, without informing the
contractor beforehand, then forwarded to him a written decision that he was
liable for the sum in question unless the contractor disputed the decision
within 14 days, which the contractor did not in fact do. When later sued by the
council, the contractor contended that the engineer's decision had been in~
valid, since the contractor had been given no opportunity to make represen~
tations before the decision was made. Held, by the Appellate Division, that as
the engineer's decision was open to review and not immediately final, and as
he himself might be a party to the dispute, he could not be regarded as an
arbitrator with an obligation to hear the parties; so that having failed to give
notice of arbitration within the 14 days the decision was binding on the con-
tractor: Kallberg v. Capetown Municipality (1961).s 1
[Note: Here there had been a long-running dispute and, in view of the earl-
ier notice, which he had ignored, the contractor could have been under no
illusions as to the true position, so that the decision is unsurprising, notwith-
standing that some notification to a party that a decision was being requested
by the opposing party would usually be expected. The Appellate Division
correctly distinguished Dunbar Ltd. v. South African Railways,58 where the
engineer's decision was to be final and binding, and he had been expressly
required to "hear and decide" any dispute referred to him by either party. In
the Kallberg case, the Appellate Division also stated that the engineer's sta-
tus was not that of a "quasi-arbitrator", but this seems a merely semantic
distinction, and it is submitted that in cases where the decision of a certifier
has at least conditional finality, as in the Kollbergcase, it will be set aside if not
made bona fide, or in such a way as to take the affected party by surprise, on
"quasi-arbitral" considerations.]
The following case, which turned upon an express term of the contract, 6°125
may nevertheless be of relevance in this context.
ILLUSTRATION
By Clause 20(1) of a contract in the standard RIBA form the contractor
was entitled to terminate the contract "if the employer interferes with or
obstructs the issue of any ... certificate". The borough architect was both the
architect and quantity surveyor under the contract, but at a stage when a con-
siderable amount of work had been done the council owners, acting on his
recommendation, appointed other surveyors. At that stage, owing to the
pressure of work on the architect, there was some doubt in the owners' mind
as to whether the contractor might have been overpaid on interim certificates.
The new surveyor made no proper valuation at all, while substantially reduc-
ing the sums claimed by the builder in his recommendation to the architect,
who certified accordingly. Shortly afterwards, he discovered he had made a
mistake justifying a larger payment to the contractor, but did not inform the
1967 (3) S.A. 472.
SS [1943] A.D. 22.
 812 APPROVAL, SATISFACTION AND CERTIFICATES [CHAP.
architect of this. The contractor protested at the valuation but the Town Clerk
rejected the protest and supported the valuation. The contractor then termin-
ated the 'contract. Held, by the House of Lords (Lord Somervell of Harrow
dissenting), that since the owners had given no instructions impeding the
architect in the performance of his duty of certification, they could not be said
to have interfered with or obstructed the issue of the certificate under the
terms of the termination clause, and the contractor was therefore in breach of
contract: Burden v. Swansea Corporation (1957). 59
[Note: This is not a very clear case. It seems to have been influenced partly
by the independent status of the surveyor, partly because at worst ~here w~s
negligence rather than interference, and partly because there was still no evi-
dence as to the extent of underpayment, if any.}
(5) Conduct Not Amounting to Fraud or Collusion
6·126 It has been said many times by the courts that, in the absence of fraud or
collusion, the effect of contractual provisions giving finality to a certificate
cannot be avoided.
ILLUSTRATIONS
(1) A bill in equity filed by contractors against a corporation and their
engineer prayed that the withholding of the certificate might be declared a
fraud upon them. It appeared by the evidence that the engineer was able and
willing to do all the duties imposed upon him by the contract, and not inca-
pacitated by collusion, corruption or otherwise, and that the contractor had
refused or neglected to send in weekly claims and produce books and vouch-
ers as required by the contract. Held, by Lord Chelmsford L.C., that the bill
should be dismissed with costs: Scott v. Liverpool Corporation (1858). 60
(2) A builder brought an action against the building owner, declaring that
although all things had been done by the plaintiff to entitle him to a certificate,
the owner's surveyor had not given such certificate, but had wrongfully and
improperly neglected and refused so to do, and the defendants had not paid
the money payable on such certificate. Held, by the Court of Common Bench,
on demurrer, that the declaration was bad as not disclosing any cause of
action against the defendants. Per Erle C.J .: "If it had been alleged that the
defendants had wrongfully colluded with the surveyor to cause the certificate
to be withheld, they could not have sheltered themselves under their own
wrongful act. But the word 'wrongfully', as used here, does not intimate any-
thing of that sort": Clarke v. Watson (1865). 61
6°127 (3) The engineer of a railway company prepared a specification of a pro-
posed railway, and contractors fixed prices to the several items in the specifi-
cation, and offered to construct the railway for a lump sum made up of these
prices. The engineer made a mistake in the calculations of the earthwork of
two million yards, and it was alleged that he, finding that this involved more
expense than he had calculated upon, promised that he would make other
s9 [1957} 1 W.L.R. 1167. 60 28 L.J.Ch. 230. ~· ;"'
61 18 C.B.(N.S.) 278. Total refusal may afford an escape. See infra, paras. 6' 146-6'148, and the
Kellett and Wafts cases, infra, para. 6· 129.
6 SECT. 5] RECOVERY WI'IHOUT CERTIFICATE 813
alterations, involving a corresponding diminution, so as to save the contract-
ors from loss. The engineer did not make any other alterations, and certified
for the final sum due to the contractors without taking any account of the
alleged extra works. No fraud was alleged, but it was argued that this had the
effect of fraud. Held, by the Court of Appeal, that unless the engineer had
wilfully made miscalculations in order to deceive the contractors, they could
not recover anything for the omission, and then only from the engineer per-
sonally, and not from the company. The contract had made the certificate of
that engineer a condition precedent to the right to recover, and if the contract-
ors could not show any dishonesty or any fraud or sinister motive, they were
bound by the engineer's certificate: Sharpe v. San Paulo Railway (1873).62
(4) A building contract provided for written orders for extras and that "a
certificate of the architect or an award of the referee hereinafter referred to,
as the case may be, showing the final balance due or payable to the con-
tractors, is to be conclusive evidence of the works having been duly com-
pleted, and that the contractors are entitled to receive payment of the final
balance". The architect employed a surveyor to measure up the work, and
certified for the final balance "as certified by the measuring surveyors to be
the final amount due". In an action by the builder to recover the amount certi-
fied, the owner set up that written orders had not been given for extras
included in the certificate, and that the reference to the "measuring sur-
veyors" made the final certificate bad, as not being an exercise of the skill and
judgment of the architect. Held, by the Common Pleas Division, that as no
allegation of fraud was made against the architect, the certificate was binding
on both parties,63 and that the architect had not abdicated his duties: Clem-
ence v. Clarke (1880). 64
(5) A contract provided for final payment on the architect's certificate of
completion to his satisfaction. The contractor refused to remedy certain
defects, and the architect refused to certify. The contractor sued the owners
and pleaded that the certificate was "wrongfully" withheld. Held, that if fraud
and collusion had been shown, the absence of the certificate might not have
been a bar to the contractor's claim, but merely to say it was "wrongfully"
withheld was no answer to the plea of the absence of the certificate: Botterillv.
Ware Guardians (1886). 65
However, it seems clear that there are situations other than prevention, 6·128
fraud or collusion in which the courts will dispense with the certificate. It
will be seen that, in a number of cases, the courts invoke the prevention
principle as the basis of their reasoning.
ILLUSTRATIONS
(1) During the course of a building contract the builder, who had received
£1,240 already, requested certificates from the architect, claiming that £2,600
of work had been done, but this was refused, on the ground that the work had
62
L.R. 8 Ch.App. 605, n. (1); and see De Wonns v. Mellier (1873) L.R. 16 Eq. 554.
63
For the significance of this, see supra, paras. 6·007-6·008.
r,,iHudson, Building Contracts (4th ed.), Vol. 2, p. 54.
,;s 2 T.L.R. 621.
 r',
' '
[CHAP, 6
814 APPROVAL, SATISFACTION AND CERTIFICATES
not been done in accordance with the contract. As the archit~ct d~d not give
d tails the builder asked two of his suppliers to meet the architect 1n order to
fi~d otlt what his complaint was, and the architect told them that the "."ark was
completed except for some £200 of work, and would be complete~ in two~r
three weeks, and gave no further details. The architect then ter°1:n~ated . e
builder's employment, and the latter instructed two surveyors to ~is1t the st~e
t xamine the work. Tue owner and the architect, although notified of this,
r~~sed to have anything to do with it. The architect mad~ no ~ccount or.fae~-
orandum of the state of the work at the time of terrmnat1ng the but er s
em loyment and completed the work himself on behalf of the o~ner. The
buifder filed ~ bill in equity against the owner and the ?rchitect asking for ;n
account of what was due to him, and the defendants rehed on t~e absence o a
certificate. Held, by Stuart V.-C., that the conduct of th~ architect had been
, and unfai'r and without imputing fraud to either defendant, was
oppressive , • . . · h, ht t h been
not of the discreet, impartial and fair descnption wh1c 1t oug o ave d ,
nd that the plaintiff was entitled to a decree for payment of the balance ue
: 0 him under the contract: Pawley v. Turnbull (1861).
66
6·U9 (2) Under a lump sum dredging contract, ~he_ engineer's certi~cate .fixing
the balance due was to be conclusive and b1nd1ng on both parties without
dfiput;s connected with the contract in any war were left tot:~
a eal and this certificate was also a condition precedent to payment: ~ll
final ~e~s1on
of the engineer. In his final certificate, the engmeer deducte _ro~ t e. ~m)
sum contract price a sum to take account of an alleged error in t e ongma
quantities stated in his specifications. Held, by the Supreme Court o~~nadj
he had no right to do so under a lump sum con~ra~t and he had acte eyon
his duty or jurisdiction. His certificate was b1n~1ng as regards any matte~
'th' hi , 'sdi'ction, but in this respect the certificate
W1 ID SJUO )"
should be corrected.
Peters v Quebec Harbour Commissioners (1891 · . decisions were to be final and conclusive. There were some limited, but not
[Not;: Si ificance need not be attached_ to the ~tatement that the certifi-
cate shouldte corrected, which in the particular c1~cumst~n~es was.synony-
mous with disregarding or dispensing with the certificate, 1t 1s submitted.]
(3) The plaintiff agreed to do work for the defendant~ t<;> the satisfaction. of
an engineer and the defendants agreed to pay the plaintiff upon the. certifid
cate of the e~gineer. Toe engineer never addressed himself to determine an
certify but wrongfully refused, or wrongfully and unreason?bly delayed, so to
deternrine and certify, and the defendants, who knew of this, took advan~~
of his refusal and delayed payment. Fraud was not alleged. J!eld, by P ffi
J that the plaintiff could recover from the defendants without acer 1 -
more Kellett
cate: ·• , · Counc1'/ (1900) ·~
v. New Mills Urban District
(4) A contract in Alberta gave the architect power to extend ti~e, and c~-
tify liquidated damages for delay. The architect told both parties tha~ ~
would not decide the question of damages. Held, by Beck J., as he had a so
lutely refused to act, the court must assess the liquidated damages themselves:
Watts v. McLeay (1911).w
(5) A architect who was being asked for a certificate 'for £750 by the
6·130
builder ~hortly bef~re the work was complet~d, receive~ a letter ~h~ ![~
owners saying that he should on no account issue a certificate unti e a
66 3 Giff. 70, approved on appeal (unreporte d) b y Lor d Westbury (see ) Malins
523 per V.-C. by
d explained in
Panama etc. v. India Rubber (1875) L.R. 10 Ch.App. 515, at P· . n an . 11
Vaugha~ Williams L.J. as a case of damages in Smith v. Howden Umon, supra~! ~ara. 6 118.
6119 S.C.R. 685, Canada. a,·
68 Hudson, Building Contracts (4th ed.), Vol. 2, p. 298. . these same clauses in a contract 50 years later in Egan v. South Australian Railway Auth-
w 19 w.L.R. 916 Canada, illustrated more fu~ly supra, para. 6120.
SECT, 5] RECOVERY WITHOUT CERTIFICATE 815
received the builder's account for extras. After receiving further letters from
the builder, the architect wrote to the owners stating that he wished to issue a
certificate for £600, adding that the builder was entitled to a certificate. The
owners replied as before, and said they would not meet the certificate. The
architect then wrote to the builder stating that he regretted he could not issue
a certificate as the owners had instructed him to issue no further certificates
until his final certificate, and suggested that the.builder should meet the own-
ers, since in the face of their instructions he could not issue a certificate, what-
ever his private opinion. Ultimately, he gave a certificate (not a final
certificate) for £400 to the builder, who obtained judgment upon it, and issued
a writ for the balance due. Other letters between the owners and the architect,
not shown to the builder, indicated that the owners were pressing the archi-
tect to cut down the builder's claims as much as possible in view of their own
difficulties. Held, by the House of Lords, that while the architect was not
guilty of fraud or collusion, and accepting that his final certificate, when
issued, would have stated the amount in his opinion properly due, neverthe-
less he had allowed himself to be influenced by the owners in a manner incon-
sistent with his position as certifier, and the owners could not set up the
absence of a certificate as a defence to the claim: Hickman v. Roberts [1913).70
[Note: The judgments in this case suggest that the attitude and conduct of
the certifier was the primary reason for avoiding his last certificate, but they
also note the various improper actions of the owner, so that the case should
also be regarded as one of prevention or wrongful interference, and it was
apparently so regarded by Lord Thankerton in the Panamena case.]
(6) By the terms of a railway contract the certificates of the chief engineer of 6·131
railways were to be a condition precedent to payment, and also to be binding
on both parties; all disputes were to be referred to the chief engineer, whose
applicable, rights to independent arbitration. In the absence of the necessary
certificate the contractor brought a claim for moneys due and damages, and
for a declaration of his entitlement to sue in the absence of the certificate,
alleging wrongful influence by the railway commissioners and collusion with
the chief engineer, and unjudicial conduct on his part. The Chief Justice of
South Australia, while finding no moral misconduct by the chief engineer and
no collusion by the commissioners, found that he had failed tp realise that he
had a judicial duty to perfonn and had acted as if he only had the interests of
the defendants to consider, and gave judgment for the contractor. Held, by
the High Court of Australia (Isaacs and Rich JJ ., dissenting), after consider-
ing Hickman v. Roberts, that misconduct by the chief engineer had not been
shown; but by a majority (Isaacs, Rich and Starke JJ., Knox C.J. and Higgins J.
dissenting) that, had there been a sufficient degree of misconduct by the chief
engineer, there would have been no need to assert or prove interference or
collusion by the owners: Dixon v. South Australian Railway Commissioners
(1923)/'
(7) A builder was to be paid by instalments on certificates issued by the
architect. In case of disputes, the architect was to act as arbitrator. A dispute
arose, but the architect refused to act himself or to issue a certificate, and
sought to nominate a third person as arbitrator. The owner took no steps to
appoint a new arbitrator or to stay an action commenced by the builder. Held,
70
[1913] A.C. 229.
34 C.L.R. 71 (for two in effect opposing views of Hickman v. Roberts see the judgments of
Knox C.J. and Higgins J. respectively. Compare Menzies J.'s excoriating comments on
ority (1973) 130 C.L.R. 506, infra, para. 6·137.
 816 APPROVAL, SATISFACTION AND CERTIFICATES [CHAP. 6
by the Court of Appeal, since the architect had failed to act as required by the
contract, the need for a certificate could be dispensed with and the plaintiff
could recover, subject to the owners defence on the merits: Nealev. Richard-
son (1938).72
6·132 (8) A contract for the repair of a ship provided that the owners should pay
the repairers during the progress of the work on the basis of their expenditure,
payment to be effected upon certificates of the owners' surveyor that the
work had been satisfactorily carried out, and of the investigation branch of
the Ministry of War Transport as to the amount due. The certificates were to
be final and conclusive and there was no arbitration clause. The certificate of
cost was issued, but the surveyor, although satisfied as to quality, took the
view that his approval and certification extended beyond the quality of the
work to the question whether reasonable economy had been exercised, and
refused to give a certificate without fuller information by the repairers. The
owners and their solicitors concurred in the surveyor's view and so advised
him. The repairers brought an action for the value of the work done. Held, by
the House of Lords, that on the true construction of the contract the sur-
veyor's interpretation had been incorrect and the necessity for the surveyor's
certificate would be dispensed with: Panamena Europea v. Leyland (1947). 73
[Note: The judgments of Scott L.J. and Goddard L.J. in the Court of
Appeal are required reading, particularly since Lord Thankerton's speech in
the House of Lords is a difficult one, and since he expressly approved God-
dard L.J.'s judgment below. The trial judge had allowed a late amendment
alleging fraud, and had found conduct involving fraud and active collusion by
the surveyor, who was also the president of the defendant ship-owners. How-
ever, although both the court of Appeal and the House of Lords were highly
critical of his conduct, both expressly preferred to treat the case as one of an
honest but mistaken refusal to give the certificate in which the owners con-
curred, and the House of Lords expressly negatived what was called "inno-
cent collusion". The Court of Appeal judgments were subsequently analysed
by McFarlan J. in the Perini case, illustrated infra, and the case is further
discussed infra, Subsection (6), where the relevance of any concept of sub-
sequent concurrence by the defendant in the certifier's decision is queried.
The judgments also suggest a positive duty of the owner to give_ instructions to
a certifier who is not fulfilling his mandate correctly, and, if necessary, to dis-
miss him and appoint another, and were followed on this in the Perini case.]
6·133 (9) A contractor undertook to supply gravel and asphalt to be paid for by
weight, and possession of an estimate or certificate signed by the owner's
engineer was to be a condition precedent to the right of payment. The engin-
eer refused to certify for the materials by weight, and used his own methods of
calculation in arriving at the amounts to be paid. Held, by the Supreme Court
of Canada, the engineer's refusal to certify in accordance with the contract
was arbitrary and illegal and an abdication of his function under the contract.
The owners had concurred in the position taken by the engineer, and had thus
brought themselves within the principle of the Panamena case, and the con-
tractor was absolved from the requirement with respect to the certificate:
Corporation of City of Oshawa v. Brennan Paving Co. Ltd. (1955).74
(10) A government contract made with the Department of Works for the
construction of a mail exchange named the Director of Works as the certifier,
n [1938] 1 All E.R. 753. Illustrated more fully supra, para. 6·073.
n [1947] A.C. 428 and see the casein the Court of Appeal. (1943) 76 Lloyd's Re1\~~13, and the
discussion infra, paras. 6· 143---6·151.
• [1955] S.C.R. 76, Canada. See also infra, paras. 6·148-6·150.
1
SECT. 5] RECOVERY WITHOUT CERTIFICATE 817
i? p~ticular to decide matters of extension of time for the purpose of the
liqm?ated ct.am.ages clause. There was an arbitration clause. It was alleged
th~t m certain matters, such as extensions of time for rain and for strikes the
Drrect?r had ~ven "departmental policy" as his reasons for disallo.;.,ing
extens!ons of time, rather than his own opinion, and also that he had refused
extensions where he was of opinion that the delay could be subsequently
recovered by the contractor, and that both these views misconstrued his
?uties under .~e extension of time provisions. The contractor had allegedly
incurred additional expense in order to complete to time and avoid the liqui-
da~ed damages. By consent, the Court was asked to state principles for the
gm dance of an arbitrator. Held, by MacFarlan J., while the Director of Works
w~ an employee.or serva~t of the government, in his role as certifier he was
obliged to act fairly and Justly to both parties. While entitled to consider
departmental policy, he would be acting wrongly if he considered himself
controlled by it. Applying the Panamena case and Lord Blackburn's dictum
15
in. McKay v. Dick, there was a duty, in the negative sense, not to interfere
Wlt!1 the proper perfoil?ance <;>f the Director's duties in considering appli-
cations under the ~xtens1on of time clause, and, in the positive sense, a duty to
ensure !hat the Drrector of Works performed his duties properly under that
cla°;57, if aw~e th~t he ..-yas proposing to act beyond it. Held, further, that, in
~ddr~1on to dispensing with the need for a certificate, damages for breach of an
1mphed term would, in principle, be recoverable in such a case so as to cover
any acceleration expenditure of the contractor: Perini Pacific Corporation v.
Commonwealth ofAustralia (1969).76
. (11) A Canadian building contract contained a provision that the final cer- 6·134
tificate should constitute a waiver of all claims by each party against each
ot~er. In pre-contract negotiations, the architect assured the contractor that
an mcrease in taxes on building materials which had occurred since his tender
would be paid f?r by the o~er, but the contract as executed provided only for
decreases, not mcreases, 1n tax. Nevertheless the architect certified for the
increases in his final certificate. Held, by Morden J., distinguishing Goodyear
v. Weymouth Corporation, the final certificate would have bound the owners
had the increase been authorised by any provision of the contract, but since
the architect was acting outside his authority, the certificate could not bind the
owners: James Moore & Sons Ltd. v. University of Ottawa (1974).n
(12) The engineer under a drainage contract was of the opinion that the
contractor had seriously underestimated the cost of the road-surface
re~statem7nt at the end of the work, and, for that reason, and acting on a
m1staken view of a contractual provision, reduced his valuations for interim
payment during the earlier stages of the work. There was no evidence of
~nancial stringency on the part of the contractor, but he retaliated by reduc-
ing the number o~ men on site and suspending work unless full payment was
resumed. The engineer then gave notice, and later certified under a forfeiture
clause cond_itioned on an inadequate supply of labour, ~nd the Drainage
Bo~d term1na~ed the contract. The engineer had acted independently, and
was 10 no way Influenced by the Board's committee members or solicitors.
Held,.by the New Zealand Court of Appeal, that while the contractor had
been 1n the wrong, since there was no power to suspend work for non-pay-
ment in English or New Zealand law or under the terms of the contract, and
75
(1881) 6 App.Cas. 251, at p. 263, cited ante, Chap. 1, paras. 6·186-6·187.
76
[1969] 2 N.S.W.R. 530.
17
49 D.L.R. (3d) 666. On a quite different basis the plaintiff ultimately succeeded in quasi-
contract, however. See ante, Chap. 1, paras. 1·261-1·262. See also Trade Indemnity v
Workington [1937J A.C. 1. ·
 818 APPROVAL, SATISFACTION AND CERTIFICATES [CHAP. 6
while the engineer had subjectively acted in good faith, he was bound to act
fairly and impartially when certifying under the forfeiture clause, and objec-
tively regarded, as a matter of fact and degree, the engineer had appeared to
assume the role of adversary more than a professional man holding the scales.
Since both parties were to blame, the contractor should be paid the contract
value of work done, without interest, but his claim for quantum mentit or loss
of profit for a wrongful determination would be disallowed: Canterbury Pipe-
lines Ltd. v. Christchurch Drainage Board (1979). 78
[Note: The remedies in the latter part of ~is judgment, while understand-
able, are not easy to explain in strictly legal terms.]
6°135 On the other hand, in the following cases conduct which no doubt would
not have been accepted in a fully independent arbitrator was held not to
affect the validity of an award of a named architect arbitrator, since it
arose as a result of the proper discharge of the architect's or engineer's
other duties under the contract.79 The principle, asno doubt in the case of a
certifier, is that a party cannot complain of an interest of which he was
aware at the time of contracting, although, in the case of arbitrators only,
revocation of their authority on the ground of a known interest has been
expressly permitted by statute since the Act of 1934.80
ILLUSTRATIONS
{1) Under an engineering contract, the engineer was both certifier and ~rbi-
trator. A dispute arose as to whether stone or rocky marl had to be provided
by the contractor so as to satisfy the provisions of the contract. Correspon-
dence took place between the contractor and the engineer, in which .the latter
stated his view that the contractor was bound to use stone, and that 1t was not
an extra. The matter was then formally referred to the engineer under the
arbitration clause, and on the day appointed for the reference the engineer
again wrote to the contractors repeating his former vie~. Th~ contract~r
sought an injunction to restrain the owners from proceeding with the arbi-
tration. Held, by the Court of Appeal, that the final letter on its fair construc-
tion did not indicate that the engineer had made up his mind so as not to be
open to change it upon argument, and since his position as engineer meant
that he must already have expressed his opinion on the point, he was not
disqualified from acting as arbitrator: Jackson v. Barry Railway (1893). 81
6·136 (2) Under a contractforthe execu~ion of waterwor~s for a lo~al authori~ in
Scotland, the engineer of the authority was also appointed arbitrator. Dunng
the course of the works he submitted a report to the owners complaining in
strong terms of the way the works had been carried out. Held, by the Court of
Session, that he was not thereby disqualified from acting as arbitrator: Scott v.
Carluke Corporation (1879).82
1a [1979] 2N.Z.L.R.347. SeealsoBrownandDohertyv. Whangarei County [1988] 1 N.Z.L.R.
33, ante, Chap. 4, paras. 4·213-4·215, for another case of a termination failing on grounds of
unfairness. Also illustrated infra, para. 6· 159.
19 See also the case of Hatrick v. Nelson, illustrated supra, paras. 6· 116-6-120.
so See supra, Subsection (2).
Sl [1893] 1 Ch. 238.
82 6 R. (Ct. ofSess.) 616.
SECT. 5] RECOVERY WITHOUT CERTIFICATE 819
(3) Under a contract for the construction of a pier the engineer was also
app?inted arbitrator. After completion a question arose as to extras, and the
engt?eer wrote to the owners in answer to a request from them, giving
detaded reasons why the sums claimed were not in his opinion due. Held, by
the Court of Session, that he was not thereby disqualified from acting as arbi-
trator: Halliday v. Duke of Hamilton's Trustees (1903).sJ
(4) A named arbitrator, who was the city engineer of the Leeds Corpora-
tion, wrote a letter in answer to a claim by the contractors against the corpora-
tion stating that their claim was outrageous. Held, by the Court of Appeal, he
was not disqualified from acting as arbitrator: Cross v. Leeds Corporation
(1902).~
(5) M. contracted to do engineering work for the B. parochial board. All
matters, claims and obligations whatever arising out of the contract were to be
referred to A., who was, in fact, the engineer of the board. A. had, as engineer,
complained of some of M. 's work, and had measured the work and brought
out as due to M. Iess than he claimed. Held, that A. was not disqualified from
acting as arbitrator: Mackay v. Barry Parochial Board (1883).85
(6) By Clause 30 of a South Australian railway contract, the Commissioner 6·137
was given power to determine the contract if the contractor did not proceed at
the rate of progress required by the Chief Engineer. There was no certifying
provision referred to in the clause. By Clause 32, the Commissioner's exercise
of that power ( and many other matters under the contract) could be disputed
before the Chief Engineer, whose decision was to be final and conclusive save
in regard to a limited class of matters of measurement and price, where the
decision could be appealed to an arbitrator). By Clause 35, no action for
recovery of money or for breach of contract could be brought by the Com-
missioner or by the contractor against each other unless as a condition prece-
dent they had obtained the "certificate, order or award" of the Chief
Engineer. The contractor brought an action for wrongful determination,
moneys due, and damages; for detinue and conversion of plant; and for
release of a bank guarantee. He admitted that he had not sought or obtained
the Chief Engineer's certificate, but relied on the fact that he had disputed the
termination to the Commissioner and that the Chief Engineer, as the Com-
missioner's servant, would have already been required to rule on his rate of
progress. The trial judge ruled that the Chief Engineer's role disqualified him
from giving a certificate order or award, which could be dispensed with. Held,
by the High Court of Australia, following the Jackson, Scott and Halliday
cases, Clause 35 applied, and the fact that the Chief Engineer had already
reached a decision upon the matter in dispute did not disqualify him from
giving a certificate, so that while the claims for release of the guarantee and
for detinue and conversion, not being money claims, were not affected, the
claim for wrongful determination must be dismissed: Egan v. South Austra-
lian Railway Authority (1972).86
[Note: Menzies J. thought that this was "perhaps the most wordy, obscure
and oppressive contract that I have come across ... it was probably compiled a
long time ago 86" mainly by putting together, with some incongruity, provisions
from other contracts. In the compilation, I am sure not one oppressive pro-
vision which could be found was omitted. The contract is so outrageous that it
114
Ill 5 F. (Ct. of Sess.) 800. Hudson, Building Contracts (4th ed.), Vol. 2, p. 339.
85
10 R. (Ct. of Sess.) 1046.
!Iii 130 C.L.R. 506; also illustrated supra, para. 6·086.
!llio See the Dixon case in 1923 supra, para. 6· 131.
 820 APPROVAL, SATISFACTION AND CERTIFICATES [CHAP.
is surprising that any contractor would undertake work for the railways com-
missioner upon its terms ... [Clause 32} takes some seven hundred words to
achieve the result which requires any dispute to be referred to and decided
finally and conclusively by the Chief Engineer ... It is true that there is a minor
relaxation of this in a proviso ... Clause 32 is certainly invalid. It is a barefaced
attempt to oust the jurisdiction of the Court. One problem here, as I see it, is
to determine whether Clause 35 of the contract is so linked with Clause 32 that
it, too, is invalid." Despite these trenchant criticisms, which are fully justified
in substance, it is not certain, it is submitted, that a provision like Clause 32
would be invalid as ousting the jurisdiction of the Court, however attractive as
a proposition that might be. 87]
6·138 The principle underlying these cases is perhaps best expressed in the
following passage from the judgement of Bowen L.J. in Jackson v. Barry
Railway81J:
"The perfectly open judgment, the absence of all previously formed or pro-
nounced views, which in an ordinary arbitrator are natural and to be looked
for, neither party to the contract proposed to exact from the arbitrator of
their choice ... The question is whether the engineer has done anything to
unfit himself to act, or render himself incapable of acting, not as an arbitrator
without previously formed or even strong views, but as an honest judge of this
very special and exceptional kind. " 89
(6) Summary and Discussion of Preceding Subsections
6,,139 The preceding sections have subdivided the cases in which a certificate can
be dispensed with into the following classes, namely (a) "Disqualification
by Interest", (b) "Fraud or Collusion";(c) "Prevention by the Employer",
and (d) the omnibus class "Conduct Not Amounting to Fraud or Collu-
sion". This was the classification adopted in the early editions of Hudson,
and followed by other works on this subject, and does find support in the
wording of many judgments, particularly where the prevention principle
seems to have been invoked compendiously in so many cases without
much discussion of the precise facts relied on by the court. One result has
been, it is submitted, that owner participation may have been overempha-
sised as a necessary ingredient for avoiding a certificate, or somewhat
artifically found to exist as a fact in cases where the conduct of the certifier
may by itself have been sufficient for that purpose.90 Closer examination of
the facts of the cases suggests that this classification involves a degree of
87
See further post, Chap. 18, Section 2(4)(e).
ss [1893] 1 Ch. 238.
89 "Arbitrator" here means "certifier". See the criticism of the earlier classification by Scott
L.J. in the Court of Appeal, in particular in regard to talcing wrong matters into consider-
ation, in Leyland Ltd. v. Panamena Europea Ltd. (1943) 76 Lloyd's Rep. 113, at p. 123.
90
See, for an example of this, Panamena Europea v. Leyland, see supra, para. 6J32, decided
largely, it would seem, on the basis of owner prevention, and of implied terms requiring
positive action by the owner to correct his certifier, see infra, paras. 6· 149--6·150.
6 SECT. 5] RECOVERY WITHOUT CERTIFICATE 821
overlapping and confusion. 91 It may be more helpful, therefore, to con-
sider the following situations separately:
(a) a special interest of the certifier not known to a party to the
contract;
(b) fraud of the certifier, or of either party to the contract, whether at
the time of the contract or subsequently, and whether collusive or
not92;
( c) improper pressure, influence or interference by the owner affecting
the issue or refusal or contents of a certificate;
( d) conduct of the certifier which (consistent with his other duties) falls
short of a proper standard of fairness, independence and impar-
tiality in relation to the issue or refusal of a certificate;
( e) breach of contract or other act or omission of the owner having the
effect of preventing the builder obtaining the certificate;
(f) unreasonable refusal by the certifier to give any consideration to
the matter upon which he is required to certify,
(g) taking into consideration by the certifier of matters extraneous to
his proper jurisdiction under the contract or applying the wrong
principles.
(a) Interest of certifier
Here it should be noted that acts which would be considered collusion 6-140
or interference by the owner or indiscreet conduct by the architect, if they
occur after a contact is signed,93 may be classified under this head if they
occur prior to the contract being signed. On the other hand, acts occuring
subsequent to the contract, for example, an acquisition of shares by the
A/E in one of the parties to the contract, may be regarded either as a
disqualifying interest, or, it is suggested, as indiscreet conduct.
Cases where the interest is financial, for example, the holding of shares,
are likely to be a matter of degree, since a senior director or official of any
really large industrial organisation or company might well be expected to
have a holding of shares in the company.94 These cases will turn upon
whether such an interest was to be expected in the circumstances of the
91
See the criticisms of the older classification by Scott L.J. in Leyland v. Panamena Europea
(1943) 76.Lloyd's Rep.113, at p.123, who would have preferred a discussion of the implied
unde~takmg of the o'!"ner to the contractor with regard to the certifier's discharge of his
function.
92
For cases of fraud by the contractor in obtaining a certificate, and the effect on third parties,
see Wak!fie!d, etc. v. ~ormanton Local Board (1881) 44 L.T. 697,post, Chap. 14, Section
5(5) (assignee) andKmgston-upon-Hull Corporation v. Harding [1892] 2 Q.B. 494supra,
para. 6·109; ante paras. 5·022-5·023; and see post, Chap. 17, Section 2(2) (guarantor).
93
e.g. the request for the assurances as to keeping down final cost in Kimberley v. Dick'and
Kemp v. Rose, supra.
94
Cf. Rangerv. G. W.Ry., supra.
 822 APPROVAL, SATISFACTION AND CERTIFICATES [CHAP.
particular case,95 and also, no doubt, on the relative size of the interest and
the degree to which it might be affected by the contract and decision in
question.
(b) Fraud
6·141 The essence of fraud is a deliberate intention to deceive. It is submitted
that collusion with the certifier or knowledge of his fraud by the other
contracting party is not necessary to avoid a certificate affected by fraud of
the certifier alone, although such fraud may be rare in practice.96 While
there will be no implied term that a certifier will use reasonable skill, the
honesty of the certifier will be the basis of any agreement between the
parties to abide by his certificates, and where, as in construction contracts,
he is employed by the owner, there will be an implied warranty by the
owner to that effect.97 Whatever the position about this liability of the
owner to the contractor, the architect will, of course, be personally liable
for his fraud to any party injured by a fraudulent misrepresentation made
to that party. '---
(c) Interference with the certifier
6·142 It is submitted that fraudulent motive is irrelevant in considering this
head, which is sufficiently wide to cover any improper interference with
the certifier's independence and function by either party.98 It is, of course,
both usual and proper for both parties to make representations, however
strongly worded, to the certifier upon any matter or dispute upon which
the contract requires him to certify. 99 The dividing line between such rep-
resentations and pressure of an improper kind is not difficult to discern in
practice, and broadly speaking any pressure or action which goes beyond
representations confined to the merits of the matter in question, or which
does not expressly or impliedly recognised the certifier's ultimate right
and duty to decide the matter impartially on its merits, will be suspect:
"Where _a surveyor is put into that position to give a certificate, I do not say
that he is an arbitrator, but he is an independent person. His duty is to give the
certificate according to his own conscience and according to what he con-
ceives to be the right and truth as to the work done, and for that purpose he
•5 Or knowledge of this interest may constitute waiver. See Thornton Hall v. Wembley Elec-
trical Appliances [1947] 2 All E.R. 630, where a surveyor employed to supervise work
subsequently became managing director of the builders with the knowledge of his client
(illustrated ante, Chap. 2, para. 2·235). See also Re Elliott, supra, parl!, 6-101.
""See Smith v. Howden Union, illustrated supra, para. 6· 118.
'11 See per Diplock J. in Neodox Ltd. v. Swinton & Pendlebury Borough Council (1958) 5
B.L.R. 34, at p. 47; London Borough of Merton v. Leach (1985) 32 B.L.R. 51, atp. 78,per
Vinelott J., see supra, para. 6·113.
1111
See, e.g. Page v. Llandraff Rural Council, illustrated supra, para. 6· 119.
00 Cf Hat rick v. Nelson, illustrated supra, paras. 6· 121--6· 123. See also that case discussed by
Cooke J. in Canterbury Pipelines v. Christchurch Drainage Board [1979] 2 N.Z1:.R. 347, at
pp. 356----357.
6 SECT. 5] RECOVERY WITHOUT CERTIFICATE 823
has no ~ight to obey any order or any suggestion by these people who are
called his masters; for that purpose they are not his masters."1
No doubt where interference or pressure by an owner results in no cer-
tificate being given, the prevention principle will apply, but the cases show
that other forms of influencing or interference need only be such as to cast
doubt on the certifier's independence: see Page v. Llandaff Rural Council
and Hickman v. Roberts. 2 These and the cases on impartial or indiscreet
conduct by the certifier suggest that, once the certifier's independence has
become suspect, the courts will not concern themselves unduly with the
extent or degree of influence over the certifier, or its precise impact on the
certificate in question. Thus, in Hickman v. Roberts, Lord Shaw of Dun-
fermline expressly stated that the architect would not have been influ. .
enced as to the contents of his final certificate, although he had been in
deciding to delay his interim certificates, and indeed this is very clear from
the reported evidence, which showed the certifier as being perhaps more
than usually conscientious, although making an error of judgment in the
event.
Apart from cases where, on the facts, the prevention principle can prop-
erly be invoked, the basis for this ground of avoidance of certification
decisions will be an implied term prohibiting the improper influencing of
certifiers, it is submitted. 3
(d) Want of impartiality or indiscreet conduct of the certifier
T~is head is, of course, closely allied with the preceding one, although 6·143
the improper conduct of the certifier need not necessarily arise from collu-
sion with or interference by a party to the contract, it is submitted.
The cases have constantly and rightly emphasised that a certifier's other
administrative and supervisory duties and his obligations to the owner
mean that in the normal course of events he may well already have given a
decision or submitted reports as to some matter in relation to which at
some lat~r stage he is called upon to certify. Conduct showing previously
formed VIews, however strongly expressed, will not amount to indiscreet
conduct unless lack of independence or honesty of belief can be deduced
from it.4
. It must be conceded that this class rested for its authority upon one
single case, namely, Pawley v. Tumbull, 5 until the case of Hickman v.
Roberts, which itself could, on its facts as found, be explained as depend-
ing upon improper interference by the owners. Thus in Panamena v. Ley-
land,6 Lord Thankerton said of Hickman v. Roberts:
I
Per Lord Esher M.R. in McDonald v. Mayor of Workington (1893) 9 T.L.R. 230.
2
Both illustrated supra, paras. 6· 119 and 6· 130.
3
See supra, paras. 6·112-6·113.
4
See Jackson v. Barry Rly. and the cases collected supra, para. 6·135.
l (1861) 3 Giff. 70; 4 L.T. 672. . .
6
[1947] A.C. 428, at p. 438.
 824 APPROVAL, SATISFACTION AND CERTIFICATES [CHAP.
"It is clear from all the judgments that the ground of disqualification was that
Mr. Hobden, the owner's architect, had referred to the owners for instruc-
tions and had accepted and acted on their instructions in reference to the
matter submitted to him as arbitrator [sic] regardless of his own opinion."
6·144 Nevertheless, the language of the Hickman judgments, while noting the
various interventions of the owner, does appear to concentrate more on
the indiscreet nature of the architect's conduct, and, in particular, his com-
munications with the contractor, as showing that he had lost his indepen-
dence as the reason for avoiding his last certificate and permitting the
contr~ctor to recover the final balance due without the support of a certifi-
cate. Very significantly, Hickman v. Roberts was considered in 1923 by the
High Court of Australia in Dixon v. South Australia Railways/ where the
complaint related to the certifying chief engineer's partisan and ~nf~ir
conduct and not to any interventions of the owners. There, by a ma1onty
of three' to two, the Court held that, had the conduct been such as to dis-
qualify, it would not have been necessary to prove collusion with or par-
ticipation by the owner. Similarly in New Zealand, an ~ngineer's hon~st,
but objectively unfair and oppressive conduct of a partisan n~ture,. which
was expressly found not to involve his employers, was held to mvabdate a
forfeiture under that contract.8 Other earlier cases of misinterpretation of
the contract successfully invalidated certificates, although there was no
hint of owner involvement.9
(e) Prevention by the owner
6-145 Clearly, if the owner wrongly dismisses the contractor, or intervenes
directly with the certifier to prevent a certificate being is~ued, o~ by order-
ing extra work renders completion by the contract date 1mposs1ble, these
will all be classical cases of prevention, whether or not formally breaches
of contract.to So too cases of failure to appoint a new certifier on the death
~r retirement of a predecesser. 11 It has been seen that the prevention prin-
ciple also has a positive side, since there is also a duty to do whatever may
12
be necessary to enable the other party to perform his part of the contra~t,
so that failure to appoint a certifier, or a replacement on death or retire-
ment of a predecessor, may be similarly regarded. There may also be a
positive duty to give instructions to the certifier to ensure his proper _dis-
charge of his function. 12a Thus, in the Panamena case, where the certifier
1 (1923) 34 C.L.R. 71. . 13
s Canterbury Pipelines v. Christchurch Drainage Board [1979] 2 N.Z.L.R. 347, illustrated
supra, para. 6-134.
9 See, e.g. Peters v. Quebec Harbour Commfssioners (1891) 35 S.C.R. 685. . ,
10 See supra, Section 2, and the cases there illustrated, and see ~lso_ McMullm J. s detailed
discussion of the prevention principle in the Canterbury Ptpehnes case, supra, at pp.
369-371.
11 See the remarks of Phillimore J. in Kellett v. New Mills Urban District Council (1900);
Hudson, Building Contracts (4th ed.), Vol. 2, p. 298.
12 See Lord Blackburn's classical statement in McKay v. Dick, ante, Chap. 1, paras.
1·186-1·187. : ;''
12a See the Panamena judgments and the Perini Pacific cases illustrated supra, arid see further
under paragraph (f), "Refusal of the Certifier".
6 SECT. 5] RECOVERY WITHOUT CERTIFICATE 825
had, on his own initiative, taken a wrong view of his terms of reference and
refused a certificate for that reason, the prevention principle was again in
the forefront of Lord Thankerton's speech in the House of Lords,
and, indeed, implicit in Goddard L.J.'s judgment in the Court of Appeal,
quoted in paragraph (f) infra, and expressly approved on this point by
Lord Thankerton. 13 Unconsidered application of the prevention principle
to very different situations may serve to distract attention from a closer
analysis of the certifier's own conduct as the reason for avoiding the certifi-
cate requirement. In the Panamena case there was as it happened, a close
identity of interest between the surveyor and the owners.
(f) Refusal of the certifier
This, of course, means not a refusal to issue a certificate because none is 6·146
due on the merits, 14 but refusal or failure by a certifier to give any consider-
ation to the matters upon which such issue will depend.
Whether this could give rise to any remedy was much canvassed in ear-
lier editions of this work. Some cases undoubtedly stated that there was no
implied covenant by an owner that his architect would certify (see Kemp-
ster v. Bank of Montreal 15 ) and a builder was refused relief in equity upon
an unreasonable refusal of an architect to certify in Moser v. S. Magnus
and S. Margaret's Churchwardens ,16 but these cases were really concerned
with a refusal of an architect to issue a certificate on the merits. On the
other hand there were dicta which suggested that the courts would give
relief, for example:
"It was said that ... this clause leaves the contractors wholly at the mercy of
the ~n~ineer, who is only to determine the amount which they are to receive,
and It 1s urged that he may consult his own supposed convenience and indefi-
nitely_postpone his determination ... if he were to decline to enter upon the
question or by any affected delay, or any improper practice of any kind, were
to attempt to evade a decision, a court of equity would know how to deal with
such a state of things ... "11
"Whether such acts arose originally from any fraudulent motive or not, I
think that to use them for the purpose of defeating the plaintiff's remedy
would constitute a fraud, which this court will not permit the defendants to
avail themselves of. "1s
[1947] A.C. 428, at p. 436, followed by MacFarlan J. in the Perini Pacific case.
14
Even here, where work is done under protest after refusal to certify it as an extra, the courts
. have held arbitrators entitled to reopen the matter: Molloy v. Liebe and Brodie v. Cardiff
Corp., post, Chap. 7, paras. 7·067 and 7·068, but see the difficult Canadian case of Peter
Kiewit &Sons v. Eakins Construction (1960) 22D.L.R 465, illustrated ante, Chap. 4, paras.
4218-4·220.
,$ (1871) 32 Up.Can.Q.B. 87.
16
Cited in Worsley v. Wood (1796) 6 Term.R. 710, at p. 716, and Mahoney v. Le Rennetel
(1892) 13 N.S.W.R. (Equity) 7.
17
Per Lord Chelmsford L.C. in Scott v. Liverpool Corporation (1858) 28 L.J.Cb. 230.
18
PerCottenham L.C. in Macintoshv. Great Western Ry. (1850) 19 L.J.Ch. 374; and see Smith
v. Howden Union (1890), Hudson, Building Contracts (4th ed.), Vol. 2, p. 156.
 826 APPROVAL, SATISFACTION AND CERTIFICA'IES [CHAP. 6 SECT. 5]
The case of Kellett v. New Mills Urban District Council 19 undoubtedly
6-147
went very far in support of the view that absence of a certificate in these
circumstances was not fatal, although this case was adversely comme°:ted
upon by Slesser L.J. in the case of Neale v. Richardson,20 where he said:
"I cannot see why in principle the defendant should not be entitled to stand
upon her contract and say that she has undertaken to pay when, and only
when, the architect gives his final certificate ... To say that a pe~on, by rely-
ing on his legal rights, has taken advantage of somebody else s failure of duty
in a case where there is no suggestion that he has prompted or even acknowl-
edged that breach of duty seems to me to be contrary to princip~e, and if
Kellett v. New Mills Urban District Council is to be taken to provide more
than another example of collusion, respectfully I find myself unable to follow
it."21
Examination of the judgment in Kellett's case does in fact suggest that
the court was thinking in terms of collusion, although this was hardly
applicable to the facts as found and pleaded.
6-148 However, it is submitted that there is now little doubt that unreasonable
refusal or prolonged delay by an AfE in giving his attention to a matt~r
requiring his decision, satisfaction or a certificate must, as a ma~ter o~ busi-
ness efficacy, enable the absence of the certificate or lack of sat:J.sfaction t?
be disregarded, the correct basis for this being that a ~ontractu.al o~li-
gation to obtain a certificate can only be construed _as subJect to ~ rmplied
term that the AfE will be willing or able to do his part, and, indeed, an
implied undertaking to the contractor on the part of the owner to the same
effect. Thus in the Panamena case in the Court of Appeal, Goddard L.J.
said:
"The first question that arises is, can the defendants :el)'. on the a.b~ence of a
certificate from their surveyor, the production of which 1s a_condit.1on prece-
dent to their liability to pay, when the absence .of that ce~ficate is due to~
refusal by their surveyor to perform the duty ass1gn~d to him by the contract.
It is, and must be conceded, that, if a party desires to. rely on the non-
performance of a condition preceden~, he m~t do n?thing to prevent the
condition from being performed, and, if there ts anyth1!1~ that ID:ust be do~e
by him to render possibl~ the perfo~ance o_f t~e ~ondition, a fadure by him
to do what is required disenutles him from 1ns1s~g on performance of the
condition ... If they failed to appoint anyone, obvtously they could not r~ly
on the absence of a certificate. Equally, it seems to me, they must appoint
someone who is willing to perform the duty assigned to him by the contract. If
he will not or cannot perform that duty, they must app?int someone wh<? w_ill.
Here it is clear that Dr. Telfer refused to perform the simple du~y of ce~g
whether the work was properly done ... because he took the view, and I will
assume honestly, that the contract enabled and, indeed, required him .to do
something else ... He, therefore, was unwilling to carry out the duty ~s~1gned
by the contract to him. The defendants either were of the same op1n1on or
19 Illustrated, supra, para. 6·129.
20 [1938] 1 All E.R. 753, at p. 756. _ .-·
21 see, in addition to Kellett's case, Watts v. McLeay and Neale v. Ric~a_rruo~~.~llustrated
supra, p·aras. 6·120 and 6·073, and Young v. Bal!arat ~a~er Commisswners, illustrated
supra, para. 6·108. See also Swiney v. Ballymena Commisswners (1888) 23 L.R. Ir. 122.
RECOVERY WITIIOUT CERTIFICATE 827
adopted his view; for this purpose, it matters not which. Consequently, they
neither required him to certify in accordance with the contract, nor they did
appoint anyone else in his place. It is no answer for them to say that that was
because they misinterpreted the contract. It is often the case that a person is
guilty of a breach of contract because he has placed a wrong construction on
it, but that affords him no defence.'>ii
Those remarks, approved by Lord Thankerton in the same case in the
House of Lords, were made in a situation where the certifier had misinter-
preted the contract, and must apply a fortiori, it is submitted, in a case
where there is not even that excuse for refusal to certify.
(g) Wrong matters taken into consideration
It will be seen that there have been a number of reported cases where 6°149
certification decisions have been invalidated because the certifier applied
some wrong principle or took extraneous and irrelevant matters into
consideration.23
Where it can be shown that a person whose approval or certificate is
required has misinterpreted his function and discretion, and taken into
account matters which the parties, on a true construction of their contract,
did not intend that he should consider, it is submitted that, as a matter of
principle the decision cannot have any validity, since the jurisdiction of the
architect or certifier can only arise from the act of the parties as expressed
in their contract, and, by definition, he has exceeded that jurisdiction. On
this view, a certifier's own demonstrable error outside his own area of
discretion will be sufficient to invalidate a certification without need for
participation or collusion on the part of the owner.
Viewed in the different light of the prevention principle, however, the
Panamena case also suggests a positive duty of the owner under that prin-
ciple to provide a certifier available to perform his function as required by
the contract:
"In my opinion, therefore, the case can be decided, apart altogether from
collusion, on the ground that the absence of a certificate is due to the fact that
the surveyor refused to do that which the contract contemplated he should
do, and that the defendants did not require him to perform his duty or
appoint anyone else to perform it, although they knew why he was refusing to
certify."i4
Viewed in the light of a more specific implied term, Scott L.J., whose 6°150
judgment concentrated on this aspect, said:
22
Leyland Ltd. v. Panameno Europea (1943) 76 Lloyd's Rep.113, at p. 127.
23 Peters v. Quebec Harbour Commissioners (1891) 19 S.C.R. 658; Panameno Europea v.
Leyland [1947] A.C. 428; City of Oshawa v. Brennan Paving [1955] S.C.R. 76; Re Dav-
stone's Leases [1969] 2 Ch. 378;James Moore Ltd. v. University of Ottawa (1975) 49 D.L.R.
(3d) 666;_Canterbury Pipelines Ltd. v. Christchurch Drainage Board [1979] 2N.Z.L.R. 347.
2• Per Goddard L.J., atp.127. See also the passage quoted from Goddard L.J. under "Refusal
of Certifier", supra.

828 APPROVAL, SATISFACTION AND CERTIFICATES (CHAP.
"I think the Court ought to imply an undertaking by the owners that, in the
event of its becoming known to them that their surveyor was departing from
the function which both parties had agreed he was to perform, they would call
him to book, and tell him what his real Dl.D,;<;.~911,_was. This seems to me an
implication exactly on the lines of all the authorities on implied terms ... In
the result, I am of opinion that they were under a contr~ctual duty .to,~e~p
their surveyor straight on the scope of what I metaphoncally call his JU~1s-
diction' ... It follows ... that in failing to tell Dr. Telfer that he was going
outside and away from the limits of his function, they broke their implied
undertaking. One result of this was, I think, a repudiation upon which the
plaintiffs could have elected to rescind an~ c~aim damages, if th~y so chose,
but another result in law was that, on the pnnc1ples of McKay v. Dzck and also
Hickman v. Roberts, the plaintiffs were entitled instead to treat ~e def~nd-
ants as preventing the performance of the terms of the contract 1n question,
and also as waiving it as a condition precedent to the plaintiffs' right to sue on
the ... certificate. "25
Whatever its origin, this is a basic principle of long standing. Thus,
where the parties had agreed to buy and sell a house at a price to be fixed
by a named valuer, and the valuation was ·disputed as excessive, Lord
Romilly M.R. said:
" ... this Court must act on that valuation, unless there be proof of some mis-
talce, or some improper motive, I do not say a fraudulent one; as if the valuer
had valued something not included, or had valued it on a wholly erroneous
principle ... In any one of these cases, the Court would refuse to act on the
valuation. " 26
6,151 Again, when re-conditioning certificates of quality were required in a
contract for sale of used machinery, a third party's certificates which bona
fide applied a subjective and not objective standard had the effect of inval-
idating the certification requirements of the contract.27
While, therefore, the Panamena case certainly appears to stress knowl-
edge and support or concurrence in his certifier's error on the part of the
owner,21a it is difficult to see how, in practice, any need to show this can
embarrass a party seeking to override a certification decision arrived at for
extraneous reasons, since the presence of the dispute in the courts inevi-
tably involves the defendant having decided at some stage to support the
position taken by the certifier. Thus the reasoning in the Oshawa. case,
echoing the language in Panamena, that the owner "had concurred 1n the
position taken by the engineer", adds little or nothing, it is submitted, to
the simple proposition that, if it can be clearly shown by extraneous
evidence that a certifier has adopted wrong principles, or
taken into aCCount matters outside his proper discretion, the contractual
consequences attributed by the contract to his certificate will be avoided,28
25 Ibid. at p. 124.
26 Collier v. Mason (1858) 25 Beav. 200, at p. 204. . .
21 Minister Trust Ltd. v. Traps Tractors Ltd. [1954] 1 W .LR. 963, illustrated supra, Secuon 1,
para. 6·019. ~- '
v. There was a very close identity with the owner in Panamena.
1.B See, e.g. Peters v. Quebec Harbour Commissioners, illustrated supra.
SECT. 5] RECOVERY WITHOUT CERTIFICATE 829
6
or, in an appropriate case on the facts, damages for breach of contract can
be recovered. 29
SECTION 6. CERTIFICATES
(1) Generally
As has been seen, certificates under building and engineering contracts 6°152
are of various kinds. The commonest are as follows:
(a) interim or progress certificates, upon which periodical payments or
advances to the contractor on account are made30;
(b) final certificates, which frequently are certificates both of satisfac-
tion with the work and of the final balance due to the contractor
upon his final discharge of his obligations under the contract.31
However, in many earlier contracts, not usually found at the pre-
sent day in the United Kingdom but still common in Common-
wealth countries, an earlier certificate at the beginning of the
maintenance period is made the definitive certificate of satisfaction,
but subject to a defects liability during the subsequent maintenance
period32;
(c) certificates that the work should have been completed, after any
appropriate extensions of time, by a certain date. These effectively
record the final overall result of the certifier's previous extension of
time decisions, and are required, under the provisions of most con-
tracts, to enable the owner to recover or start to deduct liquidated
damages for delay32a;
( d) certificates of completion, or of practical or substantial completion,
which will usually imply an element of at least provisional satisfac-
tion. These are usually required to signal the end of any liquidated
damages for delay, and also the start of the maintenance or defects
liability period, as well as, very often, to authorise a release of a
proportion of the retention moneys;
(e) various other special certificates, for example, extending the time
for completion, or, on the other hand, confirming failure of due
expedition, or failure to remove defective work when instructed, or
any other facts upon which an owner's right of termination may
depend.
As generally understood in building contracts, a certificate is the 6-153
expression in a definite form of the exercise of the judgment, opinion or
29
See Scott L.J.'s judgment in the Panamena case, and the analysis of MacFarlan J. in the
Perini case.
30 See infra, paras. 6·186 et seq.
31
There is in fact no expressed equivalent, for some reason, in the ICE conditions.
32
See supra, section 3(3), paras. 6·046 et seq.
3
2e For these see post, Chap. 10, Section 3(3) and (4).
 830 APPROVAL, SATISFACTION AND CERTIFICATES [CHAP. 6 SECT. 6]
skill of the engineer, architect or surveyor in relation to some matter pro-
vided for by the terms of the contract.33 It will usually relate to an existing
state of affairs, 34 either directly or as an expression of the opinion or judg-
ment of the certifier. In fact in the great majority of cases it will record a
state of affairs, and references to the certifier's opinion or satisfaction,
either in the governing contractual provision or the certificate itself, will
be otiose and mere surplusage. 34.a Unless so required by the contract, the
certificate need not be in writing.
ILLUSTRATIONS
(1) To a suggestion that "no certificate or written allowance being expressly
required, an oral allowance will suffice", HillJ. replied: "Clearly so.": Cokerv.
Young (1860).35
(2) A building contract stipulated for payment "provided that the architect
shall have certified that the whole of the work has been done to his satisfac-
tion". Held, by the Court of Common Pleas, that it was not necessary that the
architect should certify in writing: Roberts v. Watkins (1863). 36
(3) A building contract provided for payment "on the surveyor certifying
that the whole of the works are in a complete and satisfactory state". Held,
by Vaughan Williams J., that an oral certificate was sufficient: Elmes v. Burgh
Market Co. (1891).37
And the fact of a certificate having to be "delivered" would not, it would
seem, imply that it had to be in writing. On the other hand, a mere check-
ing of the amounts _claimed for work done has been held not to be a certifi-
cate of satisfaction, where such was required. 38
(2) Form and Sufficiency of Certificate
6·154 Whether or not a certificate in writing is required, the question whether it
is a certificate of the precise kind required by the contract may give rise to
33
This sentence was adopted by Edmund DaviesL.J. in Token Construction Co. Ltd. v. Char-
lton Estates Ltd. (1973) 1 BLR 48, at p. 53. See, however, the discussion in the Hong Kong
Court of Appeal when considering a contractual provision for an "order" extending the
time for completion in Costain International v. A-G of Hong Kong (1983) 23 BLR54. The
Token case is illustrated infra, para. 6·158.
3• See the Costain International case.
4> See this explained in C.C.P.P., paras. 17-06-08.
3
>5 2 F. & F. 98, at p. 101.
6
l 14C.B.(N.S.) 592, atp. 595. Followed by Stout C.J. inMeyerv. Gi/mer(1890) 18N.Z.L.R.
129, at p. 139.
lJ Hudson, Building Contracts (4th ed), Vol. 2, p. 170; and see Re Hohzenzollern Actien-
Gesellschaft(l886), Hudson Building Contracts (4th ed.), Vol. 2, p. 100;2 T.L.R. 470. See
alsoMeyerv. Gilmer, infra. ,· ., . 42
ls Morgan v. Birnie (1833) 9 Bing. 672, infra, para. 6.162. See, however, Meyer.v. Gilmer
(1890) 18 N.Z.L.R. 129, illustrated infra, para. 6·156.
CERTIFICATES 831
difficulty. In each case it is necessary to consider what kind of certificate is
required by the contract and whether the acts of the certifier or terms of
any statement relied upon can constitute such a certificate. Thus of acer-
tificate of quality, which it was intended should have binding effect, Dev-
lin J. said:
"I think that a certificate of this sort must, to satisfy the contract, be unam-
biguous and readily understandable. When a document is tendered under a
contract, the recipient has often to make up his mind whether he is going to
pay out money upon it or to accept or reject goods; he has no right, and may
not have time, to cross-examine the certifier or to ask him to clear up doubts
... The seller has the advantage of being allowed to supply a document
which, if effective, shuts out all further enquiry into the condition of the
goods. It is not unreasonable to demand that such a document should be clear
and substantially in the terms for which the contract calls. " 39
It will be seen that architects in particular have, over the generations, been
extremely careless in regard to the verbal content of their certificates.
They may even omit altogether to issue earlier certificates called for by the
contract upon which a later certificate may be required to depend.
In addition to the cases illustrated below, those in Section 1(2) supra,
should also be considered.40
ILLUSTRATIONS
(1) A building contract in Victoria provided that, upon a certificate of the 6·155
architect that the work had been completed to his entire satisfaction, the conw
tractor should be paid such a sum as, with any previous payment, would
amount to 97!,S; per cent. upon the contract price, and that, upon a further
certificate to the same effect but further stating the final balance due, such
balance should be paid within a time named. Held, by the Full Court, that the
two certificates might in principle be combined in one,41 but as the actual cer-
tificate in the present case was a qualified one, stating that the contractors
were entitled to receive a certain sum-the balance, less a sum retained as
security for reparation of any defects-such certificate could not be treated as
the final certificate entitling the contractors to payment of the final balance:
Walker v. Black (1879).4z
(2) An architect received the builder's account for extras, placed his own
figures in the margin, thus reducing the builder's claim, and at the foot wrote,
"Balance due as perconditions,£125", and signed his name thereunder. Held,
by the Court of Appeal, that this did not amount to a certificate: Goodman v.
Layborn (1881). 43
(3) Where there were two clauses in the same contract-one that the
builder was not to be paid the final balance until two months after the archi-
39
Minster Trust Ltd. v. Traps Tract9rs Ltd. [1954] 1 W.L.R. 963, at pp. 982-983.
40
See supra, paras. 6·011 et seq.
41
Distinguish Kirsch v. Brady (1937) 58 C.L.R. 36, Australia, illustrated infra, para. 6·165.
5 Viet.LR. (Law) 77. (Distinguish McCarthy v. Visser, infra, para. 6·163).
43
Roscoe's Digest ofBuilding Cases, (4th ed.), App., p.162, C.A. Compare Morgan v. Birnie,
illustrated infra.
 832 APPROVAL, SATISFACTION AND CERTIFICATES [CHAP.6
tect had "expressed his satisfaction", the other that the balance was not to be
paid till "after" the architect had given his final certificate-the architect
wrote expressing his satisfaction in 1883, and in June 1884 gave his final certifi-
cate. Held, by Mathew J., that the meaning of the two clauses was that satisfac-
tion was to be expressed by a final certificate, and an action brought within
two months of delivery of that certificate was premature: Coleman v. Gittens
(1884)."
6·156 (4) An architect in New Zealand wrote at the bottom of the contractor's
account: "I certify that this account is correct." The contract provided for
payment on certificates in writing under the hand of the architect, and for 25
per cent. of the final balance to be retained till forty days after the work was
satisfactorily completed and a "certificate to that effect" granted. Held, by
Stout C.J ., that the document was a sufficient certificate for payment of the
final balance less retention, but it was doubtful ifit was sufficient for release of
the 25 per cent. retention. However, there being no provision that the second
certificate should be in writing, and the architect having orally expressed his
satisfaction, the contractor was entitled to the whole contract sum: Meyer v.
Gilmer (1899). 45
(5) A contract for the sale of used machinery required "Hunt Engineering
Certificates" to be supplied showing that it was fully reconditioned to the
Hunt standard, which would be conclusive as to its quality. Documents were
issued by the Hunt company entitled "Inspection Report" indicating satisfac-
tion, but it emerged that they did not indicate an objective standard of quality,
which it had never been the company's practice to issue, but were only arrived
at after taking account of an individual client's indicated requirements. 46
Held, by Devlin J., that the documents were not certificates in form, sub-
stance, or intent of the kind which had been contemplated by the contract,
and the buyers were entitled to prove deficiencies in the machinery supplied:
Minster Trust Ltd. v. Traps Tractors Ltd. (1954). 47
6,157 (6) A contract in South Africa provided that on the expiration of three
months after completion of the works the architect should issue a "final cer-
tificate of the value of the works executed". The architect issued a document
stating that the contractor had completed his contract including all work on a
certain date, and in a later, second document, called a final account, stated
that "the amount due to date" was a certain sum. Held, by Kuper J., that the
second document was a valid final certificate: Portuguese Plastering Contract-
ors v. Bytenski (1956). 48
(7) A contract required the architect to certify completion to his satisfac-
tion at the beginning of the maintenance period. The architect wrote a letter to
the contractor on April 26, 1957 "subject to certain amendments not now
required to be executed the residence in essence is now complete and under
the terms of the contract the maintenance period will commence as from
April 11, 1957." Subsequently the architect gave his final certificate at the end
of the maintenance period. Held, by the Court of Appeal of New Zealand,
that the letter was a valid certificate of satisfaction: Major v. Greenfield
(1965).'"
44
1 T.L.R. 8. Compare Kirsch v. Brady, and Crestar Ltd. v. Carr, illustrated infra.
4S 18 N.Z.L.R. 129.
-w; See the case illustrated supra, Section 1, paras. 6·011-6-012.
41 [1954] 1 W.L.R. 963.
4l! 1956 (4) S.A. 812. ,·
49
[1965] N.Z.L.R. 1035, illustrated and doubted on other grounds supra, Section 4, para.
6·083.
SECT. 6] CERTIFICATES 833
(8) By Clause 2(e) of a modified RIB A/JCT prime-cost contract, the archi- 6,158
tect was required to give extensions of time for specified reasons and, by
Clause 16 (the equivalent of Clause 22 of the priced RIBA/JCTmain contract
forms) the owner was entitled to deduct liquidated damages on the architect's
certificate that the works ought reasonably to have been completed by the
contract or its extended completion date. Shortly before completion, the con-
tractors wrote requesting substantial extensions of time, and 18 months after
completion, the architect wrote a letter to the owner which stated: "I wish to
bring to your attention the fact that, in accordance with Clause 16 of the con-
tract, you are entitled to deduct from any payments due to the contractor such
. sums as are due to you as damages for non-completion. The dates relevant to
this calculation are as follows. The original contract completion date was
31.10.67. With 13 weeks' extension of time the adjusted completion date for
the contract would have been 30.1.68. The date for the practical completion of
tl).e contract was 15.7.68 ... To summarise, the following are the relevant
dates: contract completion date ... 31st October 1967. Agreed extension of
time allowed-13 weeks. This adjusts the contract completion date to 30th
January 1968. Agreed practical completion dates ... 15th July 1968." The
owner contended that this letter constituted both the extensions of time
required to be made under Clause 2(e) and the certificate under Clause 16. No
·:COPY of the letter was sent to the contractor. Held, by the Court of Appeal,
that the contract required the architect, first, to form the necessary opinion
following a request under Clause 2(e) to grant an extension and to specify its
duration, and then to "make" the extension, not necessarily in writing; and,
secondly, to certify in writing as required by Clause 16. The letter was ambigu-
ous as to whether or not, and, if so, what, extension had been granted. Fur-
thermore, following the Minster Trust v. Traps Tractors case, the letter was
not a certificate in "form, substance, and intent" as contemplated by the con-
. tract, since nowhere did it specifically record the architect's opinion that the
· works ought reasonably to have been completed by a particular date: Token
Construction v. Charlton Estates (1973). 50
(Note: This letter would seem, it is submitted, to state all the relevant dates
and, by implication if not expressly, the extent of the total extension. The
letter also stated expressly that details of the 13-week extension would be
forwarded in due course. As will be seen in later cases, the courts have been
relatively severe in demanding close attention to the contract wording with
· ·regard to the vital Clause 16 (or its equivalent in other contracts) certificate
that the works should have been completed on a named date, no doubt
because the entitlement to deduction from interim certificates, in addition to
any later right to bring an action, is dependent upon this certificate, and doubt
as to its exact application might have serious consequences involving for ex-
ample, a termination of the contract being attempted by the contractor for
non-payment of sums certified.]
(9) A termination clause in a New Zealand engineering contract provided 6·159
that if the engineer should certify in writing to the council that the contractor
had failed to proceed with the works with due diligence, the council would be
entitled, on seven days' notice, to determine the contract. The contractor was
five months late when the engineer submitted a report to the council, emanat-
ing originally fr:om his assistant engineer, stating that progress had slowed,
and that the contractor was not efficient and had insufficient suitably com-
petent staff, and recommending that the council should determine the con-
tract. Held, by Smellie J., that the document did not itself purport to be a
.~1 BLR 48. See also the later cases on this type or certificate post, Chap. 10, Section 3(4),
para. 10·075.
 834 APPROVAL, SATISFACTION AND CERTIFICATES [CHAP.
certificate, and the members of the council would regard it primarily as a rec-
ommendation and secondly as a report, and not as a formal certification in
writing of the opinion of the county engineer as engineer under the contract.
Applying the Minster Trust and Token Construction cases, the document was
not a certificate which complied with the requirements of the termination
clause: Brown & Doherty Ltd. v. Whangarei County (1988). 51
6·160 The relative severity of the courts in interpreting certificates for liqui-
dated damages deductions has led, as might be expected in view of the
procedural complication of many English sub-contracts (which require
certification by the architect in the main contract in support of any right of
the main contractor to deduct in the sub-contract) to not infrequent fail-
ures of the resulting offered documentation. Thus, where liquidated dam-
ages had been successfully imposed on the main contractor, the architect's
accompanying main contract documentation justifying his decision on the
basis of disallowance of a nominated sub-contractor's application for
extension of time, has more than once been held to be an inadequate certi-
fication as against the sub-contractor from the point of view of the sub-
contract requirements. 52
The above cases emphasise the need, particularly in cases involving ter-
mination or liquidated damages, for a reasonable degree of precision in
the drafting of his certificates by the architect or engineer. In particular,
they should purport to be certificates wherever possible; refer to the spe-
cific provision of the contract authorising their issue; and follow the word-
ing of its requirements as closely as possible. Otherwise, documents
which, on close analysis, almost certainly do convey the required inten-
tion, may fail in effect for lack of clarity, that is to say, insufficiently
clear "form and intent" as referred to by Devlin J. in the Minster Trust
case.
Again, where contractual provisions require certificates of satisfactory
completion in the later stages of the work, or final certificates for payment,
or sometimes certificates involving a combination of these two matters,
problems have frequently arisen under older forms of contract in deciding
whether a particular informal document or certificate meets the require-
ments of the parties in the dispute which has arisen.
6·161 If the required certificate is of satisfaction only, no amount need be
stated in the certificate, and the amount due, if in dispute, must be deter-
mined by the courts or an arbitrator, as the case may be. In such a case, if
an amount is stated, it does not bind.
51
{1988] 1 N.Z.L.R. 33.
52
Savage Brothers v. Shillington (1985), reported in (1989) 5 Const. L.J. 295,per HigginsJ.,
Northern Ireland High Court; Pyrok Ltd. v. Chee Tat Engineering Ltd. (1988)'41 BLR 124,
C.A., Hong Kong. The Savage Brothers case is illustrated supra, Section 4, pat,<!c·; 6·088, and
both cases are illustrated post, para. 10·076.
6 SECT. 6] CERTIFICATES 835
ILLUSTRATION
P. sued for £4,46119s. Sd., as the balance of the contract price and extras
due on building a gaol. The contract provided for payment of the retention
money "after the architect shall have certified the completion of the whole
work to his satisfaction". The architect made two certificates or reports to the
owner declaring his satisfaction with the work, but not mentioning the
amount due to P., and made another certificate to the effect that£59 7s. 2\4d.
was due on the balance of the contract, and £3,923 for extra work. Held, by the
Court of Common Pleas, that a certificate of satisfactory completion alone
was required; that it was unnecessary to mention the amount due; and that the
plaintiff having obtained such certificate was at liberty to prove aliunde a dif-
ferent amount due: Pashby v. Birmingham Corporation (1856). 53
On the other hand, a document showing a final or other amount as due 6,162
to the contractor, without any reference to satisfaction or any other matter
on which the payment in question is conditioned under the contract, will
often, unless there is some indication to the contrary, impliedly certify
satisfaction or whatever other matter is required by the contract to justify
the payment. However, a document showing the final value of extras and
omissions only has been held not to certify satisfaction with the works.
ILLUSTRATIONS
(1) In an action by a builder to recover for extras, where the contract stipu-
lated for payment on the architect's written certificate of satisfactory com-
pletion, the plaintiff proved that the architect had been asked to examine and
approve the builder's charges, and had written to the owner enclosing a docu-
ment headed: "Final statement of extras and omissions of the carcase of a
house for G. B. Esqre., by T. M. builder." Held, by the Court of Common
Pleas, that this was not a certificate; for the effect of a certificate would be
altogether different, applying to the manner in which the work had been
done, while the checking of the accounts applied only to the propriety of the
charges: Morgan v. Birnie (1833). 54
[Note: This case was clearly rightly decided on its particular facts.J
(2) A New Zealand building contract provided for interim payments, and
that the balance of the stipulated price "shall be paid by the proprietor to the
contractor within fourteen days from the architect's certificate being given
that the works are completed to his satisfaction". The architect gave a certifi-
cate: "I hereby certify that Messrs. S. B. are entitled to the sum of£--, being
balance of amount due to them on account of contract and extras for your
house atS." Held, by the New Zealand Court of Appeal, that this was a suf-
ficient certificate·under the terms of the contract: Harman v. Scott (1874). 55
5318 C.B. 2; and see Robinson v. Owen Sound Corporation (1888) 16 Ont.Rep. 121.
54
9 Bing. 672; and see this case commented on in Harman v. Scott (1874).2 Johnst. N.Z.C.A.
407, infra. See also Goodman v. Laybom (1881), illustrated supra, para. 6·155 and Lam-
prell v. Billericay Union (1848) 18 L.J. Ex. 282, illustrated infra, para. 6·172, and post, para.
7·058.
"2 Johnst.N.Z.Rep. 407; see also Clarke v. Murray (1885) 11 Vict.L.R. (Law) 817.
 836 APPROVAL, SATISFACTION AND CERTIFICATES [CHAP.
6·163 (3) A contract in the Cape provided for the work to be done to the satisfac-
tion of the architect; for payment on his certificate; and for retention of a
proportion of the price as security for the making good of defects appearing
within two months of completion. The architect certified that a certain sum
was due, subject to the contractor putting right a number of listed defects.
These were in fact remedied. Held, by Maasdorp J., following Bateman
(Lord) v. Thompson {where a similar qualified certificate was issued), that
this was a valid final certificate once the listed defects had been remedied:
McCarthy v. Visser (1905). 56
(4) A Transvaal contract provided that a certain percentage of the purchase
price was only to be paid "two months after the date of the certificate of final
completion, when the architect shall have certified that the works are com-
pleted in tenns of the contract and to his satisfaction and that the roofs have
proved watertight". The architect gave a certificate reading: "final instalment
certificate. I hereby certify that the sum of £--is due to G. Swan & Co. on
account of work executed and materials supplied". Held, by the Transvaal
Provincial Division (Hill J. ), that it was a final certificate under the contract
and implied satisfaction: Lowther v. Swan (1915).57
(5) Under a contract requiring a definitive certificate of completion to the
architect's satisfaction at the beginning of the maintenance period, no such
certificate was ever given, but ultimately the architect gave a certificate No. 16
for payment, stating: "that in accordance with the conditions of the above
contract the Progress Payment No. 16 (final) is due to the contractors for the
sum of£--." Held, by the Court of Appeal of New Zealand, following
Hannan v. Scott, that the certificate was a certificate of satisfaction and bound
the owner in the absence of defects notified in time: Borough of Stratford v.
Ashman (1960).58
The above earlier cases, and certain other Australian cases, were con-
sidered in 1937 in a valuable review (as at that date) by Dixon J. in the
High Court of Australia.59
6·164 It is submitted that a provision for payment on certificate will by impli-
cation confer a power on the certifier to ascertain and decide the amount
due under the various contractual provisions which may enable adjust-
ments to be made to the sums to be certified (for example, under re-
measurement, variations or :fluctuations clauses, or other compensatory
provisions in the contract) and that, in the absence of express provision, no
objection can be taken to a binding certificate either on this ground or that
it does not specify the various adjustments separately. In such cases, a
statement of the simple balance due will be sufficient as regards the form
of the certificate, it is submitted. However, this can pose considerable diffi-
culties for either party when considering whether to challenge a certifi-
cate, and contracts should, although they almost never do, expressly
entitle either party to require a full make-up or explanation of any certifi-
cate.60 Even in the absence of such a provision, certifiers should in their
~ 22 Cape of Good Hope Rep. 122, South Africa.
51 (1915] T.F.D. 494, South Africa.
>B [1960] N.Z.L.R. 503, illustrated more fully supra, para. 6-082.
:;g See Kirsch v. Brady (1937) 58 C.L.R. 36, at pp. 52-54, illustrated infra.
60 See, e.g. SIA contract, Clause 31(11), C.C.P.P., p. 599.
6 SECT. 6] CERTIFICATES 837
own interest explain the make-up of a certifying decision at the request of
either party, since otherwise both their bona fides and the proper exercise
of their contractual discretion within their jurisdiction under the contract
will be justifiably under suspicion.60a
A certificate which may satisfy all requirements of form may neverthe- 6·165
less fail to have effect if it is clearly given at the wrong time under the terms
of the contract, or some other certificate on which it is itself dependent has
not been properly issued.
ILLUSTRATIONS
(1) A contract provided for payment at a rate of 80 per cent. of the value of
work done, with 99 per cent. payable on a certificate of practical completion
to the architect's satisfaction, whereupon the contractor would give up pos-
session, and with the final 1 per cent. payable upon a final certificate given not
less than six months thereafter. The contractor gave up possession without
any payment or certificate for the additional 19 per cent., and the architect
thereafter gave only one certificate, described as a final certificate, for the
entire balance, on which the contractor sued. The owner wished to defend
alleging defective work, and the contractor alleged a binding certificate of
satisfaction. Held, by the High Court of Australia, that the right to sue on the
final certificate could not arise until six months after the practical completion
certificate, and in the absence of the earlier certificate it was not binding. Fur-
thennore, even if the final certificate could be regarded as the certificate of
satisfaction, the contractor had issued his writ within six months of the certifi-
cate, so that it failed as a final certificate: Kirsch v. Brady (1937). 61
(2) By Clause lO{ii) the architect was to certify 95 per cent. of the contract
price within 10 days of practical completion, and by Clause 9(iii) a certificate
of making good defects at the end of the three month defects liability period
was also required. The final certificate was to be within 10 days of the Clause
9(iii) certificate. The architect neither issued a 95 per cent. certificate nor a
making good of defects certificate, but one purported final certificate for the
balance. The contractor contended that the certificate was binding, notwith-
standing the presence of an arbitration clause,62 whereas the owner wished to·
dispute it as being excessive on a number of grounds. Held, by the Court of
Appeal, pointing out that the contract contemplated a comparatively small
final certificate, whereas this certificate related to some 30 per cent. of the
total contract price, it could not be valid in the absence of the two preceding
certificates: Crestar Ltd. v. Carr (1987). 63
(3) By the Singapore 1979 SIA contract (identical for this purpose and in 6·166
many other respects with the 1963 RIBA/JCT English standard forms) the
architect was required to issue his final certificate "so soon as practicable but
before the exploration of 3 months from the end of the defects liability pe-
riod". The architect in fact supplied a schedule of defects during the period,
and on their being remedied issued a final certificate some 6 weeks before the
end of the period. In an action by the contractor for the sums due on two
earlier certificates and the final certificate, the owner alleged defects in the
r.o. Compare the arbitrator misconduct case of Traynor v. Panan Contractors, see post, para.
18·144.
61
58 C.L.R. 36. This is a difficult decision if the writ was more than six months after re-entry.
62
For the case illustrated on this point, see supra, para. 6·077. ·
6.137 BLR 113.
 838 APPROVAL, SATISFACTION AND CERTIFICATES [CHAP.
work either not notified to or not properly rectified by the contractor, and the
registrar gave leave to dE:fend for that purpose. Held, by Karthigesu J., that
since there was no express prohibiton against the issue of a final certificate, it
was valid and conclusive, by virtue of Clause 30(7), that the work had been
properly carried out, so that the contractor was entitled to the whole of the
sums claimed without deduction: James Png Construction v. Tsu Chin Kwan
Peter (1991),64
[Note: This seems, with respect, a very doubtful decision. Clause 30(4) of
these forms envisages a preceding certificate which releases the second half of
the retention money at the end ofthe defects liability period or on a certificate
of making good of defects, which ever is the later, and it is difficult to see,
unless knowledge and waiver by the owner had been established, how the
architect could without authority cut short the limited degree of protection in
regard to defective work afforded by the chronology laid down in this earlier
Singapore form of contract. If the preceding certificate releasing retention
could not be issued before the end of the period, it is hard to see how a suc-
ceeding final certificate, presumably also dealing with retention, could validly
be issued earlier.]
(3) Mistakes in Certificates
6·167 Errors which are not material, and which do not go to the substance of
what is being certified, and do not mislead, will not invalidate a certificate,
as, for example, an error in stating the contractor's company name cor-
rectly, or an error in stating the date of the contract.6s
Those cases where a certifier discovers an error of substance in a pre-
vious certificate, and desires to correct it, are discussed in Subsection (4),
below. In the case of interim certificates, there will, in any case, be an
automatic element of correction of earlier substantive mistakes by reason
of the express payment provisions of nearly all contracts, which usually
take the form of periodical retrospective valuations of all the work done to
date, with many other retrospective adjustments, such as the replacement
of unfixed materials in earlier certificates by finished work valuations in
later certificates, or reductions for newly-discovered defective work pre-
viously allowed in full. 66 Correction in subsequent certificates of earlier
mistakes of all kinds is, therefore, an inherent element of nearly all sys-
tems of interim payment.
6,168 Errors in certificates due to the certifier taking wrong matters into con-
sideration, and their possible effect in invalidating the certificate, have
already been considered supra, Section 6. Where, however, the error or
mistake is alleged in one of the intended areas of discretion reserved by
the contract to the certifier, as, for example, in the valuation of contract
work, or of variations, or in making disallowances for defective work, or in
deciding on extensions of time, it has been seen that, in general, this will
not, in the absence of collusion, dishonesty or prevention, enable a certifi-
64
[1991] 1 M.L.J. 499.
65
See Euston Contractors Ltd. v. Protea Estates (1987) 39 BLR 126,per Judge f_qx-Andrews
Q.C. ·,c-
66 See this explained in C.C.P.P., para. 14-05.
6 SECT. 6] CERTIFICATES 839
cate to be re-opened or invalidated, at least in cases where it is required to
be final and binding under the terms of the contract.
Equally, where it is reasonable or contemplated that the certifier may
act after taking into account the .reports of subordinates, agents or
employees, errors by them will not avoid an otherwise binding
certificate.67
However, if the certifier allows himself to be controlled by departmen-
tal policy or by a subordinate's report, and does not apply his own mind to
the matter, there will be a breach of contract, or a binding certificate may
be invalidated. 68 However, the mere fact that a letter had been drafted by a
subordinate, who had previously taken an active part in the contract as the
project engineer, has been regarded as of no significance in the absence of
further evidence: "It would require compelling evidence to establish in
such circumstances that the decision was not that of the signatory. " 69
(4) Correcting a Mistake in a Certificate
If the effect of the contract is to confer finality upon a certificate, it has 6·169
been held that a certificate validly issued cannot, in the absence of a con-
tractual provision to the contrary, or agreement or waiver by the parties,
be withdrawn in order to correct mistakes of fact or value in it. Having
issued the certificate, the certifier has on this theory discharged his func-
tion, and unless an arbitration or other clause empowers him to decide a
dispute arising upon the certificate, or to amend it, he has no jurisdiction to
alter it or issue another.
ILLUS1RATION
A contract to build bridges gave the owner power to terminate the contract
on notice, and pay for work and materials provided up to the date of the
notice, on production of the engineer's certificate of the amount due. The
owner exercised the power and the engineer certified as to the value of the
work done, but subsequently delivered a second certificate amending the one
previously given. Held, by the Supreme Court of Canada, that the first certifi-
cate given was a final certificate and not a progress certificate, and therefore
was binding: McGreevy v. Boomer (1880). 70
67
Clemence v. Clarke (1880), Hudson, Building Contracts (4th ed.), Vol 2, p. 54,Ayr Road
Trustees v. Adams (1883) 11 R. (Ct. of Sess.) 326, illustrated supra, Section 3, para. 6.050;
and see also Brown and Docherty Ltd. v. Whangarei County [1988] 1 N.Z.LR. 33, illus-
trated supra, para. 6.159, and ante, para. 4·215.
68
Perini Pacific Corporation v. Commonwealth of Australia [1969] 2 N.s:w.R. 530, illus-
trated supra, Section 5, para. 6·133, and see also the formidable judgment of Isaacs J. in
Dixon v. South Australia Railways Commissioners (1923) 34 C.L.R. 71.
69
Per Judge Fox-Andrews Q.C. in Anglian Water Authority v. R.D.L. Contracting Ltd.
(1988) 43 BLR 104, at p. 112.
70
[1880] Cassell's Digest 73, Sup. Ct., Canada. And see Davey v. Gravesend Corp. (1903) 67
J.P. 127, where it was held obiter that an interim certificate, once given, could not be
withdrawn.
 840 APPROVAL, SATISFACTION AND CERTIFICATES [CHAP.
6-170 There may be circumstances, however, where, if the original certificate
can be regarded as a nullity, the subsequent issue of a valid certificate may
be effective.
ILLUSTRATION
A local board of health gave notice, under section 69 of the Public Health
Act 1848, to the owners of premises fronting two streets to level, pave, etc. and
the owners having made default, the board did the work themselves. An
apportionment was made by the surveyor of the board, which was held to be a
nullity because the surveyor had apportioned the expenses of both streets,
instead of each street separately. Held, by the Court of Queen's Bench, that
the surveyor was not functus officio, and was, therefore, right in making a
fresh apportionment: Cook v. Ipswich Local Board (1871). 71
Again it has been held that an architect could not, after giving his final
certificate, remedy a previous omission to issue a Clause 22 certificate un-
der the pre-1980 RIBA/JCT standard forms, so as to perfect the owner's
right to deduct liquidated damages for delay in respect of previously
refused extensions of time. 72
6·171 Notwithstanding the above cases, it is difficult to see why, in principle, a
certifier should not be able to issue a corrective certificate where he
becomes aware of an error in an earlier certificate, a fortiori if there is
doubt or objection taken to the validity of the earlier certificate on
grounds of form or timing, for example. But unless the effect of the earlier
certificate has been to alter a party's position irreparably (for example, as
a result of the necessary certificates prior to a termination), or the contract
has expressedly or impliedly imposed restrictions on the timing of the cer-
tificate, there seems no good reason why even substantive errors should
not be corrected.
Final certificates may be in a special category, of course, since here the
argument that the certifier is functus officio may well have additional
force, and obviously it would be highly undesirable to have retrospective
alterations of the financial position made by the certifier long after com-
pletion. It is submitted, however, that whether or not the certificate is
binding under the terms of the contract, each case should be looked at on
its merits, and the question asked whether a term preventing correction
must be implied as a matter of business efficacy in the particular circum-
stances which have arisen.
Well-drafted contracts should contain express provisions permitting
correction of certificates in defined circumstances. 73
11 L.R. 6 Q.B. 451. This case, however depended on statutory, and not contractual, powers.
72
Fairweather Ltd. v. Asden Securities Ltd. (1979) 12 BLR 40, per Judge Stabb Q.C.
13
See, for a comprehensive but carefully defined example, Clause31(4) of the Singapore SIA
contract, C.C.P.P. p. 597; and, for a more generalised provision, Clause 60(:1-J of the 1955
ICE fourth edition, unfortunately not reproduced in the 1973 fifth edition.'
6
Seer. 6] CERTIFICA'IES 841
As pointed out supra,74 periodical interim certificates for payment are,
by their nature, likely to be self-correcting after earlier mistakes have
been discovered by the certifier.
(5) Who is to Give the Certificate?
A certificate, in the absence of any provision or implication to the con- 6-172
trary, can only be given by the person or person designated in the contract
(whether by name or description). Some legal persons (for example, a
limited company or a local authority) can only act through agents, but
apart from such cases a strict view is likely to be taken of the contractual
provisions identifying the certifier, and attempts to delegate this function
will not normally be held to satisfy the contractual provisions.
ILLUSTRATIONS
(1) Goods were agreed to be sold at a valuation to be made by A. A.'s clerk
B. valued the goods. Held, by the Court of Exchequer, that the purchaser was
not bound unless a new agreement to accept B. 's valuation be proved: Ess v.
Truscott (1837). 75
(2) Where a certificate of two or more persons was required, the Court of
Exchequer held that a certificate by one of them only would not comply with
the terms of the contract: Lamprell v. Billericay Union (1849). 76
(3) A railway disposed of land over a tunnel to B., and stipulated that no
buildings were to be erected, except in accordance with a specification in writ-
ing, to be approved by the principal engineer of the railway. B. submitted
plans to the resident engineer, who did not lay them before the principal
engineer, but said verbally that the works might proceed. B. began to build.
Four months later, the principal engineer saw the plans for the first time, and
condemned them as dangerous to the tunnel. B. persisted in continuing to
build. The railway promoted an information against B. Held, by Wood V.-C.,
that the approval of the resident engineer did not bind the railway, and that
there was no such acquiescence as to prevent B. being bound by the contract:
Att.-Gen. v. Briggs (1853).n
In many building contracts, the certifier is named in the contract as an 6·173
individual. If a firm is named, it is submitted that a certificate issued by a
partner for and on behalf of the firm will satisfy the contractual require-
ment. Whether or not the owner has express or implied power, vis-d-vis
the contractor, to dismiss the certifier or appoint another will depend
upon the contractual provisions.78 Where he has no power, he will be
74
Subsection (3), para. 6· 167.
1
s 2 M. & W. 385; 6 L.J.Ex.144.
76
18 L.J.Ex. 283, at p. 285; see also Marryatv. Broderick (1837) 2 M. & W. 369.
77
1 Jur.1084. But see De Morgan Snellv. Rio de Janeiro Flour Mills, ante, paras. 2·028-2·030.
18
For the owner's possible obligation to appoint an architect, see ante, Chap. 4, Section 2(3),
paras. 4·197-4·199, and supra, Section 5, paras. 6·114 and 6-145. See also Article 3,
post-1980 RIBA/JCT forms.
 842 APPROVAL, SATISFACTION AND CERTIFICATES [CHAP.
bound by the certifier's certificates even after disrnissal. 79 Most modern
contracts use the "or other for the time being" formula, 80 so no problem
will exist. Where the power does exist, the new architect will, as a necess-
ary implication, take over (except in so far as they may have been dis-
charged) the certifying powers of his predecessor.81 In most modern
contracts this will create no problem, firstly because nearly all decisions of
the architect are in the last resort open to arbitration on the merits prior to
the final certificate, and secondly because nearly all provisions for interim
valuation are based on a formula for revaluation of the whole work on the
occasion of each interim certificate, less amounts previously certified, so
that if the second architect disagrees with the valuations of the first, or is
aware, for example, of defective work not known to the first when he gave
his earlier certificates, the second architect is in a position to make interim
valuations giving effect to his own views. Furthermore, in the case of work
which is defective in his opinion but has been passed by the earlier archi-
tect, it has already been seen82 that no bar can arise in such a case because
on an earlier occasion the defective work could or should have been con-
demned. Powers to order removal and re-execution of the work can there-
fore be exercised at any time.
6·174 However, the English RIBA/JCT contracts have traditionally provided
expressly that a successor architect appointed by the owner will be bowid
by all the various certificates, opinions, decisions, approvals, or instruc-
tions of his predecessor.83 This policy is too simplistic, and invites obstruc-
tion and difficulties, particularly in the areas of interim payment or
measurement, or of previously approved work. On the other hand, there
clearly are some earlier decisions which it is not desirable or practicable
for a later architect to re-open, such as finalised extension of time and
liquidated damages decisions, or those_ associated with a termination.
Thus the Singapore SIA contract, subject to any earlier :finalised liqui-
dated damages decisions, provides, to the exact contrary, that all earlier
decisions, etc., can be reviewed by the successor architect in the light of
new evidence or knowledge. 84
6-175 It has been submitted that, if the contract contemplates the issue of cer-
tificates as a condition of payment, then the contractor could require an
owner who had taken no steps to do so to appoint a successor upon the
death, dismissal or withdrawal of the architect.85 In most cases, however,
he will be able to sue without the certificate.86 In those older cases where
the architect was also appointed arbitrator in the full sense by the terms of
19
Burns & Kenealy v. Furby (1885) 4 N.Z.L.R. 110, and Clarke v. Murray (1885) 11 V.L.R
817, Victoria, illustrated infra, para. 6.177.
so See Kellett's case infra, para. 6· 180.
61
See Kellett v. Mayor of Stockport (1906) 70 J.P. 154, infra. See also Article 3, RIBA/JCT
forms.
62
See ante, Chap. 5, paras. 5·019 et seq.
11J Article 3, pre- and post-1980 forms.
84 Post-1980 SIA fonns, Article 3, set out in C.C.P.P., p. 549. ,·.,
85
See ante, Chap. 4, paras. 4·197-4·199, and supra, Section 5(4), para. 6·114. -fr
86 See Degagnev. Chave (1896) 2 Terr.L.R. 210, Canada, and Section5(4), paras. 6· 112 et seq.
6 SECT. 6] CERTIFICA'IES 843
the contract, the English Arbitration Acts contain provisions to enable
the courts to appoint a new arbitrator in such a situation,87 and practically
no modern contracts in England have made the architect an arbitrator in
the full sense since the Act of 1934. This and other statutory powers of
revocation will not apply to a certifier's authority, however.
ILLUSTRATIONS
(1) M. agreed in writing to empty B.'s mill pool on the terms of being paid 6·176
fivepence -a yard for all mud removed. The agreement provided that the
measurement of the mud should be settled by N., and that any dispute which
arose should be referred to N. A dispute arose as to whether B. had prevented
M. from completing the work by flooding the mill pool, which N. decided in
M.'s favour. Held, by the Court of Exchequer, that M. might be able to revoke
N. 's authority as to settlement of disputes, but could not revoke his authority
to measure the amount of mud removed: Mills v. Bayley (1863).88
[Note: At the time this case was decided submissions to arbitration in the
full sense were revocable at will. See post, Chapter 18, Section 1(3).]
(2) A., a contractor, brought an action for work and labour done in Ontario.
The defendant pleaded: (1) that the work was under a contract which pro-
vided that the work was to be measured, calculated and determined by the
engineer, whose decision should be conclusive, and that the engineer had
measured and determined the value of the work, which value the defendant
had paid; (2) that the contract provided that the work was to be done to the
satisfaction of the engineer, and that the engineer was not, before action, sat-
isfied therewith. A. replied that he had withdrawn the engineer's authority.
Held, by Cameron J., on demurrer, that the first plea was good, as there was
not a covenant to refer to arbitration, but one which made ascertainment by
the engineer a condition precedent to A. 's right recover; and that the second
plea was also good, as the covenant made the satisfaction of the engineer a
condition precedent to A.'s right to recover. Furthermore, A. could not
revoke the engineer's authority: Canty v. Clarke (1878).89
(3) B. and K., in answer to an advertisement by H., an architect, sent in a 6°177
tender to build a house for F., which was accepted, and then entered into a
building agreement which provided, inter alia, that the certificate of the archi-
tect should be conclusive. F. dismissed the architect, and appointed another
whom B. and K. declined to recognise. On completion, they obtained and
sued on the first architect's certificate. Held, by Gillies J., that as neither fraud
nor collusion was proved, the architect was architect for the whole work, and
the sole judge, and that neither party could dispute his judgment. If the build-
ing owner could prove bad workmanship, his remedy was against the archi-
tect: Burns & Kenealy v. Furby (1885). 90
[Note: Had they been unable to obtain the certificate, the plaintiffs could
have sued without it. See supra, Section 5.]
(4) A New South Wales building contract was in the same fonn as that in
Lloyd Bros. v. Milward. 91 The owner discharged the architect before he had
67
Sees. 24 of the Act of 1950, and post, Chap. 18, Section 2(4)(g).
88
2 H. & C. 36.
89
44 Up.Can.Q.B. 222; followed in Robinson v. Owen Sound (1888) 16 Ont.Rep. 121.
90
4 N.Z.L.R. (Supr.Ct.) 110; and see Stevenson v. Watson (1879) 4 C.P.D. 148.
91
(1895), Hudson, Building Contracts (4th ed.), Vol. 2, p. 262, illustrated supra, Section 4,
para. 6'068.
 844 APPROVAL, SATISFACTION AND CERTIFICATES [CHAP.
given his final certificate, but he nevertheless certified, and the builder sought
to charge the estate of the owner, who was a married woman, with the amount
of the certificate. She moved to stay proceedings, on the ground that there was
a dispute, which must be referred. Held, by Owen C.J. in Eq., following Mills
v. Bayley,9 2 that the architect was the one agreed on between the parties and
could not be discharged; (2) that his certificate was conclusive: Murray v.
Cohen (1889). 93
6·178 However, where the contract identifies the certifier by description-as
for instance, "the engineer for the time being of the employer", or "the
engineer in charge of the work"-or where the certifier is referred to by
name, but some such words are added as "or other the engineer of the
employer", the person answering the description at the material time is
usually the proper person to certify, and to this extent the owner may be
said to have a power to revoke an earlier certifier's authority. What the
material time is may give rise to difficulty, although in most cases it will be
the time when the certificate is required to be issued by the contract.
ILLUS'IRATIONS
(1) An engineering contract between the W. Railway Co. and T. provided
for the reference of disputes to A., if and so long as he should continue to be
the company's principal engineer. The W. Railway was amalgamated with
another railway, and A., who still continued to be the engineer of the W.
portion of the railway, was not the principal engineer of the amalgamated
railway. Held, by the Court of Common Pleas, that A. remained the proper
referee in disputes arising out of the contract: Wansbeck Railway v.
Trowsdale (1866). 94
6·179 (2) S. agreed with the plaintiff in November, 1871, to pay the amount due
for certain work previously performed under a contract with another party in
the construction of a bridge in the State of New York, "under a certificate
from the engineer in charge of the said work". In September and October,
1870, M. had been in charge of the bridge, and gave certificates for work done
and materials supplied by the plaintiff. F. was in charge of the bridge from
September, 1871, to a time subsequent to and including the date of the agree-
ment with S. Held, by the New York Court of Appeals, that the certificate
required must be had from M., the engineer who had charge of the work at the
time it was done, and not from F., because the court inferred that the parties
had in mind the engineer who prepared the plans and the specifications, who
knew what was to be done: "who knew also what had been done, and who,
knowing of the delivery of the materials and the work as it went on from day
to day, was the person most likely, if not the only one, who was capable of
measuring from his own knowledge the inquiD;es called for by the agreement
... Much of the materials and work was evidently of a temporary nature,
necessary for the permanent structure which was to follow it, and of a charac-
ter to be estimated only by a daily eye-witness or one whose duty required his
92
(1863) 2 H. & C. 36, supra.
93
9 N.S.W.R. (Eq.) 124.
94 L.R. 1 C.P. 269.
6 SECT. 6] CERTIFICATES 845
actual supervision of the work.... It is impossible to suppose that one having
no personal knowledge of the work or means of acquiring it, and whose con-
nection with the structure began long after the services were rendered and
material furnished, could have been selected by a person wholly ignorant as
to these things to determine not only the quantity of each but the amount due
therefor.": Wangler v. Swift (1882).95
(3) A building contract provided that the engineer's certificate should be a 6·180
condition precedent to payment for all extra work. The engineer was
expressed to be "A.B. or other the engineer" of the owner. A.B. died, and the
contractor objected that his successor had no jurisdiction to fix the price for
the extra work. Held, by Walton J., that "or other the engineer" meant the
engineer from time to time appointed by the owner, and that where work
begun under one engineer had to be continued under his successor, it was the
certificate of such successor that was necessary under the contraGt: Kellett v.
Mayor of Stockport (1906).96
Although, however, the certifier may not delegate his function, he can
delegate the detailed work necessary for the preparation of certificates to
competent persons, and may consider and take into account the reports of
subordinates, provided he does not regard himself as controlled by them
and is ready to exercise his own independent judgment wherever
necessary.97
(6) Final Certificates
In practical terms, although the provisions of many earlier contracts dis re- 6· 181
gard the practicalities, and assume meticulous payment of stipulated valu-
ations or percentages of the final contract sum at the various earlier stages
of the contract, AIEs habitually postpone payment or other decisions on
controversial or doubtful items, on the one hand, while contractors, on the
other, habitually advance provisional or tentative claims, in each case on
the basis that negotiation at the end of the day will produce a balance
representing the certifier's final decision on the sums due to the contractor
for the completed work. For these reasons, this balance may in practice
often include substantial sums which theoretically should have been ruled
upon and decided at an earlier stage of the project.
Final certificates may also deal with the question of liquidated damages
for delay, but nearly all English contracts provide for separate systems of
certification, operating independently of the interim and final payment
certificates, for the very good reason that owners will see considerable
~ 90N.Y. 38.
%701.P.154.
.,., See supra, para. 6·168, and see Clemence v. Clarke, supra, para. 6·127.
 846 APPROVAL, SATISFACTION AND CERTIFICATES [CHAP.
advantages in a system which gives them a discretion whether or not to
deduct liquidated damages from current payments when dealing with or
"nursing" a contractor who may be recalcitrant or in financial difficulties.
After the final certificate, the A/E will, in general, be seen as beingjunc-
tus officio, although there is not, it is submitted, any strict or rigid doctrine
to that effect,98 and, indeed, in the English ICE conditions, for example,
the engineer appears to have a continuing potential function under Clause
66 of that contract,99 in regard to deciding disputes between the parties
which may persist indefinitely until the expiry of the limitation period: for
example, a dispute between owner and contractor under the indemnity
clause in respect of third party claims can easily arise on receipt of such a
claim long after the final certificate.
6·182 Final certificates have already been considered in regard to their pos-
sible binding effect in Sections 2 and 3, supra, where it has been seen that
in many earlier contracts they could be a condition precedent to payment
of the final balance due and, conversely, could exclude a defence or set-off
by the owner. In particular, they might rank as certificates of satisfaction
(although in some contracts other certificates might be required to per-
form this function) so as to preclude the owner from seeking to claim or
set-off damages for defective work. Questions as to the form and suf-
ficiency of final certificates have been discussed in Section 6, supra.
It may be useful to give a short account of the current policy of the
modern standard forms in England with regard to final certificates, which
has changed dramatically since the tenth edition. As a matter of history, it
may be inferred that by the end of the nineteenth century the binding
effect of the A/E's certificates was no longer desired by either side of the
industry, with the result that arbitration clauses providing for indepen-
dent arbitration came into use. Typically imprecise draftsmanship then
appears to have led to numerous cases where the party seeing himself as
benefiting from certification which had taken place sought to argue that
the arbitrator was nevertheless bound by the certifier's earlier decisions,
and it has been seen that the courts had considerable difficulty in such
cases in defining the respective jurisdictions of the certifier, on the one
hand, and of the arbitrator, on the other.1 In consequence, the "open up
review and revise" formula came to be adopted by the RIBA draftsmen in
their arbitration clause at the latest by 1905,2 and this was rapidly adopted
by the ICE engineering forms, although for some reason it was not
adopted by many English standard forms of sub-contract. The courts
themselves felt no difficulty in deciding disputes on the merits where
this formula had been used if, for any reason, the dispute did not go to
an arbitrator3 (although, very recently, the Court of Appeal has taken a
98
See supra, Subsection (4), "Correcting a Mistake in a Certificate", para. 6·171, and the case
of Fairweather Ltd. v. Asden Securities Ltd. (1979) 12 B.L.R. 40 there referred to.
99
Or Clause 67 of the FIDICconditions.
I
See Section 4, supra.
2
See, e.g. Robins v. Goddard [1905] 1 K.B. 294, illustrated supra, para. 6·069. ,:
3
See supra, paras. 6·063-6-064, and see C.C.P.P., Chap. 17 for this case law, commencmg
with Robins v. Goddard, examined in detail.
6 CERTIFICA'IES 847
different and controversial view on this latter point:4). For a period, there-
fore, final certificates in the standard forms in England ceased to have any
permanently binding effect on either party.
However, it would seem that the increasing influence of the contracting 6·183
side of the industry, particularly over the contents of the RIBA standard
forms, soon led to the use of express "conclusive evidence" wording in the
clauses governing the final certificate in the period following the First
World War, with the principal commercial object of preventing recovery
by the owner for defective work after the date of the final certificate. The
foregoing history is discussed in greater detail in C.C.P.P. 5
After an initial resistance by Devlin J., who held that the arbitrator's
express "open up review and revise" powers in the arbitration clause pre-
vailed over the "conclusive evidence" wording in the RIBA/JCT final cer-
tificate clause,6 the House of Lords eventually took the opposite view,
holding that the RIBA/JCT final certificate wording did indeed prevail.'
Meanwhile, the wording of the 1963 RIBA/JCT contracts had been
powerfully strengthened, even beyond that considered in the East Ham
case, so as to reduce to minimal proportions, by use of "reasonable exam-
ination at any reasonable time" wording, the then remaining protection of
the owner against defects no longer visible at the time the certificate was
issued. Moreover, later versions of these contracts required the owner (but
not the contractor) to give notice of arbitration before the final certificate
was issued if its finality was to be avoided (implicitly requiring prior con-
sultation between architect and owner before issue of the certificate if the
owner's interest in regard to contractors' financial claims, for example,
was to be reasonably protected).
In the case of the ICE conditions, a confused and difficult traditional
draftsmanship8 had, for a considerable period, purported to confer finality
on the maintenance certificate under that contract so as to preclude com-
plaints of defective work after that certificate.
By the 1970s, therefore, final certificates in the building standard forms 6·184
were a formidable obstacle to owners who had later discovered defective
work, and the owner's unhappy position was compounded by what was
then thought to be the contractual immunity of the certifier himself, as
against his client, for negligence in certifying the full value of work sub-
sequently found to be defective. 9 This was the general position heavily
criticised in the tenth edition, which also pointed out that the RIBA/JCT
express contractual restrictions on the contractor advancing further
4
See North Regional Health Authority v. Crouch Construction [1984] 1 Q.B. 644, analysed
and doubted in C.C.P.P. Chap. 17, and discussed supra, Section 4(2), paras. 6·063-6·064.
5
C.C.P.P., paras. 17-06 to 17-12. See also supra, Section 1, paras. 6{l02-6·003.
6
Windsor Rural District Councilv. Otterwayand Try Ltd. [1954J 1 W.L.R.1434, illustrated
supra, para. 6·074.
7
East Ham Borough Council v. Sunley (1966) A.C. 406.
a See Clauses 61 and 62 of the 1955 and earlier editions (curiously never ruled on until 1990
. in the Wang Chong Construction case in Hong Kong, illustrated supra, para. 6·054).
9
Chambers v. Goldthorpe [1901] 1 K.B. 624, C.A.; finally overruled in Sutcliffe v. Thackrah
[1974) A.C. 727.

848 APPROVAL, SATISFACTION AND CERTIFICATES
claims after the final certificate were, in practical terms, purely cosmetic as
a counterbalance to the very damaging immunity for defective work con-
ferred by the certificate.
However, by the 1970s a new climate of parliamentary opinion had
clearly developed in the face of these tendencies, exemplified by the
Defective Premises Act 1972, the overruling of Chambers v. Goldthorpe
by the House of Lords in 1974, and the Unfair Contracts Act 1976, and it
seems reasonable to suppose that it was this climate which led the ICE
fifth edition in 1973 to remove altogether the binding effect of its own
maintenance certificate, 10 and the RIBA/JCT, in their 1976 Revision, to
reduce very substantially, if not for practical purposes remove altogether,
the contractor's previous exemption for defective work under the final
certificates clause. However, the peculiar new wording employed in that
contract did appear intended to keep some small exemption argument
alive in cases "where the quality of materials or the standards of workman-
ship are to be to the reasonable satisfaction of the Architect". 11 The
post-1980 RIBA/JCT contracts continued with this new wording
unchanged. 12 It seems likely that those resppnsible for this obscure but
modified wording considered it might survive attack under the Unfair
Contract Terms Acts in the minority of situations where it might apply.
6°185 However, this new wording was recently considered in the official refer-
ees' courts in England, and contrary to the views here expressed it would
be held that in all cases of defective work the satisfaction of the architect
was "inherently" involved, even if not expressly mentioned in the specifi-
cation or elsewhere in the contract, since it was the architect's duty to pass
work for payment under the terms of the contract. As a result, the finai
certificate was held to be conclusive, preventing any subsequent assertion
of defective work by the owner as a defence against the sums certified in
the final certificate. 13 If this decision were to be confirmed as correct, it
would mean that the 1977 amendment to the standard forms had intro-
duced a new and far more severe limitation of the contractor's liability for
defective work, since the certificate would no longer, as under the pre-
vious wording, be subject to exceptions for concealment or defects not
observable on reasonable inspection. 13a
At the present day, therefore, the final certificate provisions in the two
principal English building and civil engineering standard forms are
unlikely seriously to embarrass owners alleging defective work, or to
prejudice contractors making claims, unless the Crouch doctrine14 is suc-
cessfully invoked in cases where the dispute happens to be before the
10 See Clause 61(2).
II See Clauses 1(1) and 30(7)(a) of the 1976 revision.
u See Clauses 2.1 and 30.1.1.1 of the post-1980 fonns. See these developments explained and
discussed in C.C.P.P., para. 30-25.
13 Colbart Ltd. v. H. Kumar(l992) 59 BLR 89, analysed and criticised bytheeditorin (1993) 9
Const.L.J. 7.
1~, See Const. LJ ., ibid. ·--.
14 Discussed and doubted supra, Section 4(2), paras. 6·063-6'064, and see the 'Cases Section
4(4).
SECT. 6] CERTIFICATES 849
[CHAP. 6
~ourts and not before an arbitrator, or Colbart Ltd. v. Kumar is authoritat-
ively held to be rightly decided. Industrial plant contracts based on the old
"Model_ A" types of contract, on the other hand, still contain draconian
exemptions for the contractor following completion. 15
Howev~r, ~e use of pre-1976 RIBA/JCT contracts, or of forms based
o~. them, is still by no means uncommon. Where this is so their pro-
v1s1ons15a. would, i~ principle, seem open to attack at the presedt day under
the Eng_lish U~rur Contract Terms legislation, although there are a num-
be: of difficulties to be surmounted by parties seeking to invoke that Iegis-
latio~.16 Moreover, a very recent decision by Gatehouse J., overturning
~reviously held views, has ruled that under the RIBA/JCT wording there
IS power to extend the time permitted by the final certificate clause for
service of notice of arbitration under Section 27 of the Arbitration Act
1950 on grounds of hardship," although how this will be applied to undis-
covered defects is uncertain.
(7) Interim Certificates
(a) Generally
It_ is a _curious fact, indicative perhaps of producer and vested pro- 6·186
fess1onal influences a~d of t_he lack of understanding of governments and
other owners a~d therr adVIsers, that the great majority of contracts and
standard forms m the Commo1:1-wealth and the United States, as well as in
England, almost always prescnbe a periodical valuation of the work done
to date, usua~y m?nthly, as_ the basis for interim certification and pay-
ment. The savmgs In professional fees and time, the avoidance of contro-
versy, and ~he .v~luable and continuous inducements to rapid progress
offered by Judiciously calculated fixed instalment stage payments (far
mo_re effective than any sy~te~ of liquidated damages for delay) appear to
be ~gnor~d by the vast maJ~nty of owners, whether public or private, and
therr advisers. Moreover, 1t1s often thought, quite erroneously that instal-
ment p~yments are incompatible with measured contracts and.can only be
used with lump sum contracts. Exceptionally, the Singapore private sector
~IA standar.d for~s have since 1987 offered the alternative of fixed stage
instalments m their measured contract (bills of quantities) standard forms
as well as in their lump sum forms.18
As a rule, however! the payments contemplated by such provisions only 6-187
represent the approxnnate value (or a proportion of it) of the work done,
15
Compare Clauses 30.12 and 42 (exclusive remedies) and clause 33.11 (final certificate) of
the 1987 FIDIC.E & ME Conditions.
15
" As also the 1980 forms if Colbart v. Kumar is correct.
16
See ante, Chap. 1, paras. 1·238 et seq.
17
':1cLaughlin and Harvey plcv. P. & 0. Developments Ltd. (1991) 55 BLR 101 distinguish-
15 mg Bab.an.aft International Co. S.A. v. Avant Petroleum Inc. [1982] 1 W.L.R.' 871.
Se: Article 2 and Clause 31(3) of the 1987 third and later SIA editions. For the advantages
of mstahnent stage payments, see also ante, Chap. 4, Section 1, paras. 4·023-4·024 and the
passages from C.C.P.P. and King's College London's Construction Contract Policies there
referred to.
 850 APPROVAL, SATISFACTION AND CERTIFICATES [CHAP. 6 SECT. 6]
and possibly also of materials delivered to the site, at the relevant date,1 9
and, in the vast majority of cases, they will not be conclusive or binding on
the owner as an expression of satisfaction with the quality of the work or
materials.20 It makes no difference that they are frequently expressed to
represent the value of work properly done, since such a qualification is an
obvious one in any provision for payment on account, and will almost
always be implied in any event, even if the concept of value did not itself
involve an element of deduction for work containing a defect requiring to
be repaired or reinstated. In addition the whole scheme of most contracts,
including powers to order the removal of work exercisable at any time, to
withhold the certificate of practical completion, and to order defects to be
repaired during the maintenance period, is usually inconsistent with any
such intention. Indeed, most provisions for interim payment expressly
involve a revaluation of the whole work (not the work done since the last
certificate) each time a new certificate is given. Such certificates, then, are
usually subject to re-adjustment, not only in the final certificate but also in
subsequent interim certificates, although in some contracts they may, in
the absence of an overriding arbitration clause or a right of the owner to
set off the cost of remedying or the value of defective work, be given tem-
porary effect until the time for the final certificate, or a subsequent amend-
ing interim certificate, has arrived. Thus in Tharsis Sulphur & Copper Co.
v. McElroy, 21 Lord Cairns L.C. described the certificates in that case as
follows:
"The certificates I look upon as simply a statement of a matter of fact,
namely, what was the weight and what was the contract price of the materials
actually delivered from time to time upon the ground, and the payments
made under those certificates were altogether provisional, and subject to
adjustment or to readjustment at the end of the contract."
In the same case, Lord Blackbum said:
6-188 "They were made out with a view to regulating the advances, and showing
how much should be paid on account; not at all as showing how much was to
be paid ultimately upon the final account and reckoning."
Again, in Lamprell v. Billericay Union, Pollock C.B. said22:
"When the payments were from time to time made on the certificates of the
architect, the obvious meaning of both parties was that ... they were to be
treated as sums paid on account of whatever the plaintiff might eventually be
entitled to recover from the defendants, whether for the original or
additional works."
19 Pashby v. Birmingham Co. (1856) 18 C.B. 2.
20 See, e.g. Cooper v. Uttoxeter Burial Board (1865) 11 L.T. 565, and the discussion ante,
Chap. 5, paras. 5.010-5·011, and see e.g. Royston U.D.C. v. Royston Builders Ltd. (1961)
177 E.G. 589, see ante, Chap. 1, paras. 1·246-1 ·249. ,: .,
21 (1878) 3 App.Cas. 1040, at p. 1045. Illustrated post, Chap. 7, para. 7·059.
12 (1879) 18 L.J.Ex. 282, at p. 305. Illustrated post, Chap. 7, para. 7·058.
CERTIFICATES 851
Further, the fact that the owner has made payments or allowed claims of
one kind or another on interim certificates creates no estoppel and does
not bind him when the final account is being drawn up. 23
Thus, in deciding whether an architect was acting merely as agent of the
owner when issuing interim certificates, as opposed to exercising a "quasi-
judicial" discretionary function, as had been contended, Sankey J. said:
"Personally I should have thought that the inference was just the other Way-
namely, that in giving an interim certificate he is merely acting as the agent
for the building owner unless there is something in the contract to contradict
that. .. " 24
While, therefore, there is virtually no likelihood of an interim certificate 6,189
provision in a construction contract being drafted or interpreted so as to
be permanently binding on the owner in regard to defective work ( and
indeed the RIBA/JCT contracts have provided expressly to the contrary
for many years25), two questions as to the temporary finality of these cer-
tificates do arise, namely:
(1) Can the contractor sue for interim payment without, or for sums in
excess of those stated in, the architect's supporting certificate-in
other words, is the certificate a condition precedent to payment?
(2) To what extent may the certificate have a temporary finality binding
on the owner-in other words, must the owner pay whatever may
have been certified, being left to recover in respect of any defence,
set-off or cross-claim only in subsequent litigation or arbitration?
(b) Is interim certificate a condition precedent to payment?
This subject has already been discussed in the context of certificates 6·190
generally.26 In the case of interim certificates in modern contracts, this will
depend entirely on the express wording of t.he contract, which can be
extremely shortly drafted to that effect if that is the intention. In Australia
and New Zealand it is, for example, common to find such wording as "no
sum shall be considered due to the contractor until the engineer has given
his certificate". r, Explicit "condition precedent" wording can also be used,
even more shortly, in the payment or certificate clause if that is the desired
intention.
There is little doubt that in early Victorian contracts, particularly those
with no arbitration clause, simple provisions for payment on the archi-
tect's certificate were sometimes interpreted as conditions precedent
23 See, e.g. Royston Urban District Council v. Royston Builders Ltd. (1961) 177 E.G. 589,
illustrated ante, Chap. 1, para. 1·247.
24 Wisbech Rural Councilv. Ward [1927] 2 Q.B. 556, at p. 565.
25 See Clauses 30(8) and 30.11 of the pre- and post-1980 contracts.
26 See supra, Section 1(1), paras. fr002 et seq., and Section 3(2), paras. 6·036 et seq.
21 See clause 26(b) of the contract before the New Zealand Court of Appeal in Canterbury
Pipe Lines Ltd. v. Christchurch Drainage Board [1979] 2 N.Z.L.R. 347, at p. 355.
 852 APPROVAL, SATISFACTION AND CERTIFICATES [CHAP.
without any express wording to that effect.28 However, the advent of the
arbitration clause represented, it has been submitted, a desire of both par-
ties to escape this type of finality, a fortiori where the "open up review and
revise" formula in the arbitration clause was employed.29 It then became a
question whether the arbitration clause overrode the certification pro-
visions, or vice versa, and it has been seen that by 1954 as distinguished a
judge as Devlin J. was prepared to hold that the arbitration clause over-
rode even the very explicit "conclusive evidence" wording of the final cer-
tificate provision in the then RIBA/JCT contracts.30
6·191 The practical importance of this distinction lies.in the fact that a con-
tractor with sufficient affidavit evidence as to the value of work done in
excess of any sum so far certified on interim certificate will, on the one
view, be entitled to summary judgment for the additional work, in the
absence of a counter-affidavit showing a defence on the merits rather than
one relying solely on the strict certification position.
The post-war English standard forms, unlike many Commonwealth
forms, have only rarely contained express "condition precedent" wording
in the interim certificate provisions, and indeed not infrequently also con-
tain the express provisions denying any finality of certificates in regard to
the quality of the work previously mentioned. Indeed, by the 1970s, it was
the common practice of Official Referees to give summary judgment on
claims for interim payment in excess of or in the absence of any certified
sums under the English standard forms, in the absence of a sufficient coun-
ter-affidavit on the merits, 31 particularly since those forms contained arbi-
tration clauses enabling certificates to be reviewed by an arbitrator prior
to cofilpletion of the work.
6·192 However, it must be said that, in a little-noticed case in 1957 involving
garnishee proceedings, the Court of Appeal had undoubtedly thought the
contrary as a part of its reasoning.
ILLUSTRATION
A sub-contract was held to incorporate the then current RIBA/JCT main
contract certification provisions, Clause 21(a)(3) of which provided" ... pay-
ment of any work ... comprised in a sub-contract shall not be due until receipt
by the contractor of the architect's certificate". A nominated sub-contractor
completed his work at a time when the main contractor had also completed
his work and had applied for a final certificate. Creditors of the sub-contractor
applied for a garnishee order against the main contractor, who contended
that until the final certificate in the main contract had been issued nothing was
due to the sub-contractor. Held, by the Court of Appeal, that, although there
23 See the earlier cases supra, Section 3, paras. 6·036 et seq.
See supra, Sections 1(1) and 4(1), and see C.C.P.P., paras. 17-11 to 17-12.
2~
w Windsor Rural District Council v. Otterway & Try (1954] 1 W.L.R. 1494, illustrated supra,
Section 4, para. 6-074 and subsequently overruled in the East Ham case thefe..illustrated.
1 1 See the editor's pre-Gilbert-Ash article, (1973) 89 L.Q.R. 36, at p. 43, reproduced in
C.C.P.P., para. 14-06(d).
6 SECT. 6] CERTIFICATES 853
was no precise authority on the point,32 under Clause 24 of the main contractll
( the interim payment clause, which contained no condition precedent word-
ing), the main contractor would have no right to receive payment from the
owner in the absence of a certificate, and that in such a case a garnishee order
could not have been obtained against the owner by a creditor of the main
contractor. The intention of the incorporation here was to place the sub-con-
tractor in the same position as against the main contractor, and the order
should not have been issued: Dunlop & Ranken Ltd. v. Rendall Steel Struc-
tures Ltd. (1957).34
~ot~: This case is open to criticism in the light of the principles relating to
garrnshing of debts, 35 and has not been followed in Canada36; but in addition
the Court of Appeal does not appear to have considered the effect of the
"open up review and revise" arbitration clause in the main contract (now,
although not then, including an express right to take a dispute "whether or not
a certificate is in accordance with a contract" to early arbitration), 37 which
woul.d mean that the contractor would be free to commence proceedings
despite the absence of the certificate, since the work was admittedly finished,
whether by way of arbitration or in the courts (although now in the latter case
subject to any possible effect of the Crouch decisionJs).
Moreover, in another case where the point was not directly in issue, the 6·193
English Court of Appeal has also recently held to the same effect.
ILLUSTRATION
. Cl~use 39(1) of the pre-1980 RIBA/JCT standard form provided, in terms
identical WJ.th Clause 24 of the Dunlop and Ranken case, supra, that the archi-
tect should make interim valuations and issue interim certificates "stating the
amount due to the Contractor", and that the contractor "shall be entitled to
payment therefor" within a stipulated number of days. By Clause 30(2) the
"amount stated as due" in the certificates was to be the total value of work
properly executed less retention and any amounts previously paid. A con-
tractor's bondsman claimed to be entitled to terminate the contract under
Clause 27 for non~payment of "monies due under a certificate" (which had
not in fact been certified but had been bona fide, although erroneously, delib-
erately disallowed by the architect when arriving at the amount of the certifi-
cate). Held, by the Court of Appeal, that since a certificate under Clause 30
was a condition precedent to payment, the termination under Clause 27 was
invalid: Lubenham Fidelity Investment v. South Pembrokeshire Council
(1986).'"
[Note: This case has been illustrated and doubted, on this particular point ,
only, supra, 40 and is discussed in detail in, [1987] 3 Const. L.J.172. The Court
32
Goddard C.J. cited and followed a note in the Annual Practice (1950), p. 808 stating this
interpretation of the contract.
33
Identical with that in Clause 30(1) of the 1963 RIBA/JCT standard form set out in the
Lubenham Fidelities case next illustrated infra.
34 [1957] 1 W.L.R. 1102.
3.'i See post, Chap.14, Section 7.
36
Sandy v. Yukon Construction Company Ltd. [1961] 26 D.L.R. (2d) 254.
J See i.nfra, paras. 6-209-6·213. .
7
38
See also supra, Section 4, paras. 6·063-6·064.
39
33BLR39.
·~ Section 3(2), paras. 6-040-6·043. The termination itself was clearly invalid for other
reasons.

854 APPROVAL, SATISFACTION AND CERTIFICATES
does not appear to have considered the r_el~vance o~the Gilbert-Ash .case, in
the converse situation of the owner res1st1ng a claim fo_r sums certified on
interim certificate, nor was the Dunlop & Ranken case cited.}
If the Lubenham case was rightly decided on this point, interim certifi-
cates under the wording of the numerous English and overseas standard
forms which have adopted the pre-1980 RIBA/JCT wording will bind on
the contractor until the conclusion of arbitration or (subject to the Crou~h
dictum) litigation; but on the other hand, follo~~g the Gi~bert-Ash case m
the House of Lords in 1973, not an owner wishing to raise a defence or
cross-claim against sums certified, as discussed below.
(c) Is an interim certificate binding on the owner?
6·194 In other words is the owner prevented from raising a defence, set-off or
cross-claim whe~ sued on an interim certificate? This subject has already
been shortly mentioned supra.41
For many years, most English standard form contracts and su?~con-
tracts contained no express wording preventing an owner from .ra1s1ng a
defence or set-off against sums certified for interim ~a~ent by his A/E. It
should be noted that it is of the essence of most 1ntenm payment pro-
visions based on valuation of work done that the valuation rel~tes to ~ll
the work done to date, not of the work done since the last intenm certifi-
cate. As a result, regarded from the owner's point of view, many er.r?rs of
valuation arising, for example, from overestimation of the ~uantltles of
work done, or from the subsequent discovery of defective work or
materials previously allowed as being satisfactory, can be e:'-pected to be
rapidly and automatically remedied in a subsequent cert1fica_te, unless
there is disagreement on the merits between the owner and his ~E. In
many contracts, too, sums allowed for unfix:e~ m~terials, if ~e~tted by
the interim payment provision, will, following mcorporatlon mto the
work, require to be removed from the sum~ previously certi!ied ?n that
basis and allowed for in a subsequent certificate on the quite different
basis of the prices for completed work with the materials inc0:rporated
into it. . h · th
6-195 However, in 1971, disregarding these factors serving to erop asis e
essentially provisional nature of roost contractual arrangements for
interim payment, Lord Denning M.R. held in the Cou~ of ~ppeal that,
even in the absence of express wording to that effect, 1ntenm payment
certificates were to be regarded as binding on the owner so as to prevent
his raising any set-off or other cross-claim, and so entitling the contractor
to immediate summary judgment in the absence of an.exp~ess ~nt_ra~tual
provision permitting deduction for the matter in question. This pnnc1ple,
•1 Section 1(1), paras. 6·004-6·005 and Section 4( 4), and see also Chap. 5, Sectio~ .~,(5), paras.
5·014-5·016.
•2 Dawnays Ltd v. F.G. Minter Ltd. [1971] 1 W.L.R 1205.
SECT. 6] CERTIFICATES 855
[CHAP. 6
justified by Lord Denning on the basis of a contractor's need for "cash
flow", was, apparently, to be binding both on owners in main contracts and
on main contractors in sub-contracts (Dawnays' case was in fact decided
on the wording of a standard form of building sub-contract, and only one
of the six subsequent cases ultimately reviewed by the House of Lords in
the Gilbert-Ash case involved a main contract). The decision did not, of
course, prevent the owner's cross-claim being litigated or arbitrated at the
end of the day, but effectively conferred a "temporary finality" on the
certificate and a right to immediate payment in full. The case was rapidly
followed in no less than six reported Court of Appeal decisions in the
following two years, 43 with leave to appeal refused by the Court of Appeal
in all cases, and at first refused by the House of Lords itself.
All those cases were, however, overruled by the House of Lords, after
finally giving leave to appeal in 1973, in the landmark Gilbert-Ash
decision .44 Lord Diplock's seminal statements of principle, applicable, it is
submitted ( and rightly so on both practical and consensual grounds) over
the whole range of certification provisions in construction contracts, and
not merely those involving interim payment, have been quoted supra in
extenso. 45 Put shortly, they require explicit wording before any certifica-
tion provision in a construction contract or sub-contract will prevent the
raising of a defence, set-off or other cross-claim against sums certified for
payment ( or indeed, expressed more widely, so as to deprive any party of a
remedy, whether by claim or by defence or set-off or cross-claim, which he
would otherwise have by operation of law). 46
It should be appreciated that this is a principle of general application in 6·196
commercial fields other than construction contracts and their certification
provisions.
ILLUSTRATION
Clause 6 of a charterparty provided for payment of hire monthly without
discount in advance. In default of payment, the owners might withdraw the
vessel. Clause 11 provided that no hire was to be paid in the event of time lost
due to breakdown of machinery, and for hire paid in advance to be adjusted in
that event. It also provided for time lost and other costs due to slow speeding
to be deducted from the hire. From time to time the charterers had made
deductions which were agreed, but later they made deductions which the
owners disputed. The owners then gave instructions to their ship-masters not
to release cargo unless (effectively) the advance hire was paid in full less only
such deductions as had been agreed by the owners. The charterers accepted
this as a repudiation of the contract. The owners contended that only deduc-
i3 Criticised and discussed in detail in the articles, [1973] 89 L.Q.R. 36 and (1974) 90 LQ.R.,
reproduced in C.C.P.P., Chap. 14 and 15.
44 Modern Engineering (Bristol) Ltd. v. Gilbert-Ash (Northern) Ltd. [1974] A.C. 689, ana-
lysed in detail by the author, (1974) 90 L.Q.R. 21, reproduced in C.C.P.P., Chap. 14.
4.S Section 1(1), paras. 6·004-6·005.
, •. i See per Lord Diplock, cited supra, paras. 6·004-6-005.
6
 856 APPROVAL, SATISFACTION AND CERTIFICATES [CHAP.
tions which they had agreed to could be made from the hire, and that disputed
items must be taken to arbitration and the hire meanwhile paid in full. Held,
by the Court of Appeal (Cummins-Bruce L.J. dissenting), and upholding
Kerr J. on this point, that the charterers were entitled to deduct from hire
payments by way of equitable set-off representing their bona fide estimate of
loss caused by any breach by the owner resulting in less than full use of the
vessel, whether or not expressly covered by the two matters in Clause 11. The
ship owners had accordingly repudiated the contract: Federal Commerce Ltd.
v. Molena Alpha Ltd. (1978). 47
6·197 The majority judgments in this important case make clear that there
may be some types of contract (one example being marine "freight" con-
tracts for voyage charters) where even in the absence of express wording
set-off may not be permitted against payments due. They also make clear
that not every type of cross-claim which arises wider the same contract
will necessarily rank in law as an equitable set-off, if they are not such as to
render it wifair or unconscionable for the plaintiff to recover in full with-
out any set-off. The importance of the Gilbert-Ash case, having regard to
the earlier cases which it overruled, is that it holds that, in the case of
construction contracts viewed as a class, not only cross-claims for defec-
tive work, or contesting the amount or value of work done (both strictly
defences rather than set-offs,48 but also cross-claims for damages for
breach of contract, such as delay by the contractor (that is, strictly set-offs
and not defences) can properly be deducted, on the pre-1980 RIBA/JCT
wording, before making periodical or other payments otherwise due in
full. However, the Gilbert-Ash interpretation has not been applied to the
two Australian standard forms, "E5b" and "JCCB" respectively, where
set-off was held to be prohibited by the wording there used. 49
6·198 Moreover, as stated in Section 1(1) supra, the Gilbert-Ash case, decided
in 1973, has been followed in England by an explosion of construction
industry draftsmanship, in particular in the standard forms of sub-contract
and in some "management" contracts, designed to confer a "temporary
finality" on interim certification or other interim payment arrangements,
and expressly excluding defences or set-offs and entitling the contractor
or sub-contractor to immediate summary judgment without any deduc-
tion. In the case of some standard forms of sub-contract, main contractors
appear to have submitted to extraordinarily severe draftsmanship, for
reasons which are not easy to explain. The scheme of this new type of
sub-contract in England has been to provide expressly for a very limited
( and i:µ most cases self-evident) defined class of rights of set-off (for exam-
ple, retention, sums admitted or already established as due in arbitration
or litigation, cash dis.counts, and amounts previously paid); to make any
further "set-offs" dependent on notice of intention to set-off given by the
47
[1978] 1 Q.B. 927.
4llSee the Acsim (Southern) case, illustrated infra, para. 6.201.
49 Triden Contractors Ltd. v. Belvista Ltd. (1986) 3 B.C.L. 203; Sabemo Ltd. 'y,°'.De Groot
(1991) 8 B.C.L. 132,per Giles J.
6
SECT. 6) CERTIFICATES 857
main contractor not later than a very few days (in most cases only five
days) after the issue of the certificate itself; to require a quantified state-
ment of damage limited expressly to damages already incurred by the
main contractor (whereas in practice sub-contractors' delays or disrup-
tions or defective work are frequently likely to inflict predictable and
unavoidable prospective damage); to provide: that no other rights of set-off
will be permitted; and sometimes to provide for an "adjudicator" (not
arbitrator) with an absolute discretion whether to allow or deny the set-
off, in whole or in part, or to order security to be paid.so Some contracts use
express wording indicating that the adjudicator's or certifier's decision or
certificate, or in some cases even the sub-contractor's own presented
account, shall be binding, in the absence of a permissible set-off or
defence, "until the matters on which he has given his decision have been
settled by agreement or determined by an arbitrator or the courts",5 1 or
that "such estimates to be binding and conclusive ... until ... final ascer-
tainment or agreement". 52 As stated, some sub-contracts even bring about
these results when conditioned on the sub-contractor's own uncertified
and unsupported written applications for payment and not on any A/E's
or other third person's decision or certificate.53
This very explicit ( and often complicated and sometimes confused) 6°199
wording has not infrequently succeeded in its object, often in the face of
quite obviously justified cross-claims by the main contractor. Thus under
Clause 13 of the 1978 revised FASS "Green" form of sub-contract (where
a main contractor had been given a technically invalid Clause 8 architect's
certificate confirming the sub-contractor's delay, and had succeeded in
obtaining a valid replacement for it, but very shortly after the architect's
payment certificate had become due) not only did the sub-contractor
obtain final judgment on the payment certificate, since it had been imposs-
ible to serve the necessary notice of intention to set-off in time, but a stay
of execution pending arbitration of the main contractor's counterclaim for
delay was refused. 54 A similar result occurred in a case under the NSC 4
post-1980 sub-contract form where the architect had omitted to give the
confirming delay certificate in time to enable the main contractor to give
notice of intention to set-off damages for delay within the very short
period permitted after the issue of the payment certificate. 55 Again, where
a sub-contractor under the 1978 "Blue" form of sub-contract was in gross
delay and, supported by the architect's confirmatory delay certificate, the
main contractor had quantified damages in sums greater than those
50
See, e.g. Claus~s 13 of the 1976 revised FASS "Green" nominated sub-contract; Clause 15
of the 1978 reV1Sed NFB1E "Blue" non-nominated fonn of sub-contract; Clause 19 of the
NAM/SC sub-contract; and Clause 23.4 of the 1980 RIBA/JCT NSC 4 nominated sub-
contract, as well as Clauses 21 and 24 of the "Dom. 1." building sub-contract. See also
Clause 15 of the (1984 revised) FCEC civil engineering sub-contract.
51
See A. Cameron Ltd. v.John Mowlem (1990) 52 BLR24, C.A.
Yi Rosehaugh Stanhope v. Redpath Dorman Long (1990) 50 BLR 69 C.A.
i l See the N.E.I. Thompson case, illustrated infra, para. 6·200.
~ Tubeworkers Ltd. v. Tilbury Construction Ltd. (1985) 30 BLR 67, C.A.
ss Mellowes PPG Ltd. v. Snelling Construction Ltd. (1988) 49 BLR 109.
 858 APPROVAL, SATISFACTION AND CERTIFICA'IES [CHAP. 6 SECT. 6]
claimed by the sub-contractor and given his notice in time, the notice was
nevertheless invalidated on the ground that the damage was prospective
and would be incurred over the remaining period of the contract, and had
not already been incurred.56 Again, notice not having been served in time
under Clause 23 of the NSC 4 sub-contract, the sub-contractor's argument
that the stringent notice requirements of that clause applied to set-offs of
every kind, including the main contractor's disruption claim, and not
merely to cross-claims for delayed completion, was upheld, and.summary
judgment successfully obtained by the sub-contractor.57 Similarly under
the 1980 "Dom 1" form of sub-contract, notwithstanding an express pro-
vision for recovery of unliquidated damages under Clause 12 on notifi-
cation by the contractor, Clause23.4 was held to preclude any such set-off,
unless the further notification and other strict requirements of Clause 23
had also been complied with. 58
6·200 Indeed, with the spread of management contracts (with contractors
effectively on both sides of the transaction) there has been a proliferation
in the United Kingdom of contracts attempting to confer temporary
finality on mere statements or assertions unsupported by independent
certification, both as to moneys due, on the one hand, or as to cross-claims
for damages or for delay, on the other,59 sometimes b1,1t not always 'with
disputes referred to an adjudicator.
However, whenever the constraints of the express wording have per-
mitted, the courts have not been slow to re-affirm the Gilbert-Ash Prin-
ciple and refuse summary judgment on an apparent interim certificate or
other documentary entitlement.
ILLUSTRATIONS
(1) Under Clause 15(3)(b) of the 1984 revised FCEC civil engineering sub-
contract, the contractor was expressly entitled to withhold or defer payment
of the sums in the sub-contractor's written statement of account of the value
of work done given under Clause lS(l)(a) of the sub-contract, on five
described grounds (all concerned with the amounts or quantities of work
done) "without prejudice to any rights which exist at Common Law". By
Clause 15(3)(d), in the event of the contractor withholding any payment, he
was to give notice to the sub-contractor of his reasons for doing so "not later
than the date when such payment would otherwise be payable". The contract-
or wrote to the sub-contractor some 15 days after the latest date for payment
giving notice of a cross-claim for damages for delay exceeding the amount
applied for. The sub-contractors applied for summary judgment for the sums
in their written application, and succeeded before the trial judge. Held, by the
~ Chatbrown Ltd. v. Alfred McAlpine Ltd. (1986) 35 BLR44, C.A.
s1 Pillar Ltd. v. D. J. Higgins Construction Ltd. (19~6) 34 BLR46, C.A.
58 Hermcrest pie v. Trentham (1991) 53 BLR 104, C.A.
59 See the Cameron case, illustrated infra.
CERTIFICATES 859
Court of Appeal, that (a) the reservation of "rights which exist at Common
Law" in~lu?ed the. rights Of set-off ~.t _common law for damages due to delay;
and (b) Wl~holding any payment 10 Clause 15(3)(d) was not appropriate
to a cr?~s-~larm for damages and related back specifically to the disputes over
quantities 1n Clause 15(3)(b), and not to any other type of set-off, so that the
su~-contractor was not entitled to summary judgment, despite the notice
being late: NE! Thompson v: ~impey Construction Ltd. (1987),IICl]
[Note: In this case the plaintiffs unsuccessfully relied on the case of Mot-
tram Consu~tants v. Bernard Sunley Ltd.,61 where the House of Lords, shortly
a~ter the G1lb~rt-Ash case, held by a majority of three to two that, on very
different wordmg, there was an intention to exclude set-off. That was another
case where the contractor was entitled to payment against his own written
st~tements of the value of work done. That case does not, however, it is sub-
mitted, lay down any useful point of principle, and has been the subject of
detailed analysis by the editor.62]
(2) Clause !5(2) of the 1978 revision of the NFBTE ("Blue") form of sub- 6·201
contract rrov1ded that the contractorshoul.d be entitled to set-off against the
~urns claimed by the sub-contractor claims for loss or expense actually
incurred by the contractor due to breach of the sub-contract, provided the
amount had been quantified in detail and notice of his intention given to the
sub-contractor not less than 17 days before the payments became due (that is,
not later than ~ve ?ays after the payment certificate was issued). By Clause
15(4), the parties' nghts to set-off "are fully set out in these conditions and no
other rig~~s whatsoever shall be il?plied in terms of the sub-contract relating
to set-off . Of some £220,000 claimed by the sub-contractor the main con-
tractor conceded judgment for some f.37 ,000, as his notice of i~tention to set-
off was too late, but as to the remainder his defence was that the sums claimed
were e~cessive by reason of work not done or improperly done, and that this
:,vas strictly a defence and not a set-off. Held, by the Court of Appeal,63 apply-
ing :N!_ondelv. Stee~e 64 and the Gilbert-Ash case, that there were no clear words
showmg that the nghts of set-off given by the contract were the contractor's
e":clusiv~ re?Iedy ~gainst making payments in full, and since, following Lord
Diplock s dictum 1n the Gilbert-Ash case,65 contentions that work had not
been d~ne, or was wrongly valued or calculated, or was worth less than the
sum claimed _by reason of any breac~ of contract, were all in law defences and
not cro~s-clazms by way ofset-off, neither Clause 15(2) nor 15(4) applied, and
the claim for summary Judgment failed: Acsim (Southern) Ltd. v. Danish
Contracting Ltd. (1989).66
[Note: This very important case shows that a claim for sums to which the
co~tractor is not entitled for any contractual reason (which will include, in a
c~a1m for work done such as is the basis of interim payment in most construc-
tion contracts, cases where some or all of the work has not in fact been done
or not done properly, or has been wrongly priced or valued under the terms of
th~ contra':t,_ or reduced in value by reason of any breach of contract) will
raise questions of defence, as opposed to those cross-claims for damages for
60
39 BLR65.
61
[1975] 2 Lloyd's Rep. 197.
: (1?75) 911;,.Q.R. 471, rep~oduced in C.C.P.P., Chap.16.
D1sapprovmgBWP (Archuecturai) Ltd. v. Beaver Building Systems Ltd. (1988) 42 BLR86.
64
(1841) 8 M.&W. 858.
65 [1974] A.C. 689, at p. 7178.
_.;\ 61, 47 BLR 59. See, for a somewhat controversial contrary view of set-off and cross-claims for
defective goods sold, Cellulose Products Pty. Ltd. v. Truda (1970) 92 W.N. 561 (N.S.W.),
per Isaacs J.
 860 APPROVAL, SATISFACTION AND CERTIFICATES [CHAP. 6 SECT. 6]
breach which are properly described in law as set-offs. Since the contract did
not prohibit defences ( and if it had might well, it is submitted, have attracted
the provisions of the Unfair Contracts Terms legislation) the sub-contractor
could not succeed.67 ]
6·202 (3) Clause 21 of the "Dom 1" sub-contract -provided for interim payment
based on the (uncertified) sub-contractor's gross account for work done and
materials supplied, less retention and sums previously paid. Clause 23 permit-
ted set-off by the main contractor for loss and expense caused by any sub-
contractor breach, subject to notice in writing by the main contractor and
quantification in detail of the set-off not less than 20 days before payment was
due. By Clause 23.4, no other rights of set-off were to be implied as terms of
the contract relating to set-off. By Clause 24.3, upon counter-notice by the
sub-contractor disagreeing with a proposed set-off and giving particulars of
any counterclaim for sums due and notice of arbitration and a request for an
adjudicator, the adjudicator might permit deduction of part or all of the set-
off, or order its deposit with a stakeholder, or payment of part or all of it to the
sub-contractor, "provided that the Contractor should not be ordered to pay a
sum greater than that due under Clause 21 ". The main contractor proposed to
deduct £58,000 in respect of liquidated damages for delay, and the sub-con-
tractor counterclaimed for £77 ,000 allegedly due. Tile adjudicator ruled
against the set-off and ordered its payment to the sub-contractor, who there-
upon obtained summary judgment for the full amount of his counterclaim.
Held, by the Court of Appeal, allowing the contractor's appeal, that while the
contract enabled the adjudicator to decide on the merits ofthe set-off pending
arbitration, he had, under the terms of the proviso, no power to decide the
sums properly due to the sub-contractor for work done, and since these were
themselves independently in dispute, the matter could only be determined by
an arbitrator: A. Cameron Ltd. v. John Mowlem PLC (1990). 68
The Acsim case leaves no doubt, it is submitted, that the mere enumer-
ation of expressly permitted set-offs in a contract raises no implication
that they are to be the defendant's exclusive remedy on theexpressio unius
exclusio a/terius principle.69
6·203 The following recent case in Australia seems inconsistent with the Gil-
bert-Ash principle, and may be explained by the fact that the owner's
guarantor appeared in person, apparently had few if any merits, and took
different points when attacking the certificates.
ILLUSTRATION
An owner in New South Wales disputed the validity and valuation of a
variation, the cost of which had been allowed by the architect in two progress
certificates under the Australian JCCB form. By Clause 10.16 the architect
67 Compare Lords Morris' and Salmon's judgments in the difficult case of Mottram Consult-
ants v. Bernard Sunley Ltd. [1975] 2 Lloyd's Rep.197, summarised in C.C.P.P., para.16-05.
68
52BLR24.
Ml See thereportoftheAcsincase, atp. 69, and see also per Robert GoffL.J. to t~e.,sameeffect
in Federal Commerce Ltd. v. Molena Alpha [1978] 1 Q.B. 927, at p. 988. See:.also on the
same point Redpath Dorman Long v. Cummins Engine Co. 1982 S.L.T. 489, Inner House.
CERTIFICATES 861
wa.s required to determine the value of variations, and by Clause 10.07 the
b1:1Ilder was to. be paid the amounts specified in progress certificates within a
stipulated penod. By Clause 5.02.02 the architect was to act as certifier in
r~gard, inter alia,. t~ progress certificates, and by Clause 13.01 notice was to be
given as a condition precedent to litigation or arbitration of any dispute
betwe~n th~ contr~ctor and the owner o~ his architect (inter alia, when acting
as ~ert~er m relation to a progress certificate) and within a further 10 days
8:b1trat1on co1:1ld be required. Additionally, Clause 5.02.03 provided that
e1!her party might. refer to arbitration a decision of the architect as to, inter
all~, progress certificates. By Clause 13.08, either party might raise further
cla1!Ils of s~t-off or coun~erclaill1: in any arbitration. The owner duly served
notice of dispute followmg the issue of the progress certificates and sub-
seque~tly gave notice of arbit.ration. In an action by the builder ~gainst the
owners guarantor, held, by Giies J., that on the true construction of the con-
tract the contractor was entitled to be paid in full pending the arbitration and
the guarantor was accordingly liable at once: Sabemo Ltd. v De Groot
(1991)." · .
. [Note: Although this case might have been decided on the particular word-
ing of the guarantee itself, it is clear that his view of the construction contract
was critical to Giles J.'s decision. However, he apparently took into account
matters, s~ch as the contracto~'s right to d~t.ennine f~r :non-payment of a pro-
gress certificate, and final certificate prov1s1ons requmng notice of dispute if
they .were ~ot t? creat: an immediate debt, which were not to be found in
relation to 1ntenm cert:J.ficates, but which were in no way different from the
terms _of the English ~tandard forms which had been the subject of review by
t~~ Gtlbert-!4-.sh case !n the House of Lords: The absence of any positive pro-
v1s1on requ1~1ng finality or temporary finality for the interim certificate sug-
gests that this case, and perhaps also an earlier decision under the Australian
E5b form referred to by Giles J. 71 merits reconsideration.]
(d) The concept of "temporary finality" generally
1:he draftsm~ship a~d effect of the foreg?ing cases, it should perhaps 6·204
again be emphasised, will not prevent the ultunate presentation of a claim
in litigation or arbitration at the end of the day, whether or not the con-
tract contains the express "temporary finality" wording referred to in
parag:a~h (b), above. 72 They will generally, therefore, be of relevance
only 1n interlocutory proceedings for summary judgment for interim
payment brought by main contractors or sub-contractors. However the
"temporary finality" concept recently appears to have become attra~tive
on the other side of the table, namely to owners' or main contractors'
advisers seeking to establish a temporary right against main or manage-
ment or sub-contractors respectively to deduct or recover without argu-
ment for the time being in respect of matters of defence or counterclaim
against the sums otherwise due for interim payment.73
70
8 B.C.L. 132.
71
Tri1e!7 Contractors Ltd. v. Belvista Ltd. (1987) 3 B.C.L. 203. See also Smith J's later
de~1s10n to the same effect on the JCC form in the Supreme Court of Victoria in Simon
Builders Ltd. v. H. D. Fowles Ltd. (1992) 11 A.C.L.R. 23.
;: See, e.g. per Ralph Gibson L.J. in the Acsim case, supra, at p. 62.
See Roseh~ugh Stanhope v. Redpath Donnan Long (1990) 50 BLR 69, CA, illustrated
supra, Section 1(2), para. 6-018. This seems currently confined to "one-off'' rather than
standard form contracts.
 862 APPROVAL, SATISFACTION AND CERTIFICATES lCHAP. 6
It should perhaps also be pointed out that provisions giving "temporary
finality" to an A/E's interim payment certificates can have value for own-
ers as well as to contractors if the interim certificates are expressed to be
mutually binding on both parties (that is, if they are expressed as a con-
dition precedent to payment as well as preventing identified set-offs
against the sums certified) ..For that reason, they may sometimes be justi-
fiably used for these purposes, particularly by the draftsmen of standard
forms of main contract, depending on local conditions and the economic
balance of power in the industry as between owner and contractor, and all
the more so·if the contemplated AfE is an independent professional in
private practice. The cases above are sufficient to show, however, that pro-
visions for this purpose require far more careful drafting than has been
hitherto customary in English standard forms if they are to achieve their
objectives while at the same time avoiding injustice or abuse. Given local
conditions, a comprehensive system of "temporary finality" for interim
payment certificates, binding on both parties, has been in operation under
the Singapore SIA private sector contracts since 1980.74
6·205 It is not an unreasonable comment to say of the recent draftsmanship of
management contracts and sub-contracts in England, reflecting the
increasing commercial importance obviously attached by contractor and
sub-contractor interests to interim payment and financing on account dur-
ing the course of construction, that contracts and sub-contracts are now
emerging where the asserted documentary demands, unsupported by any
independent certification, of the sub-contractor or contractor as to sums
allegedly due for work done on an interim basis, are being expressly
accorded temporary finality pending arbitration, balanced by an equal
temporary finality accorded to similarly unsupported asserted documen-
tary demands on the part of the owner or contractor as to delay or other
damage incurred by them due to alleged contractor or sub-contractor
breach. These may or may not involve the presence of an adjudicator,
entirely separate from the arbitrator, and appointed to intervene and
decide (within a very short period) what are likely to be controversial and
hotly disputed differences between the parties as to moneys due on the
one hand, and set-offs or defences on the other. Such arrangements can be
expected to provoke frequent interlocutory litigation, and hardly seem a
rational solution to the very real practical problems of temporary finality.
This draftsmanship greatly under-estimates the difficulty, even for an
experienced judge or lawyer, of arriving at a fair and accurate assessment
of the merits of a dispute at short notice and with limited evidence during
its interlocutory stages, and in inexperienced hands errors in reaching
such decisions can easily occur and given the commercial exigencies prove
irretrievable.
1• For a description of the scheme and reference to the detailed clauses implementing it, see
C.C.P.P., pp. 624-625 and in particular Clauses 31(11) and 37(3)(g) of the SIA 1980 con-
tract, at pp. 599 and 612-613 of C.C.P.P. See also for a reported case on this.aspect of the
forms Lojan Properties Ltd. v. Tropicon Contractors Ltd. [1991] 2 M.L.J. 7~, . d,iscussed in
(1992) 9 I.C.L.R. 95. ·,c-
SECT. 6] Cc.KTIFICATES 863
( e) Extent of valuation in certificate
According to the terms of the contract, interim certificates may include 6·206
not only work done but also materials supplied, even though not yet fixed:
see Pickering v. Ilfracombe Railway ,75 and other cases on vesting.76 On the
other hand, the certificates may be for work done only, as in Tripp v.
Armitage.71 In some modern long-term contracts, they may include the
value, or a proportion of it, of plant brought onto the site (for eventual
deduction from the contract sum on final account), and before 1980 the
RIBA conditions contained an optional clause for payment for "off-site"
materials or goods,78 since 1980 no longer optional but apparently at the
architect's djscretion. 79
The meaning of "value" in this context in a priced contract may give rise
to difficulty. In the absence of express provision, it is submitted that in
measured contracts this will mean the value of any completed work or
materials at contract rates ( or, in lump sum contracts, as a proportion of
the lump sum, or using on any schedule of rates forming part of the con-
tract), and not actual cost to the contractor.
ILLUSTRATIONS
(1) A New York building contract provided for interim payments of 80 per 6·207
cent. of the "value of the work done". Held, by the New York Appellate Div-
ision, that the "value of the work done" was not the .cost to the contractor, but
the value of the partial work as measured by the price for the completed work:
Hawkins v. Burrell (1902).80
(2) A railway construction contract contained powers for the engineer to
certify for "the extent and value of the works then executed, and the materials
then provided for the works". A progress certificate was granted thereunder
to the amount of £96,200 for work done and materials supplied. Held, by the
Court of Common Pleas, that the engineer had po-.yer to certify for materials
which had not been actually affixed to the line; and that the progress certifi-
cate created a debt: Pickering v. Ilfracombe Railway (1868). 81
The concept of "value" may also be a source of difficulty if defects are 6·208
known to be present in the work to be valued. It has been submitted that
defective work during construction is a breach of contract, and that theo-
ries of "temporary conformity" ( that is, denying any breach while there is
time to remedy it) are not justified. 82
1> (1868) L.R. 3 C.P. 235, illustrated infra.
76 See post, Chap. 11.
71 (1839) 4 M. & W. 687; 8 L.J.Ex. 107,post, Chap. 11, para. 11·007.
75 Clause 30(2A).
79 Clause 30.3.
SO-N.Y. 69 App.Div. 462.
61 L.R. 3 C.P. 235.
82 See ante, Chap. 5, Section 2(1).
 864 APPROVAL, SATISFACTION AND CERTIFICATES [CHAP.
Prima facie, moreover, the measure of damage in contract for defective
work will be the cost of repair ,83 and this must be so particularly while work
is still under construction, since the owner must at that stage be entitled to
have carried out whatever work he may have specified or described, how-
ever idiosyncratically. Furthermore, as a matter of interpretation, "value"
in an interim payment provision must mean the value only of work prop-
erly carried out, even if that is not expressly stated, it is submitted.M
All this suggests strongly that the appropriate disallowance for defec-
tive work should be the cost of repair, which in some cases, if demolition
and disturbance is involved, may well exceed greatly a disallowance based
only on the price of the work not properly carried out. Conversely, any
disallowance based on price which exceeds the cost of full and satisfactory
repair may not in principle be justifiable, although such cases will usually
involve the question of fact whether the offered repair is as satisfactory as
work done correctly in the first place. In fact, most construction contracts
contain express terms giving the A/E power to order demolition or remov-
al and subsequent replacement. In the last resort, as in the case of damages
for defective work, concepts of reasonableness might then become
relevant, although an express contractual power should in principle pre-
vail, it is submitted.ss
( f) Early arbitration
6·209 Many arbitration clauses have in the past contained restrictions on com-
mencing an arbitration before completion of the work. It follows, of
course, that if such a restraint is applicable to a contractor or sub-con-
tractor's claim for moneys due in excess of those certified, an interim cer-
tificate will for that reason alone carry a substantial degree of temporary
finality for all practical purposes. This subject is also considered post,
Chapter 18."•
The traditional draftsmanship of these restraining provisions in the
English standard form arbitration clauses in both industries has in the past
been typically obscure, although recent authority has been able to take a
more liberal view of the wording. 1Disregarding the difficulties of
interpretation of the initial words of restriction "such reference shall not
be opened until practical completion" in the RIBA/JCT forms in
England,86 the potentially important wording concerns the circumstances
in which early arbitration will be permitted-in the ICE conditions these
include disputes "as to ... the withholding by the Engineer ofany certificate
or the withholding of any portion of the retention money under Clause 60
to which the Contractor claims to be entitled" ,87 and in the case of the
113
See ante, Chap. 6, Section 2(7) for the complicated case-law on this subject.
114
Compare the reasoning in Acsim (Southern) Ltd. v. Danish Contracting Ltd. (1989) 47
BLR 55, C.A., illustrated supra, para. 6·201.
11, This is in fact a very complicated and difficult subject which has provoked an enormous
jurisprudence in common law countries. See ante, Chap. 5, Section 2(6), paras. 5·059--5·062
and see post, Chapter 8, paras. 8·119 et seq.
fl5a Section 2(4)(b), paras. 18·042-18·044.
fl6 See Clause 35(2) of the pre-1980 forms and Article 5(2) of the post-1980 forms, as well as
Clause 66 of the Fourth Edition ICE conditions, but contrast "no step shall 1:te.taken in the
reference" in the ICE Fifth Edition.
87
See Clause 66 of both Fourth and Fifth Editions of the ICE conditions.
6 SECT. 6] CERTIFICATES 865
RIBA/JCT contracts disputes "whether or not the issue of an instruction
is empowered by these Conditions, whether or rtot a certificate has been
improperly withheld or is not in accordance with these Conditions" .ss
ILLUSTRATIONS
(1) A contractor under the Fourth Edition ICE conditions of contract 6·210
claimed additional payment for working space, for which he contended that
an item should have been included in the bills,89 but the engineer certified for
the work at bill rates and refused to include any additional items or payments.
The owner contended that the arbitration could not be opened until the end
of the work, since the only "withholding of a certificate" expressly referred to
in Clause 60 which would perm.it early arbitration was not applicable to this
particular dispute. Held, by Buckley J., that the exception referred to the
withholding of any certificate, not merely the particular withholding men~
tioned in Clause 60, since the words "under Clause 60" in the early arbitration
part of the clause90 qualified the words "retention money" and not the words
"of any certificate". While a bona fide difference of quantum reflected in a
certificate for less than the amount claimed would not be a "withholding of a
certificate", an adverse decision on a matter of principle, which if incorrect
would mean that the contractor was entitled to additional payment, did
amount to a "withholding of a certificate": Farr v. Ministry of Transport
(196b)."
[Note: The latter dictum of Buckley J. was doubted in the tenth edition, and
it is now clear that "withholding" had, in fact, already been construed in the
wider sense as including any difference over quantum in a slightly different
context in the House of Lords in 1933, in a case not cited to Buckley J ., and
which is accordingly now illustrated infra.]
(2) An architect issued an interim certificate for a gross sum of £10,482, 6·211
leaving a balance of some £900, after previous payments and retention, which
was duly paid. The contractor disputed the valuation and contended that the
gross sum certified should have been £11,125, and suspended work, where-
upon the owner terminated under a clause which empowered him to do so
"unless there has been a withholding of a certificate". The arbitrator held that
the gross sum certified should have been even higher at £11,364, but pro-
ceeded to misinterpret a contractual provision about minimum sums to be
certified, and consequently held that the contractor was not at the time
entitled to any certificate at all, so that there was no "withholding" and the
termination was valid. On an application to set aside the award for an error of
law on its face, held, by the House of Lords, that the arbitrator had misinter~
preted the contract, and that based on his monetary findings there had been a
"withholding" of the certificate to which the contractor had been entitled, and
the termination was accordingly invalid: Absalom v. G. W. (London) Garden
Village Society (1933).n
(3) A government contract modelled closely on the English civil engineer- 6·212
ing forms provided that "such reference, except as to the withholding by the
ss See Clause 35(2) of the 1963 edition, article 5(2) of the 1980 edition.
ij ~ee post, Chapter 8, para. 8·029 for the House of Lords' subsequent decision on this point,
9
and paras. 8·024 et seq. for this type of claim.
90
Quoted in the text immediately supra, para. 6·209, and compare the virtually identical
wording in the Costain International case, infra.
91
[1960] 1 W.L.R. 956.
92 [1933] A.C. 592.
 866 APPROVAL, SATISFACTION AND CERTIF1CATES [CHAP.
Engineer of any certificate or the withholding of any portion of Retention
Money under Clauses 102 and 104 to which the contractor claims to be
entitled", should not be opened until completion or alleged completion of the
work. The contract provided that the engineer was to "determine the amount
of" any extension of time, and that "every variation in time for completion of
the contract shall be by order in writing signed by _the Engineer". The con-
tractor encountered greater quantities of underground obstructions than
those provided for in the bills, and made a substantial claim (presumably for
an alteration of the bill rates) which was rejected by the engineer. Early arbi-
tration of this claim appears to have been agreed to. However, the contractor
also requested an extension of time, which was refused, and the government
resisted early arbitration of that particular issue. Held, by the Hong Kong
Court of Appeal, that the engineer's "order in writing" for an extension of
time which had been refused by the engineer was not a "certificate" within the
meaning of the clause, so that the claim to early arbitration must fail, and
further that, distinguishing the wording in Farr's case, the "certificate"
referred to was in any event a certificate under the payments clause, Clause
102, and not one under any other prOvision of the contract: Costain Inter-
national v. Attorney-General of Hong Kong (1983). 93
6·213 It appears, therefore, that in most cases the use of "withholding of a
certificate to which the contractor is entitled" wording will be sufficient to
include disputes over quantum. There also seems no doubt that the
"whether or not a certificate is in accordance with these conditions" word-
ing to be found additionally in RIBNJCT-type early arbitration clauses
will apply to a dispute as to the proper valuation of the work in the certifi-
cate-thus, in a dispute under the RIBA/JCT fixed fee cost-reimbursable
contract, an owner resisted summary judgment on the ground that the
probability was that the work had not been carried out economically, and
that the relevant certificate had for that reason generally over-valued the
work done. In giving leave to defend on the ground that no sufficiently
clear words existed excluding a defence or set-off, Kerr L.J. stated that this
wording in the arbitration clause (Clause 31A(2), of that contract) would
permit the dispute in question to be arbitrated before completion.94 On
the above views of these two types of wording, it will only be rarely that
early arbitration of financial claims will be prevented as in the rather
unusual Costain International case. Disputes likely to be caught by this
wording will be claims based on breach of contract, as opposed to claims
for contractual compensation, it is suggested.
(g) Other aspects of interim certificates
6·214 For the effect of interim certificates on vesting of property, see post,
Chapter 1195 ; as to their effect as orders in writing for extras, see post,
Chapter796; and as to their effect on the release of liquidated damages, see
9323 BLR54.
94
Pillings (CM) Ltd. v. Kent Investments (1985) 30 BLR 80, at p. 91.
95
Paras. 11 ·044---11 ·045.
96 Paras. 7·099-7·100.
6
SECT. 6] CERTIFICATES 867
post, Chapter 10.97 As to whether non-payment amounts to repudiation,
see ante, Chapter 4. 98 For the possible complication that an interim certifi-
cate may only be subject to set-off in respect of cross-claims existing dur-
ing the "working period" to which the certificate relates, see post Chapter
13.99 '
(8) Final Accounts
In practice, the contractor's account subntitted to the owner is the usual 6·215
f'relude to the final certificate, but its existence is often not acknowledged
1n.st~dard forms. However, the 1963 RIBA forms 1 did require the sub-
nuss1on of "documents" by the contractor as a condition of the issue of the
final certificate by the due date, and this has been continued in the
post-1980 forms. 2 Apart from provisions of this kind, therefore, it would
seem that in theory on a strict view the A/E or surveyor is bound to value
the work according to the contract for the purpose of 111.e final certificate,
whethe: or not the contractor submits an account and if necessary without
that ass1stance,3 although the latter may well find it more difficult to criti-
cise the adequacy of the certificate if the A/E has not been afforded that
assistance.
SECTION 7. EFFECT ON THIRD PERSONS
It goes without saying that certificates or awards of an architect or engin- 6·216
eer, or his approval or satisfaction, even though expressed to be final or
binding by the contract, will not bind strangers to the contract, unless they
have themselves contracted to be bound by them, or are claiming in some
way through a party to the contract, such as an assignee or garnishor. This
can be of particular importance in considering guarantees for the per-
formance of contracts. Equally, while a certificate may bind a party to the
contract vis-11-vis the other party, it may not bind him against a stranger,
and ce:tainly not as against the certifier himself, who will normally owe his
own chent a contractual duty of care.4 On the other hand, an assignee of a
contract is in no better position and is bound in the same way by contrac-
tual certifications as his assignor.s
91
Paras. 10·071-10.074.
98
Paras. 4·218-4·220.
99
See para. 12·057, and the case of Redpath Dorman Long Ltd. v. Cummins Engine Co 1982
S.L.T. 489 there illustrated. ·
1
Clause 30(5)(b) and (6).
1
Clauses 30.6.1.1 and 30.8.
3
See, e.g. Clause 9 of the pre-1963 standard forms.
4
See, e.g. Rogers v. James (1891) 56 J.P. 277; 8 T.L.R. 67, and the other nineteenth century
cases referred to, ante, Chap. 2, paras. 2·028--2·030.
5
See post, Chap. 14, Section 5(5).
 868 APPROVAL, SATISFACTION AND CERTIFICATES [CHAP.
In the case of contracts made with third parties, it is necessary to con-
sider carefully whether the third party has agreed in terms which show an
intention to be bound by the certifier's decisions.
ILLUSTRATIONS
6·217 (1) The respondent H. advanced money to T., a builder, on a guarantee by
L., the building owner, of repayment "on the completion of six houses, in
accordance with the contract between myself and T.". The houses were to be
built to the satisfaction of a surveyor, and payment was to be made upon his
certificate. No such certificate had been given. In an action on the guarantee,
brought by H. against L., the jury found that as a fact the houses were com~
pleted. Held, by the Court of Appeal (affirming the judgment of the court
below), that the respondent was entitled to recover notwithstanding the
absence of the certificate: Lewis v. Hoare (1881).6
(2) A contractor in Ontario abandoned the work, and the owner, in an
interview with a sub-contractor, told him to go on, and that he (the owner)
would see him paid. In the original contract, the work was to be paid for on a
certificate of completion. Held, this did not apply to the new contract, which
was not an assignment of the old one, but that the owner had made himself
personally liable, and could not insist on the certificate as a condition prece-
dent if the work was sufficiently carried out in fact: Petrie v. Hunter (1882). 7
SECTION 8. SUMMARY OF THE LAW ON CONCLUSIVENESS OF
SATISFACTION OR CERTIFICATES
6·218 It may be helpful to summarise briefly the position as disclosed by the
preceding sections of this chapter. In order for the satisfaction or certifi-
cate of an architect or engineer to be conclusive and binding on the par-
ties, the following conditions must exist:
(1) the matter in dispute must be one upon which the contract confers
jurisdiction on the architect or engineer to express his satisfaction
or certify. That jurisdiction will usually be narrowly construed8 ;
(2) the contract must on its true construction provide that the certifi-
cate or satisfaction is intended to be binding. If so, there will be at
least a tendency to regard it as being bilaterally binding, that is to
say, both parties will be bound by the certificate. There are, how-
ever, cases, apart from the example of interim certificates, where
the certificate may only be intended to bind unilaterally.9 But in
6
44 L.T. 66.
7
2 OntRep. 233; following Lewis v. Hoare, supra.
a See, e.g. the cases under Section 1(2),supra, and Lloyd v. Milward and Clemence v. Clarke,
supra, paras. 6·068 and 6·079, and the cases referred to in Section 5(6)(g), see!!Jpra, paras.
6·149-6·151.
9
See Section 3, supra.
6 SECT. 8] SUMMARY OF THE LAW ON CONCLUSIVENESS, ETC. 869
either case a provision enabling a party to go behind or question or
dispute the decision will destroy the conclusiveness of the satisfac-
tion or certificate, in particular any applicable arbitration clause,
either in general terms containing no express restrictions on the
disputes to be referred, and a fortiori if "open up review and revise"
or other express wording showing an-intention to confer an over-
riding or appellate jurisdiction on the arbitrator is usedto;
(3) the certificate or satisfaction must be honestly given, and if not this
will be a breach of warranty by the owner. 10a It must be given with- 6·219
out collusion, interference or undue influence, and the certifier
must preserve his independence and not act in a way that suggests
that he has lost his independence. 11 Whether or not a breach of con-
tract by the owner sounding in damages is involved, the certificate
in such cases will cease to be binding and can be disregarded;
(4) the provisions of the contract regulating the matter to be certified
must be strictly adhered to; the approval or certificate must be giv-
en by the correct person at the correct time, and must not take into
account any matters extraneous to the stipulated requirements of
the contract, 12 although there may be a class of satisfaction pro-
vision where the A/E may bona fide impose a stricter standard, for
example, of quality, on the party bound than the contract docu-
ments otherwise require13;
(5) the owner must have done nothing, by breach of contract or other-
wise, to prevent the contractor from obtaining the certificate or
satisfaction. 14
SECTION 9. STATUS AND DUTIES OF CERTIFIER
(1) Generally
It has been seen, particularly in Sections 1 and 5, see supra, that in most of 6-220
his functions the A/Eis merely the agent or alter ego of the owner; but that
-insofar as the construction contract may require him to decide contro-
versial matters such as valuation, the owner, while not warranting his com-
petence, does warrant his honesty and undertakes not to interfere with the
c~rtifiers independent exercise of his own judgment when carrying out
.those functions. 14a
Much of what follows in this section will not today be of great practical
importance if there is an arbitration clause permitting decisions or
w See Section 4. See, however, the possible effect of the Court of Appeal's Crouch view, in
"open up and revise" cases only, if the displlte is in the courts and not before an arbitrator,
supra, Sections 4(2) and 4(5), paras. 6·093-6·095.
1
0. See, e.g. supra, para. 6· 113.
11
See Section 5, ante, and the analysis at paras. 6·097-6·098, 6· 112 et seq., and 6-139 et seq.
12
Ibid. o See the analysis supra, Section 3, paras. 6·034---6·035.
14
See Sections 5(4) and (5),supra.
14
• See the quotations supra, paras. 6· 112-6· 113.
 870 APPROVAL, SATISFACTION AND CERTIFICATES [CHAP.
approvals of the AfE or certifier to be reviewed. On the other hand, if
there is no, or no sufficiently wide, arbitration clause, or if the right to
arbitration is for some reason lost, then, on the Crouch theory that the
courts will have no power to intervene in "open up review and revise"
cases, the exact status of and performance of his duties by the certifier may
be of critical importance. Much of this subject has already been discussed
in, Section 5, supra, which should be borne in mind when considering the
present section.
An architect, in certifying, is not, as has been pointed out, an arbi-
trator.15 He has been described, perhaps not entirely accurately, as a "pre-
venter of disputes" in contradistinction to an arbitrator, whose powers
16
only become operative when a dispute has arisen. The certifying function
is usually referred to as "quasi-judicial" or sometimes "quasi-arbitral",
although this part of his functions has more recently been described, per-
haps more accurately, as "discretionary". 17 Lord Radcliffe has expressed
this distinction shortly:
" ... it is obvious that his general function is to act on behalf of the owner, and
he is the owner's agent to give the required instructions to the contractor. He
is placed in office to protect the owner's interests. But in those parts of his
duties which relate to the giving of certificates for payment, I think that he
stands apart from the owner and enjoys to some extent an independent auth-
ority of his own."18
6°221 The greater part of an AJE's functions are administrative and only
occasionally judicial, and may often require to be exercised before any
dispute has arisen, or upon matters on which he has already formed an
opinion. Hence the same obligation to hear and determine disputes in a
fully judicial manner without prior interest which rests upon a full arbi-
trator or a judge is not imposed upon him when acting as certifier. Extracts
from the following judgments on which the courts have commented upon
the postion of a certifier may make this distinction clearer. Thus in Jack-
son v. Barry Railway,19 Bowen L.J. said:
"The perfectly open judgment, the absence of _all previously fanned or pro-
nounced views, which in an ordinary arbitrator are natural and to be looked
for, neither party to the contract proposed to exact from the arbitrator of
their choice ... The question is whether the engineer has done anything to
unfit himself to act, or render himself incapable of acting, not as an arbitrator
without previously formed or even strong views, but as honest judge of this
very special and exceptional kind."
15 Kennedyv. Mayor ofBarrow in Furness (1909), Hudson, Building Contracts (4th ed.), Vol.
2, p. 411.
16 Laidlaw v. Hastings Pier Co. (1874), Hudson, Building Contracts (4th ed.), Vol. 2, p. 13,
Ex.Ch; Re Carus-Wilson and Greene (1886) 18 Q.B.D. 7.
11 See VinelottJ.'s judgment in London Borough of Merton v. Leach (1985) 32 BLR 51, at p.
78, quoted supra, paras. 6· 112-6·113.
18 Burden Ltd. v. Swansea Corporation [1957] 1 W.L.R. 1167, at p. 1172.
19 {1893] 1 Ch. 238.
6 SECT. 9] STATUS AND DUTIES OF CERTIFIER 871
This judgment has been quoted with strong approval in subsequent
cases, in particular in Hickman Co. v. Roberts.20 Again, in McDonald v.
Mayor ofWorkington,21 Lord Esher M.R. said:
"Where a surveyor is put into that position to give a certificate, I do not say
that heis an arbitrator, but he is an independent person. His duty is to give the
certificate according to his own conscience ·and according to what he con-
ceives to be the right and truth as to the work done, and for that purpose he
has no right to obey any order or any suggeston by these people who are
called his masters; for that purpose they are not his masters."
And in Page v. Llandaff and Dinas Powis Rural District Council, 22 6·222
Channell J. said:
"They may each argue their case before him, and it would be perfectly right
f"?r ~e engineer to give opportunities to either of them by saying 'Now my
view is so and so: what have you to say to that?' provided he does it equally to
the other person. There would be no objections whatever to his doing that,
but he must, so far as regards the portions of his duty in which he is deciding
between the parties, deal equally with both parties. If he gives opportunities
too one, he must give the same opportunties to the other; and although he
?1ay listen to arguments which may be addressed to him, he is not to allow his
Judgment to be influenced by directions given him of the character which
would be properly given to him if he were doing some other part of his work;
namely, the part in which he is surveyor only and directing the mode in which
the work is to be done."
Again, in Cross v. Leeds Corporation,23 Mathew L.J. said:
"Now it is said that we ought to come to the conclusion that he was unfit to act
judicially, because he anticipated the time when he would have to act
judicially, without hearing or giving the opportunity of hearing the builder
~ith regard to the matters in dispute; but if you look at the correspondence, it
ts a perfectly good-tempered correspondence from beginning to end, there is
not in the course of it the smallest imputation upon the honour of the engin·
eer, but he took the position when he was appealed to in the matter, 'I have
given you your certificates and there they are, and I see no reason now for
altering them'."24
In the same case Mathew L.J. said that the architect was in two
positions:
"in the one position he is bound to do his best for his employer and to look
sharply after the builder whilst the work is going on, and it is his duty in that
capacity to form an opinion as to what his employer is entitled to while the
works are being executed."
But should a time come when disputes arise 6°223
See supra, paras. 6·130, and 6·142-6·144.
:!11
21
Hudson, Building Contracts (4th ed.), Vol. 2, p. 228, 230-1.
22
(1901) op. cit. 316, 320.
23
(1902), op. cit. 339.
2• Op. cit., at p. 344.
 872 APPROVAL, SATISFACTION AND CERTIFICATES [CHAP. 6
"the engineer should deal with them in a cliffe:en~ cap~city, and then he has
to do his best as an honourable man to detenmne Jud.ictally and finally quest-
ions between the parties."25
Thus there is really only one rule for the guidance of engineers and
architects in performing their duties as supervisors of the works and certi-
fiers of money from time to time due to the builder when they may sub-
sequently have to act judicially, as final certifiers or on a reference prior to
arbitration, and that is that they should act honestly and without 3[!-Y per-
verse conduct or refusal to deal with the matter at all. Thus Collins M.R.
said in Cross v. Leeds Corporation26:
"A strong man forming an opinion and acting on it, and if nee~ be expressing
it does not negative his right, for the reasons I have alr~ady pointed out, to act
as arbitrator afterwards. You have got to get something more than a strong
opinion strongly expressed before you have something equivalent to a
refusal to consider the matter on its merits at all."
As the above passages indicate, it is often impossible for an engineer or
architect to perform the many duties devolving upon him during the pro-
gress of the works without expressing an opinion on matters as to which he
may have to adjudicate later as certifier.27
6·224 Nevertheless, it should be borne in mind by certifiers that their primary
duty to their client requires them to protect his interest. That duty is in no
way inconsistent with a duty to act impartially when called upon by the
contract to do so, but this does not mean (as some architects and many
engineers, whether acting as certifiers or arbitrators, seem to think) that
they are free to give way to their own ideas of what is fair in defiance of the
strict letter of the contract. The contract confers no personal discretion
whatever upon the certifier,is unless it expressly so states, or is in one of the
comparatively rare categories ( as it has been submitted that in the case of
architect and engineer certifiers it will almost invariably not be) where the
contract on its true construction requires the satisfaction of the person
concerned to be the overriding obligation. 29 The duty of the certifier is to
apply the contract as strictly and impartially as a judge would do, it is ~ub-
mitted, though no doubt the application of the "de minimis" rule 1?1-ght
allow him to pass over purely trivial defects in the same way that a Judge
would do.
Furthermore, the important and useful case of Hatrick v. Nelsanw
31
shows ( and indeed the latest RIBA forms of contract implicitly require )
that a close liaison between architect and employer over some of his more
2.1 Op. cit., p. 343.
u Op. cit., at p. 342.
21 See also the cases illustrated supra, paras. 6· 135-6·138.
211 See for an example where an engineer arbitrator sought to invoke an obviou~lyinappr?p~-
ate discretion in favour of the contractor in the absence of a required notice of claun m
Blackford & Sons (Calne) Ltd. v. Christchurch Corp. [1952] 1 Lloyd's Rep. 349.
29 See supra, Section 3, paras. 6·034---6·035.
io [1964] N.Z.L.R. 72, supra, Section 5, para. 6-123.
Ji See supra, paras. 6· 182-6· 183.
SECT. 9] STATUS AND DUTIES OF CERTIFIER 873
important certifying decisions should exist prior to his making them, and
of their nature these are not discussions at which the contractor would or
should be present. On the other hand, an opportunity to make represen-
tations should be afforded to the contractor wherever possible (see the
views expressed as to the South African case of Kallberg v. Cape Town
Municipality,n supra, Section 5, and post, Chap. 18).
(Confusion can be avoided when considering many of the cases on this
subject by noting that the word "arbitrator" is frequently applied by the
courts to A/Es in the exercise of their certifying functions, and also that in
many early contracts the A/E was also named as arbitrator.)
(2) Duty When a Final Certificate has to be Given
The duty of A/Es when they have to give a final certificate is to be open, 6°225
fair and above board in all their dealings with the parties, and they should
(depending upon the nature of the subject in respect of which they have to
give a final certificate) hear all the parties wish to say, although not in the
form of a hearing with both parties present. 33
(3) Where the Same Person is Named as both Certifier and Arbitrator
Various interpretations are in fact possible where a contract names the 6°226
same person both as certifier and arbitrator. Such contracts are not com-
mon at the present day, though they were widespread in England until
1934, when the Arbitration Act of that year made it possible to secure the
revocation of such an arbitrator's appointment. 34 But where the person
named as the certifier under a building contract is also the arbitrator, this
may, depending on the true construction of the contract, mean either:
(a) that only disputes other than those covered by certificates should be
referred to the arbitrator;
(b) that before certifying the AJE or architect is under a positive duty to
hear the parties first so that his certificate becomes, in effect, his
award; or
(c) that all disputes, whether the subject of a previous certificate or not,
may be referred to the arbitrator.
The second of these interpretations appears to have appealed to Lord
Reading L.C.J. in the difficult case of Eaglesham v. McMastef" when he
said:
"Clause 27 in my view still leaves Clause 26 in operation nad makes it necess-
ary that the plaintiff should have a certificate before he can recover, but
J2 I967 (3) S.A. 472. See supra, para. 6·124.
33 See supra, Section 5(4), paras. 6·121-6·123, and supra, Subsection (1).
:;,i See now s.24 of the Act of 1950.
35 [1920] 2 K.B. 169, at p. 174, illustrated supra, paras. 6·040 and 6·080.
 874 APPROVAL, SATISFACTION AND CERTIFICATES [CHAP. 6
Clause 27 does not leave it to the architect to make his certificate without
hearing the parties and adjudicating upon any dispute that may arise between
them."
In that case the two clauses referred to were as follows:
6-227 Clause 26: The certificate of the architect is a condition precedent to the
contractor's right of action against the employer."
Clause 27: "The architect is to be the sole arbitrator or umpire between
the employer and the contractor, and is to determine any question, dis-
pute or difference that may arise either during the progress of the work or
in determining the value of any variations that may be made in the work
contracted for, and the certificate of the architect's decision upon such
question, dispute or difference shall be final and binding between the
employer and contractor and without further appeal whatsoever."
It will be seen, however, that this particular contract was in a very spe-
cial form, expressly making the certificate of the architect a condition
precedent of the contractor's right of action, and providing for the
decision under the arbitration clause, Clause 27, to be made by certificate,
which suggests that the intention may in fact have been to have a "Scott v.
Avery" type of arbitration clause,36 with the architect as the arbitrator.
In the majority of cases, where the wording of the arbitration clause is
perfectly general, and no contrary intention is expressed in the contract,
the certificate of the certifier's decision will cease to be a condition proce-
dent and the award of the arbitrator37 will be a substitute for it. Where
arbitrator and certifier are one and the same person, and the decision may
be given by either method, it is suggested that the architect or engineer
when issuing his certificate should do nothing to prevent the contractor
from subsequently having the benefit of the arbitration clause and of hav-
ing his claims fully and judicially inquired into, if either party so requires
and if no objection is taken under the Arbitration Acts to his appointment
as arbitrator.
It is further submitted, that this, the third of the above 28 interpret-
ations, is likely to be the correct one in the absence of indications to the
contrary.
(4) Duties of Certifier to Building Owner
6·228 The building owner is naturally entitled to have a high degree of control
over the services of the NE for which he is paying, consistent with his
exact status as a salaried official or as a professional man in private prac-
tice, but where the contract with the builder requires the A/E to decide
matters judicially, the owner of necessity ceases to be entitled to control
his activities in relation to the matter he is called upon to decide, whether
as certifier or arbitrator. The building owner must then leave the A/E to
decide impartially, so far as he can do so as the paid agent of one side with
~ As to which see post, Chap. 18, Section 2(4)(a), paras. 18·036 et seq.
37 See Section 4, supra.
SECT. 9] STATUS AND DUTIES OF CERTIFIER 875
possibly previously expressed opinions on the matter in question. While
proper and no dou_bt. str~ng repre.sentations can be made to him, they
must not s~ek to 11;1111-t his authority to decide, or pass the borderline
beyond which they interfere with the free exercise of his function 38
However, since the tenth edition of Hudson, the House of Lo;ds has
held that an owner can sue his NE in contract for lack of due care in the
performance of his certifying function (in that case in over-valuing work
d~ne for t~e purposes of interim certificati_on).39 On the other hand, not-
withstanding an early favourable dictum of Lord Salmon in Arenson v.
Casson-.f!ec~ma~, 40 a duty owed to the contractor, in tort under the Hedley
Byrne pnnc1ple, 10 a converse case of under-certification has it is submit-
ted rightly, been rejected by the Court of Appeal in 1989, in,what should
prove to be a landmark decision in the construction field.4'
Where the engineer or architect is acting as an arbitrator, he must be
careful to avoid receiving evidence or representations in the absence of
the other party to the dispute, since, once acting in this capacity, there is
not the s~ghtest doubt that to do so after he has formally opened the refer-
ence, or indeed after receipt of notice of arbitration, would be contrary to
natur~l j1;1stice and invalidate his award altogether. The cases of miscon-
duct mdicate clearly that the slightest conduct which may give the
app:a~ance of or thr~w an~ doubt on his impartiality, whether or not any
partiality actually exists, will be sufficient to justify his removal. 42
3
s See Section 5,supra, and the cases of Hickman v. Roberts [1913] A.C. 229, andHatrick v.
Nelson [1964] N.Z.L.R. 72 there referred to.
39
Sutcliffe v. Thakrah [1974] A.C. 727, discussed ante Chap. 2 Section 6(4)
• [1977] A.C. 405. ' ' .
41
Pacific Assoc~ates v. Baxter [1990] 1 Q.B ..993, ante, Chap. 1, Section 12(2)(d)(iii); and
Chap. 2, Sect10n 6(4), para. 0. See also thts case analysed in detail in "Charter for the
Construction Professional" (1990) 6 Const. L.J. 21J7, and see also the case applied in the
context of the A/E's design duties by the Court of Appeal of British Columbia in Edg-
":orth Construction v. Lea & Associates (1991) 54BLR 11,ante, Chap. l, Section'12(2)(d)
(1), paras. 1 ·29.5-1 ·296: \No"'., however, overruled by the Supreme Court of Canada, [1993]
3 S.C.R. 206, 1n a decision likely to provoke serious difficulties and anomalies. See ante
para.1·296.) '
42
See ~e G_amillo Eitzen and Jewson & Sons (1896) 40 S.J. 438; Re O'Connor and Whitlaw's
,:1-rbitratwn (1919) 88 L.J .K.B. 1242; London Export Corporation v. Jubilee Coffee Roast-
mg Co. Ltd. [1958] 1 W.L.R. 661. Misconduct by arbitrators is dealt with exhaustively post
Chap 18, Section 4. See ante, para. l ·296. '
 SECT. l] WHAT VARIATIONS ARE 877

SECTION 1. WHAT VARIATIONS ARE

CHAPTER 7 (1) Generally

(a) Terminology
VARIATIONS
The word "variation" can be used in a number of different senses. Thus 7·001
it is frequently used by lawyers for an agreed alteration or modification by
PARA.
the parties of the terms of a pre-existing contract between them. 1 Even in
Section 1. What Variations Are construction contracts it may occasionally be used by the draftsman for an
(1) Generally agreed alteration or extension of the contract completion date,2 or for
(a) Terminology .............. . 7·001
(b) Draftsmanship of provisions ................ .
compensatory provisions which may alter the contractprice, such as fluctu-
7·004
(c) Reasons for variation clauses .................. . 7·005 ations or "variation of price" clauses, or "changed conditions" (United
(d) General summary ............................................................. . 7·006 States) or "Clause 12" (United Kingdom) clauses3 ; or even, and in the
(e) Defects in modern standard forms ...................... . 7·007 pl"esent context highly misleadingly, for the adjustments of an initial
(2) Work Included in the Contract
(a) Generally .......................................................... . 7·010 quoted contract price in the light of the ''as built" quantities resulting from
(b) Where "as-built" quantities differ from the re-measurement provisions in unit-price or "bill of quantities" or
bills ................ . 7·015 "schedule" or other similar re-measurement contracts.
(c) Necessary work not mentioned in bills ............. . 7·019
(d) Necessary work not mentioned in schedule of rates ..... . 7·020
In this chapter, however, the term is used in the narrow sense of an
(e) Promise to pay when contractor already alteration in the previously described work and materials to be provided by
bound .............................. . 7·024 the contractor (that is, as shown on the drawings and described in the
(f) Instructions to assist contractors in
difficulty ................... . specifications, or to be implied as the indispensably or contingently
7·025
(g) Temporary works and methods of necessary work included in the contractor's obligation to complete such
working ............... . 7·037 expressly described work under the ''inclusive price principle''.4
Section 2. Variation Claims and Express Provisions
(1) Generally ............. .
Unlike some commonly used expressions such as "extras" or "extra
7·041
(2) The Power to Order Variations ...................................... , 7·043 work" or "additional work'', the term ''variations'' as used in this chapter
(3) Notice of Claims ... 7·051 will also include reduced or omitted work ("omissions"), or altered or
(4) Orders in Writing different work ( the latter on analysis will usually involve a combination of
(a) Generally .......................................................... . 7·055
(b) What are orders in writing? ... . 7·056
an omission of the relevant part of the original work followed by the
(c) Confirmation or subsequent sanction in writing 7·061 addition of new and different work in its place).
(d) Order in writing a condition precedent ........ .. 7·063 Variations in this sense are usually described as "changes" in United 7·002
(e) Order in writing not a condition precedent. 7·071
(f) Where there is an arbitration clause .............................. .
States terminology, but in United States contracts there is also a tendency
7·075
(g) Where a fraud on the contractor ............... . 7·076 to use a "changes" clause for many other matters which also involve a
(h) Where work is outside the contract or its "scope" ....... . 7·079 modification of the contract price or obligations, such as extension of time
(i) Waiver ...................... . 7·094
U) Summary of preceding paragraphs ........ .
decisions or unfavourable or changed physical conditions clauses, or fluc-
7·098
(5) Where there is a Certificate ........................................................ .. 7·099 tuations "rise and fall" financial provisions, none of which usually involve
Section 3. Valuation of Variations any change in the permanent work.
(1) Types of Valuation Clause ..... . 7·102 The term "variation" as normally used in the present chapter denotes
(2) The "Shopping List" Principle ................................................... . 7-105
(3) "Preliminaries" and Overheads Expenditure ........................... . 7·107 an alteration '\\-'.hich has been duly authorised or instructed by the owner or
(4) Criteria for Valuation ...................................... . 7·111 his A/E, and f~r the cost of which the owner will prima facie be responsible
(5) Miscellaneous Provisions in Standard Form Valuation to the contractor. Unauthorised alterations or variations of the physical
Clauses .......... . 7·113
(6) Multiple Interacting Variations 7·118
Section 4. Appropriation of Payments to Extras .............................. . 7·119 1
See, e.g. ante, Chap. 1, Section 4, paras. 1·089-1·091.
2
See, e.g. the contract wording in Costainlnternationalv .A·G ofHong Kong (1983) 23 BLR
48, ante, Chap. 6, Section 6(7), para. 6·212.
3
For these see post, Chap. 8.
4
Discussed ante, Chap. 4, paras. 4.036 et seq.

876
 878 VARIATIONS [CHAP. 7
work, whether voluntary or involuntary on the part of the contractor, far
from entitling him to extra payment, will usually be a breach of contract,
for which damages are in principle recoverable. 4a On the other hand, alter-
ations in the permanent work which may be unavoidable in order for the
contractor to discharge his completion or other contractual obligations in
regard to the originally described work, while technically a breach of con-
tract, may nevertheless constitute substantial performance, with only
nominal damages recoverable in the absence of proof of damage,5 but will
not constitute variations as here defined.
In many contracts it may be a question whether the contractual vari-
ation power extends to temporary works or methods of working, particu-
larly if undescribed, as opposed to the final permanent work in place-see
infra, Subsection (2)(g).''
7·003 Finally, the word "scope" is often used by commentators when discuss-
ing variations or changes, both in the United States and the Common-
wealth, in some such expression as "outside the scope of the contract". In
fact the word appears to have very different meanings, sometimes mean-
ing the original contract work ("the agreed scope"), so that any work
which is outside this particular "scope" will be a variation or change if
authorised; and sometimes meaning the project as a whole, including any
legitimate variations or changes which may be ordered during its course
(the "general scope" of the contract), so permitting changes to be ordered
under a changes or variations clause only if within, but not outside, that
enlarged "scope". Such "outside scope" changes, if established as such,
and in the absence of waiver by the contractor, require separate agree-
ment with the owner himself to found a contractual liability to pay. Some
contracts even use the word "scope'' in these two different senses in differ-
ent parts of the same contract. 6 In the present chapter, the word is used, if
at all, in this enlarged "general scope'' sense when discussing the proposi-
tion that, if a change can be shown to be outside this "general scope",
there is no power or right of the owner or his AIE to order such work
unilaterally under a variation clause without a separate agreement, with
the additional consequence that conduct by the owner designed to compel
its performance without the contractor's consent, such as termination of
the contract, would be a fundamental breach of contract and a repudiation
justifying rescission by the contractor.7 Such an "outside scope" change
may also enable the contractor to escape from formalities with which he
has not complied and which would prevent recovery had the change been
"inside scope".7a This subject is further considered infra, Section 2(4}(h},
para. 7·079.
4' See the old case of R. v. Peto, illustrated infra, para. 7·044.
s See, for a particularly clear statement of this position, the judgment of Cardozo J. in Jacob
& Young Inc. v. Kent 129 N.E. 889 (1921) (different pipe of equal value substituted for
unobtainable pipe); see ante, Chap. 4, paras. 4·020--4·022.
5' See paras. 7·037 et seq.; see also ante, paras. 2·138 et seq.
6 See Arts. 19 and 20 of the Norwegian Model Contract Offshore.
1 See infra, paras. 7·079 et seq.
1• See, e.g. Meyerv. Gilmer (1899) 19 N.Z.L.R. 129, illustrated infra, para. 7·082.
SEcr. l] WHAT VARIATIONS ARE 879
(b) Draftsmanship of provisions
It is perfectly possible for variations to be ordered, carried out and paid 7·004
for under a separate agreement between the owner and the contractor,
whether made orally or in writing,8 and quite independently of any express
provision providing for variations in the contract, unless there is some
provision specifically denying effect to any such separate agreement, as
was not uncommon in the past with some public or corporate owners.
Such provisions are by no means unknown at the present day. In the Com-
monwealth, they generally take the form of providing that no additional
payment should be made to the contractor for extra work without an order
in writing from an AIE or supervising officer ,9 or sometimes by the owner
himself, and sometimes an A/E's certificate may be required as a con-
dition of payment for extras. 10 ( On analysis, however, these provisions can
only operate to invalidate some other perhaps superior officer's instruc-
tion, but will not in principle operate to invalidate a separate agreement
with the owner himself, or with duly authorised officers or representatives
at the highest level with full power to contract on behalf of a public or
private corporation, it is submitted.)
In the United States, the traditional "change order" provisions have
tended to be more draconian in their formal requirements, to the point
that the requirements of the draftsmanship have become unrealistic, in
the sense that many clauses not only require a form of change order which
expressly confirms the owner's liability to pay for the work in question,10a
but in many cases additionally require prior agreement on the price of the
variation as a condition precedent to owner liability. This draftsmanship
led to the evolution of a "constructive change order" theory in United
States government contracts, 11 in order to deal with the "impasse'' created
by such wording in the extremely common case where an A!E bona fide
disputes the owner's liability on the ground that what is being instructed is
merely contract compliance, and therefore refuses any change order in the
required form while at the same time insisting on his instruction being
carried out. 11a Except in some oil industry contracts this particular wording
is extremely rare outside the United States.
Additionally, many United States contracts, unlike the great majority
of Commonwealth contracts, only permit the valuation of work under
change orders to be carried out at unaltered contract prices, with no men-
8
See ante, Chap. 1, paras. 1·089-1·091 for the principles.
9
See infra, Section 2(4), "Orders in Writing".
10
See ante, Chap. 6, Section 3.
io. See, for an English example, Brodie v. Cardiff Corporation [1919] A.C 337, infra,
para. 7·068.
n Initially for jurisdictional reasons so as to obtain Board of Contract appeal hearings prior
to the Wunderlich Act in 1978, it would seem.
ii. See infra, paras. 7·066-7·069 for the English and Commonwealth approach to this
impasse, but see in Canada the difficult case of Peter Kiewit Ltd. v. Eakins Construction
Ltd., illustrated ante, para. 4·219, as well as post, para. 17·069.
 880
VARIATIONS [CHAP. 7
tion of any allowance for delay, disruption or other factors affecting the
cost of the work. 12
(c) Reasons for variation clauses
7·005 These are inserted into nearly all construction contracts at the present
day for two principal reasons. In the first place, they give the owner the
power to require a variation of the work, unilaterally and as of right, as
opposed to relying on the willingness of the contractor to agree to the
variation, which would otherwise enable the contractor to exert unaccept-
able pricing or other pressures on the owner in return for his agreement to
carry out the variation. In the second place, it has already been seen13 that
an architect has no implied authority to contract on behalf of his
employer. 14 In the absence of such a provision, therefore, the contractor
will not be able to recover payment for any additional or varied work
which he has done on the A/E's instructions, ·unless he can show a separate
contract with the owner that he should do it and be paid for it (as, for
example, where the owner knows of the architect's instruction and does
not countermand it, provided that it is realised or ought to be realised by
the owner that a change of price is intended or probable as a consequence
of the instruction}. 15 With such a provision the contractor, provided he
complies with any requirements of form, is protected from any denial by
the owner of the A/E's authority to order the variation. A third and sub-
sidiary reason for variation clauses is that they enable the parties to agree
in advance on the basis for valuing and pricing the varied work, as to which
see infra, Section 3.
(d) General summary
7·006 in concise form, the general principles entitling a contractor to receive
payment for a change or variation have been admirably summarised in a
leading case in the United States, in terms which are applicable equally in
England and the Commonwealth, as being:
(1) that the work should be outside the narrower "agreed scope" of the
contract, that is outside the contractor's express or implied obli-
gations in regard to the work described in the original contract);
12
This has similarly resulted for pre-1978 jurisdictional reasons in the evolution in the Court
of Claims of the breach-based "cardinal change" theory, conversely designed to secure
access to that Court and escape from the inadequacy of the remedy of "equitable adjust-
ment" available before Board of Contract Appeals Tribunals in cases where the change
had caused disruption or delay-see C.C.P.P., paras. 8-38---8-39.
u See ante, Chap. 2, paras. 2·061-2·063. See, however, the case of Carlton Contractors v.
Bexley Corporation there referred to, in which a local authority's salaried architect was
held to have implied authority to contract.
14
See, e.g. the case of Ashwell and Nesbittv. Allen (1912), Hudson, Building Contracts (4th
edn.), Vol. 2, p. 462, illustrated ante, Chap. 6, para. 6-016. :· ;''
15
See, e.g. Re Chittick and Taylor (1954) 12 W.W.R. 653, Canada, referreCi" to infra,
para. 7·072.
SECT. l] WHAT VARIATIONS ARE 881
(2) that it should have been ordered by or on behalf of the owner;
(3) that the owner should, either by words or conduct have agreed to
pay for it;
(4) that any extra work has not been furnished voluntarily by the
contractor;
(5) that the work should not have been rendered necessary by the fault
of the contractor;
(6) where applicable, that any failure of the contractor to comply with
contract requirements as to procedure or form should have been
waived by the owner. 16
(e) Defects in modem standard forms
The more liberal wording often used in Commonwealth standard 7·007
forms, and in particular the English standard forms, requires as a matter of
form no more than a written "instruction" of the A!E to do the work in
question, with no express acknowledgement in the instruction of the sta-
tus of the work as an authorised variation. The principal English contracts
specifically do not require an expressly identifiable "variation order" or
"variation instruction" which could serve, like the American "change
order", to indicate a change of the ultimate contract price and to dis-
tinguish it from instructions given where no financial or compensatory
consequence is intended (as, for example, an instruction requiring com-
pliance with the drawings or specification where they are being departed
from, or explaining or confirming the contract intention, or given as a
consequence of discovered defective work}. Under modern English forms
of contract, therefore, the owner will not be liable to pay for a variation
unless the work instructed does as a fact involve an alteration in the work
required by the original contract. 11
It is also self-evident, as indicated by the fourth listed requirement in
the Watson Lumber case, supra, that instructions given by the NE as a
consequence of contractor or sub-contractor breaches of contract or
defaults ought not, in any sensibly drafted contract, to entitle the con-
tractor to compensation under a variation clause, or indeed any other con-
tractual compensatory provision. It is a remarkable tribute to the
contractor influence on the ICE and RIBA/JCT bodies in England, and a
serious reflection on the owner representation on those bodies (and on
owners' advisers who recommend adoption of their contracts without
modification) that given the potential confusion created by a compensa-
tory entitlement apparently based on an instruction to do work simpliciter,
express wording (as, for example, in Clause 9(4)(d) of the comparatively
16
See Wats-on Lumber Company v. Guennewig226 N.E. (2d) 270 (1967) (Appellate Court of
Illinois), which contains an admirable discussion of the law relating to variations generally
in terms entirely consistent with English and Commonwealth law, and also of the commer-
cial and practical background.
17
Compare clauses 51(1) of the Fourth and Fifth Editions of the ICE conditions, and Clauses
11 and 13 of the pre- and post-1980 RIB A/JCT standard forms respectively, which specify
no particular form of instruction other than writing.
 882 VARIATIONS [CHAP. 7
rarely used English government contract GC/Wks/1) does not at the very
least expressly exclude additional payment or compensation where an
instruction is given as a consequence of contractor or sub-contractor
defau1t. 1s The result in the United Kingdom over many years has been a
series of reported cases under resolutely unaltered standard forms where
unmerited contractual compensatory or even termination remedies have
been successfully exploited by contractors, particularly in relation to sub-
contract work, and where simple wording such as that in Clauses 9(4)(d)
and 31(3) of GC/Wks/1 would have prevented any such anomalous
consequences. 19
7·008 There are in fact other situations, which occur frequently in practice in
construction contracts and give rise to claims under express provisions
based on A/E's instructions, which merit similar express exclusion of com-
pensation, as, for example, where a variation is authorised at the request
of the contractor in order to assist him in a difficulty. Again, virtually no
standard forms deal expressly with this very common situation, where
unmeritorious claims are frequently advanced. 20
A further serious deficiency commonly found in English standard form
variation clauses relates to temporary works or methods of working, aS
opposed to the permanent work, which are usually (and rightly) in the
absence of express provision part of the design and other responsibilities
of the contractor. Few if any standard forms consider whether there
should be a power to order a change in temporary works or working meth-
ods, although Clause 51(1) of the post-1973 ICE conditions does now con-
fer a variation power, but only in regard to what is described as a
"specified method of working", and with no apparent thought given by
the draftsman to situations where, in the light of the contractor's obli-
gation to complete, additional payment ought not, in the owner's reason-
able interest, to be permitted.21
7·009 It is a reflection on public and private owners, and on their professional
and legal advisers, if they permit themselves to enter into contracts which,
as a minimum, do not expressly exclude additional payment for variation
or other instructions occasioned by contractor or sub-contractor default,
is Since 1990, however, a new Clause 8( 4) of the RIBA/JCTforms finally does except instr~c-
tions given as a result of defective work. For sub-contractors, see also the very specific
Clause 31(3) ofGCIWks/1.
19
See, e.g. Gloucestershire County Councilv. Richardson {1969] 1 A.C. 480, H.L.; T.A. Bick-
erton & Son Ltd. v. North West Metropolitan Regional Hospital Board [1970] 1 W.L.R. 60,
H.L.;Fairclough Building Ltd. v. Rhuddlan Borough Council (1985) 30 BLR 34C.A.;John
Jarvis Ltd. v. Rockdale Housing Association (1986) 36 BLR 48, C.A.; Scott Lithgow v.
Secretary of State for Defence (1989) 45 BLR 1, H.L. See also the analyses and criticisms by
the author of the Bickerton and Fairclough cases, C.C.P.P., Chap. 21; of the Jarvis case,
(1987) 3 Const. L.J. 274; and of the Scott Lithgow case, (1990) 7 ConsL L.J. 3. See also
Pearce v. Hereford and other "contractor in difficulties" cases infra, paras. 7·025 et seq. All
these cases could and should have been avoided by similar simple draftsmanship.
20
See the cases illustrated infra, Section 1(2)(f) and (g), paras. 7·025 et seq.
21 See, e.g. Yorkshire Water Authorityv. McAlpine Ltd., (1985)32BLR 114,illustr'.'ltedinfra,
para. 7·032, where clauses 13(1) and (3) were held, in combination with Qaus~}l(l), to
confer an express claim in favour of the contractor in such an event.
SECT.1] WHAT VARJATIONS ARE 883
in terms comparable to that in Clause 9(4)(c) of GC/Wks/1, both in regard
to variation claims and indeed in regard to any other compensatory
claims. Ideally, in the interests of administrative clarity and to avoid con-
fusion, some "variation order" or "change ·order" or other terminology
should also be used to distinguish between those situations and instruc-
tions which may entitle a contractor to compensation or additional pay-
ment and those which will not. 21a
For example, these matters are all dealt with in the Singapore SIA pri-
vate sector post-1980 contract, which expressly negatives additional pay-
ment for "directions" given:
(a) to ensure contract compliance;
(b) to vary the work as a consequence of breach of contract or dis-
covered defects;
(c) at the contractor's request to assist him when in difficulties; or
(d) when the contractor is using unsafe or unsatisfactory meth0ds of
working. 22
Such provisions are virtually unknown in the great majority of English
and Commonwealth standard forms.
(2) Work Included in the Contract
(a) Generally
The first question to be decided in considering any claim for a variation 7·010
based on an AIE 's or owner's instruction is whether or not the work com-
prised in the instruction is in fact a variation, that is to say, whether, as
defined above, it differs from the work which the contractor is already
obliged to carry out for the contract price. This will not simply involve an
examination of the work now instructed in the light of the earlier descrip-
tions in the contract drawings and specifications. Thus it has already been
seen that the contractor's basic completion obligation in a priced contract
may well include other ancillary work or processes which, although not
expressly described in the documents, are "indispensably" or unavoid-
ably necessary under the "inclusive price principle" for the proper com-
pletion of the work which has been described. 23 While usually not
presenting a serious problem of interpretation in sophisticated contracts,
quite difficult problems of interpretation can easily arise in less formally
concluded contracts, or even in some more important contracts where the
general descriptions of the work to be undertaken may be held to prevail
over the more detailed descriptions. 24
21
• Compare Clause 1(2) of the post-1980 SIA contracts set out in C.C.P.P., pp. 553-4.
zz Post-1980 SIA contracts, Clause 1(3), set out in C.C.P.P., p. 554.
23
See ante, Chap. 4, paras. 4·036 et seq.
24
See, e.g. the case of Williams v. Fitzmaurice, illustrated ante, Chap. 4, para. 4·040.
 884 VARIATIONS [CHAP. 7
Additionally, it has been seen that the inclusive price principle and the
absolute nature of the contractor's completion obligation may require
contingently necessary, although undescribed, work, often in the areas of
temporary works and methods of working, to be carried out. within the
overall contract price. 25 This contingent work may in extreme cases
involve repairing damage to the work so far completed due to external
causes or the acts of third parties,26 and may even involve a departure from
the owner's own design of the permanent work if that is necessary to bring
the work as a whole to satisfactory completion.27
7·011 Instructions which do no more than insist upon the full discharge of all
the contractor's actual or potential completion obligations in these vari-
ous situations will not, therefore, constitute a variation or change, as a
matter of interpretation of those terms as used in a variation or changes
clause, even though, in 'some cases, altered or additional undescribed
work may be involved. A further reason for denying liability will be
because, on general principles, there will be no consideration present for
any promise by the owner to pay extra for work, even though undescribed
in the original contract, which the contractor is already bound to carry out
as included in his price28 ( although in some situations, not applicable to the
present discussion, other forms of consideration can sometimes be
found29). The only case, rare at the present day, in which an owner might
theoretically be liable to the contractor in such a situation, it is submitted,
will be if the A/E's decision or certificate has been made permanently
binding on the owner as to what will constitute "extras" or varied work. 30
7·012 The foregoing principles apply with equal force to all types of priced
contract, whether lump sum or measured. In the latter (measured con-
tract) case, differences in "as built" quantities from the estimates in the
original contract documents may lead to upward or downward adjust-
ments of the contract price, but these re-measurement provisions are
designed only to apply to differences from the original contract quantities
resulting from errors in taking off the quantities from the drawings, or
from the inherently provisional and unpredictable nature of the quantities
estimates of the work in question. Such provisions, on analysis, are not
designed to apply to changes in the quantities resulting from alterations in
the work ordered by the owner or his A/E, 31 even if some contracts
(including the RIBAIJCT forms) may confusingly (and it may be a.dded
without any logical justification and against the reasonable interest of the
.s See ante, Chap. 4, para. 4·043.
16
See ante, Chap. 4, paras. 4·046 et seq., and the cases there cited.
7
2 See ante, Chap. 4, paras. 4·046 et seq.
28
Stilk v. Myrick (1809) 2 Camp. 317.
19
See for a perhaps doubtful example Williams v. Roffey Bros. & Nicholls (Contractors) Ltd.
[1991] 1 Q.B. 1, (C.A.), ante, Chap. 1, para. 1·069.
,o See ante, Chap. 6, Section 3, for a few examples in the older cases.
Ji See ante, Chap. 3, Section 1(2)(b), para. 3·014 and see the cases illustrated U!:fr;a, paras.
7·015-7·019 and the full detailed account of bill of quantities and measurementcontracts
post, Chap. 8, paras. 8·00.>-8·053.
SEcr. l] WHAT V ARJATIONS ARE 885
owner) choose to apply the variation valuation clauses expressly to regu-
late adjustments under the re-measurement clause.32
It has been seen that an owner does not generally warrant the accuracy
of the drawings or designs of his NE,33 so that alterations in the work due
to this cause, in the absence of remeasurement or other express pro-
visions,34 will similarly not entitle the contractor to extra payment.
Whether work described in contract documents such as a specification 7·013
or bills includes ancillary. work is a question of interpretation which may
sometimes depend upon the circumstances of the parties. Thus a price
quoted by a jobbing builder for supplying new doors for a house in a small
informal contract might be held to include hinges and door-handles,35 but
if a carefully drawn bill of quantities prepared by an owner's advisers
omitted to make mention of these items, a different view might be taken
( apart altogether from incorporation of a standard method of measure-
ment36 which might assist in the interpretation of the description in quest-
ion). Questions of construction of this kind do not depend upon any
distinction between measured or lump sum contracts. Thus if the descrip-
tion of concrete known, by reference to the drawings or from its location,
to be fair-faced, omits any mention of the necessary form.work, the quest-
ion of construction will be the same in each case, except for such compli-
cations as may arise from the incorporation of standard methods of
measurement in a contract using bills of quantities. Wherever it can be
inferred from the contract description that other undescribed work will be
necessary to achieve completion or a satisfactory result within the terms of
the contractors' express or implied obligations as to design, workmanship
and materials,37 then in the absence of some indication to the contrary the
undescribed work will be included in the price, whether measured or lump
sum. Every case must, however, depend on its own facts, and under the
contra proferentem rule may tum upon which party put forward the
description. Normally, both parties to a building or engineering contract
may be presumed to intend a quoted price to be comprehensive and not
subject to adjustment, in the absence of express provisions, such as those
relating to variations or fluctuations or (in the case of forms with quanti-
ties on a measured basis) differences between the quantities of the work
32
Compare the "deemed to be a variation" wording of Clause 12(2) and Clause 2.2.2.2ofthe
pre- and post-1980 RIBAJJCT forms respectively, and now Oause 55(2) of tlie post-1973
fifth edition ICE conditions.
l> See Chap. 4, paras. 4·042--4·056, and the cases there cited.
,,i As e.g. Clause 24(i)(c) of the 1963 RIBA standard forms, Clause 12(2) of the 1963 forms
without quantities, and Clause 6 of the 1955 ICE form, all of which deal primarily with
pricing discrepancies in the documentation, and are not concerned with basic deficiencies.
Js See, e.g. the case of Williams v. Fitzmaurice, ante, Chap. 4, para. 4·040.
36
As to which see infra, paras. 7·019 et seq., and post, paras. 8·024 et seq.
37
As to which see ante, Chap. 4 Section 1, paras. 4·063 et seq.
 886 VARIATIONS [CHAP. 7
estimated in the bills and the same items of work as actually carried out,38
or to changed or unfavourable site conditions.39
7·014 This same principle applies where a price is agreed for a variation or
change, whether before or after the changed work has been done:
" ... where an extra price is agreed to in respect of a particular item, that
person has a right to assume that the contractor has taken into account all of
his costs, direct and indirect, flowing from the change in circumstances that
led to the re-negotiation, and he will not later be presented with a bill for
additional compensation".40
(b) Where "as-built" quantities differ from bills
7·015 As pointed out supra, differences between "as built" quantities and
those stated in bills or other contractual estimates in unit-price (mea-
sured) contracts, frequently come about without any alteration in the
work being called for by the A/E or owner, either because of errors in
taking off quantities from the drawings in the first place or because of the
inherently unpredictable or provisional extent of the particular work in
question. The difference between a lump sum contract and measured con-
tract in this situation lies in the fact that, in the former case, both parties
carry the risk of both of these types of difference and the price will not
alter, whereas in the latter the contract sum will be adjusted, up or down,
to take account of the differences. Contractors in measured contracts will
frequently try to claim that these quantity differences should be valued
under the variation valuation clause in the contract, ( and indeed have
achieved this objective in the principal English standard forms )41 in order
to obtain the advantage of the rightly more generous valuations, permit-
ting departure in appropriate circumstances from the prices in the bills or
schedules, which are permitted by the great majority of English and Com-
monwealth variation valuation clauses in order to deal fairly with situ-
ations where, by the nature, timing or location of varied work, delay or
extra expense will be unavoidably involved. Without express provision,
however, such as in the previously mentioned measurement provisions in
the English standard fonns, 42 there can be no justification for such an
interpretation of a re-measurement provision, which will enable a con-
tractor to claim higher prices than those he has quoted where there has
been no change of circumstance other than the quantities differences, and
which is hardly likely to accord with the intentions or wishes of an owner
38 See per Lords Hodson and Guest in their dissenting judgments in A. E. Farr v. Ministry of
Transport (1965) 5 BLR 94,post, Chap 8, para. 8·029. See also the (unreported) judgments
of the Court of Appeal in that case.
39 See post, Chap. 8.
40 Per Mahoney J. in Walter Cabott Construction Ltd. v. The Queen (1974) 44 D.L.R. (3d) 82,
at p. 90.
4t See Clauses 12(2) and 2.2.2.2 of the 1963 and 1980 RIB A/JCT standard forms, and Clause
56(2) of the 1973 ICE conditions. ,·
42 See Clauses 12(2) and 2.2.2.2 of the pre- and post-1980 RIBA/JCT forms respectively, and
the new Clause 56(2) of the post-1973 ICE conditions.
SEcr. l] WHAT VARIATIONS ARE 887
pers~aded by his advisers or by industry pressures to forego the budgetary
certainty of a lump sum contract and agree to a unit-price measured con-
tract.43 Since the primary intention of a re-measurement provision ought,
therefore, be to re-measure only at the quoted prices in the bills or any
schedule, it becomes necessary, in the absence of express provision to the
contrary such as those in the English standard forms, to distinguish care-
fully between differences in quantities due to re-measurement or con-
tained within the lump sum intention, on the one hand, and differences
due to variations or changes resulting, as defined in this chapter, from an
owner or his A/E's instructions, on the other. Due to frequent obscurities
of draftsmanship, this may not always be easy.
ILLUSTRATIONS
(1) A contract for power-station foundations stated "This is a Schedule of 7·016
R~te,~ contract", and ~at the owner would only be liable to pay for the "as
built measured quantlty of work at the rates in the schedule, whether that
should be more or less th~n the quantities in the schedule. These quantities
were stated to be approxlffiately correct but no guarantee was given. The
same clause also stated that the work would be subject to extras additions
deductions, alterations, substitutions and omissions as provided fdr in clause~
10 and 1~. ~ose clauses conferred a wide power to order variations, but
placed a limit of 10 per cent. of the contract price on the total value of permit-
ted "omissions". The contract price for this latter purpose was defined as the
total value of the work ascertained under the re-measurement clause exclus-
ive of the variations, etc., referred to in that clause. The specificatio~ stated
tha! the levels and dimensions shown on the drawings were a general indi-
c~t:to~, and that the c~nstru~tion drawings and details might give substantially
diffenng levels and dimensions. In the event, the true in situ levels were such
that there were substantial reductions in the quantities of the earthworks and
concrete required by the design. Held, by the Court of Appeal of New South
Wa.le~, that the word "omissions" in clause 11 meant omissions resulting from
vana~ons ordered by the engineer, and not simple reductions in quantities
resulting from the actual levels of the ground: Arcos Industries v. Electricity
Commission of New South Wales (1973). 44
_(2) A contractor tendered a lump sum in a highway contract, which con- 7·017
tained no general re-measurement provision. The lump sum was the
~rossed-up total o_f various ite!118 at estimated quantities and rates and prices
1n a schedule requ1red to be pnced by the tendering contractors. The contract-
?r priced. an item for approximately 49,700 cubic yards of topsoil to be placed
10 .the finished emban~ments. The specification provided: ''If insufficient top
soil to meet the requrrements of the Works cannot be obtained within the
right of way, the engineer may direct the contractor to obtain top soil from
3
i For bills of q~antities and measured contracts, see ante, Chap. 3, Section 1(2)(b), but most
comprehensively post, Chap. 8, paras. 8·005 et seq. For the arguments for and against the
use of measured contracts as opposed to lump sum, and for the obvious unattractiveness to
owners of proposals for re-measurement at unpredictable rates and prices other than those
quoted in the bills, see also C.C.P.P., paras. 23-20 to 23-23, 24-20 to24-21, 26-14 to 26-16,
27-17 to 27-22, 29-12 to 29-15 and 30-20.
44
[1973] 2 N.S.W.L.R. 186.
 888 VARIATIONS [CHAP. 7
other approved locations." In addition to the placing item, whic~ was p~ce~
at 15 shillings per cubic yard by the contractor, and grossed_ up using the md1-
cated quantities and included in the tendered lump sum pnce, there w~~ a £3
rate, without any estimated quantities and with no grossed-up or prov1s1onal
amount for inclusion in the price, for importing and placing topsoil from out-
side the site. In the event, there was only 25,000 cubic yards of topsoil avail-
able on site and the contract requirement was also found to be greater than
expected at'over 60,000 cubic yards. Held, by the High Co~rt _of Australia, on
its true construction the contractor's overall lump sum pnce included for the
placing of any amount of topsoil necessary for the contract requirements, if_it
could be taken from the site, without any alteration to the contract sum; but 1n
the event of topsoil needing to be imported, he was entitled to be paid the £.3
rate for whatever quantity needed to be imported, and whether or not it
exceeded the original total estimated quantities of topsoil: Commissioner for
Main Roads v. Reed and Stuart (1974). 45
7·018 (3) Clause 49 of a roadworks contract in Transvaal empowered the engin-
eer to order variations and permitted departures from the contract rates or
prices in defined circumstances, in terms i~~ntical to those in Clau~~ 51 of the
pre-1973 ICE conditions and the ~bird edition o~ t~e FIDIC conditions. The
contract also provided elsewhere, 1n terms very similar to the ICE and FIDIC
conditions, that the quantities were approximate only and that the contractor
was to be paid for the actual work done at the unit rates and prices t~ndered.
Clause 49 also provided that no order in writing should be requrr~d tor
increases or decreases in the quantity of any work not the result of a vanatron
order under the clause but the result of the quantities exceeding or being less
than those stated in the schedule of quantities. The contractor contended that
this wording {also found in the ICE and FIDIC conditions) implied that dif-
ferences in quantities were indeed a variation, so that additional payme1;1ts
could be obtained under the variation clause. Held, by the Appellate Div-
ision that it was fallacious to equate a variation of the quantity of the work as
envi;aged in clause 49 with an increase or decrease of quantities under.the
re-measurement provision, which was to be carried out at the rates and pn~es
in the schedule of quantities: Grinaker Construction Ltd. v. Transvaal Provin-
cial Administration (1982). 46
[Note: The two Australian cases are manifestly right, it is submitte~.
Donaldson J ., in an unsatisfactory and, it would seem, shortly argued case m
1967 41 took a contrary view of the then ICE Clauses51 and 52, but that was a
case :.Vbere no item existed in the bills for the work in question, and the case
has been doubted on this as well as on other grounds. However, the South
African Grinaker contract differed very slightly from the ICE and FIDIC
conditions in that its re-measurement provision did make an express refer-
ence to the contract rates and prices, whereas the ICE and FIDICconditions
refer only to a valuation "in accordance with the Contract" ~thout any such
reference to the prices. It is submitted that Grinaker's case ts also und~u.bt-
edly right and to be preferred to that of Donaldson J., and that t~e. decision
would have been the same even had the re-measurement provision been
identical to the ICE and FIDIC wording. 48]
45
48 A.L.J.R. 641.
i6 [1982] 1 S.A.L.R. 78.
47
Crosby Ltd. v. Portland Earth Urban District Council (1969~ 5 BLR 1~1. . . . .
8
i See also post, Chap. 8, paras. 8·037-8·038 and the difficultPn'.'Y.Council d~c1s10n of M1tsu1
Construction v. A.·G. of Hong Kong (1986) 33 BLR 1, amved at on different express
wording, not disapproving, but not following Grinaker, and doubted and critip.sed by the
editor in, "How Much Measurement?" (1987) 3 Const.L.J. 3.
SEcr.1] WHAT VARIATIONS ARE 889
(c) Necessary work not mentioned in bills
Whether items of work which are not expressly mentioned in the con- 7·019
tract documents should be regarded as included in the contract price, as
being either indispensably or contingently necessary to carry out the
described work, has been discussed shortly supra49 and more fully ante,
Chapter 4.50
A special application of this ''inclusive price principle'' arises in the case
of those English-style bills of quantities contracts which expressly incor-
porate a standard method of measurement. The terms of its incorporation
into the contract, in contracts drafted in the owner's reasonable interest,
should not permit a standard method to override either the contract draw-
ings or specifications51 (prepared specially for the particular project) or
the "inclusive price principle" itself (a self-evidently basic commercial
protection}.52 On the other hand, in such a case a standard method can
obviously have some evi.dentiary value, although not, it is submitted, con-
tractual force, in deciding whether undescribed items of work are, or con-
versely are not, included in a contract price.s3
The original and fully legitimate role of an incorporated standard
method is in prescribing the particular way in which quantities of work are
to be calculated or measured ( as, for example, by what method a cubic
yard of excavation is to be calculated, since there are many different ways
this can be done). On the other hand, the "omitted item" contractors'
claim, based on failure of the bills to comply with recommendations or
requirements in a Standard Method as to the degree to which work is to be
broken down by separate pricing into particular constituent parts ( of ever-
increasing complication for measurement purposes with each successive
Edition) has become an ingenious and unmeritorious speciality of English
contractors' claims advisers which, as the years have passed, has been
increasingly and more explicitly buttressed by the two main English stan-
dard forms' draftsmanship.~ The failure of owners, both public and pri-
vate, and of their drafting and other advisers to identify these dangers or
to secure drafting protection against this type of claim54a remains a source
of surprise. These claims are considered in some detail post, Chapter 8,55
and have been analysed in detail on a number of occasions in C.C.P.P.56
49
At paras. 7·010-7·011. so At paras. 4·036 et seq.
51
Contrast the damaging example of Clauses 12(1) and 14.1 of the pre- and post-1980 RIBA/
JCT standard forms, and Clause 56(2) of the post-1973 ICE forms, but compare Clause
13(1)(b) and (c) of the Singapore post-1980 SIA contract, reproduced in C.C.P.P., p. 570.
52
Compare Article 5 and Clause 13(l)(a) of the 1980 Singapore SIA contract, reproduced in
C.C.P.P., pp. 550 and 570.
£i See, for a modern example, Holland Dredging Ltd. v. Dredging and Constrnction Ltd.
(1987) 37 BLR 1, see infra, para. 7·034.
4
~ Compare the new Clause 55(2) of the post-1973 ICE Fifth Edition, and Clause 2.2 of the
post-1980 RIBAJJCT building standard forms, and see C.C.P.P., paras. 30-14 to 30-21.
54
• Compare Art. 5 and Clause 13(1)(a) of the SIA contract, see supra.
5
5 At paras. 8·024 et seq.
56
See the entry "Omitted Items Standard Method Claims" in the C.C.P.P. subject-matter
index.
 890 VARIATIONS [CHAP. 7
(d) Necessary work not mentioned in schedule of rates
7·020 Many schedule of rates contracts, whether or not the contract design is
finalised in the form of drawings and specifications at the time of con-
tracting, provide for payment on the basis of the final "as built" quantities
(a fortiori if an overall contract price has been grossed up and tendered on
the basis of estimated quantities) and do not differ in any material sense
from bills of quantities or other forms of unit-price or measured contracts
in their legal effect,57 and any problems of interpretation in deciding
whether or not indispensably or contingently necessary work is included
in their rates or prices will be precisely the same as in bills of quantities
contracts, although schedule contracts are unlikely to be complicated by
problems raised by standard method incorporation.
Schedule of rates contracts are sometimes used where there is no final-
ised design available at the time of contracting, so that the contract effec-
tively consists of an undertaking to do whatever work may be required at
the rates and prices in the schedule, and variations in the normal sense will
not be involved, as in the case of a cost-reimbursable contract. However, if
in such a case the work later required is sufficiently different in kind from
the work in the schedule, and cannot properly be regarded as a necessary
work ancillary to the described items, some different rate or price may
need to be agreed, either because there is no fairly applicable rate for the
contract work in question, because the work is a true change from the
work reasonably contemplated and priced by the contractor.
ILLUSTRATIONS
7·021 (1) M. contracted to construct works including "cast iron outlet pipe to low
water, as described in the specification and conditions, and set forth on the
drawings"; M. also agreed to deliver a copy of the priced bill of quantities on
which the tender was based. The general plan of the work showed the outlet
pipe extending to low-water mark, but the sectional drawing showed it as
extending 279 feet further into the sea. The length of pipe in the bill of quanti-
ties corresponded with the length of pipe shown in the section, but there was
no price in the bill of quantities for underwater works. The engineer decided,
under a power in the contract, that M. was under an obligation to carry out the
work in accordance with the section. M. constructed the work according to
the section and claimed to be paid for the work beyond low-watermark at fair
and reasonable prices. Held, by Charnell J ., on case stated, that the contract
was a schedule of prices contract and, the work done beyond low-water mark
not being covered by any price in the schedule of prices, M. was entitled to be
paid for it at a fair valuation. He was paid the price he claimed, there being no
dispute as to the amount if liability was established: Re Walton-on-the-Naze
Urban District Council & Moran (1905).~8
,., See the Arcos Industries case, illustrated supra, para. 7·016, and see also the cases showing
the development of the bill of quantities contract, post, Chap. 8, para. 8·016.
~ Hudson, Building Contracts, (4th ed.), Vol. 2, p. 376, also illustrated and discussed ante,
para. 4·041. Compare, for a similar case (where, however, standard method coqs.i9erations
were involved), Holland Dredging (U.K.) Ltd. v. Dredging and Construction·Co. Ltd.
(1987) 37 BLR 1, C.A., illustrated infra, para. 7·034.
SEcr. l] WHAT VARIATIONS ARE 891
. [Note: Th~s ~ppears to b.e ~ border-line case. Much might turn on the par-
ticular descnptton of the bill items as showing clearly that the work priced in
the item was above the low-water line.]
(2) I~em 1 in a Bill was for excavation in trench not exceeding five feet in 7·022
depth; item 46 was a small provisional quantity for excavation for depths in
e:'cess o~ five f~et; and item 24 ~as an item for moulding, laying and jointing
pipes which on its true construction was held only to apply to the item 1 work.
In fact there was a considerable amount of work shown on the original con-
tract drawings in excess of five feet in depth. The contractor contended that
the contract, which was in the ICE fonn, was, under Clause 55, a contract for
measure and value, and that a new rate must be used for laying, etc., below
five feet. Alternatively, he contended that there was power to fix a new rate
under Clause 52 of the conditions (valuation of variations), notwithstanding
the absence of any order or instruction of the engineer. Held, by Donald-
son J., that there had been an increase in the quantities of excavation, so that
there was power to fix a new rate under Clause 52: Crosby v. Portland Urban
District Council (1967).59
[Note: The exact facts and terms of the bills are not clear from the judgment
in this case. While Donaldson J. undoubtedly appears to have held that
Clause 52 of the ICE conditions applied to differences in quantities not
amounting to a variation, there are in fact difficulties about this not men-
tioned in the judgment, on the wording of the ICE conditions, and i~ principle
the decision seems to be more easily supported on the contractor's first con-
tention under Clause 55 (the re-measurement provision) and the Walton-on-
the-Naze ratio decidendi. The case was originally not reported, there are signs
that the case was very shortly argued and the reasoning is not convincing.]
Disputes on schedule contracts usually involve the contention on the 7·023
part of the contractor that work required to be carried out is not included
in the schedule of rates as properly construed. The schedule requires to be
carefully drafted if disputes of this kind are to be avoided. All possible
contingencies should be considered, and the schedule should provide for
them. To take a simple instance, a schedule contract for laying a sewer will
often contain a few items, or composite items, priced per lineal yard
according to the depth of the sewer, for excavation; providing, laying,
jointing and testing pipes; and backfilling and reinstating. The contract
should at some point then provide that the prices for these items include
all incidental matters such as timbering, pumping, temporary works of
support and protection required where gas and water mains, etc., are
crossed, and so on, and the specification should describe with greater
detail still the Work required within the terms only briefly summarised in
the priced itei:n,s in the schedule. It is no hardship to a contractor to have
these risks put upon him if what is included in the schedule rates is made
clear to him when tendering ..However, as in the case of contracts with bills
of quantities (and indeed lump sum contracts), the basic presumption
must be that the prices for described items of work include for all ancillary
or contingent work which may be necessary for the completion of the
59
5 BLR 121.
 892 VARIATIONS [CHAP. 7
described work, which a well-drafted contract will also state expressly; 60
and it has been seen that in some cases even general descriptions of the
work or project may prevail in showing that undescribed work is included
in the contractor's prices.61
( e) Promise to pay when contractor already bound
7·024 If a contractor is already bound, on the true construction of the contract,
to do certain work for the contract price, there will be no consideration for
any promise by the owner to pay for it under the mistaken impression that
it is a variation.62 Equally, in most contracts an instruction by the architect
or engineer to execute certain work expressly stating it to be a variation
cannot bind the owner to pay for it if, on the true construction of the con-
tract, the work is included in the contract price, since he has no authority
to alter the terms of the contract.63 The only exception to this will be the
comparatively rare case at the present day of a provision in the contract
making an order in writing or certificate of the engineer in relation to extra
work conclusive and binding on the owner. 64 So if a contractor alleged that
work he was ordered to do was an extra and refused to continue without a
promise to pay for it, and the owner onthat account promised to pay extra
for it, he would not be liable on such a promise. J runes L.J. said of such a
promise in Sharpe v. Sao Paulo Ry. 65 : "It is perfectly nudum pactum. It is a
totally distinct thing from a claim for payment for actual extra works not
included in the contract. "66 The dividing line between this class of case and
that in paragraph (f) below is sometimes a fine one, and the illustrative
cases there collected should also be considered in the present context.
(f) Instructions to assist contractors in difficulty
7·025 A more difficult problem arises, however, if an effective alteration in
the permanent or temporary work is ordered with a view to assisting the
contractor in a difficulty which otherwise it would be his contractual obli-
gation to surmount by whatever changes or methods he might choose to
adopt and at his own cost-for instance, where he was finding difficulty in
completing the work in accordance with the contract design, or where
unexpected site difficulties arose. 67 In such cases, there may be a benefit
obtained by the owner as well as the contractor, since delays which might
oo See, e.g. Article 5 and Clause 13(1)(a) of the post-1980 Singapore SIA contract, repro-
duced in C.C.P.P ., pp. 550 and 570.
61 See ante, Chap. 4, Section 1, paras. 4·039--4·041, and supra, paras. 7·012-7·014.
62 Stilk v. Myrick (1809) 2 Camp. 317, and see ante, Chap. 1, paras. 1·067-1·070.
63
See ante, Chap. 2, paras. 2·061-2·063.
64 See Chap. 6, Section 3.
51 (1873) L.R. 8 Cb. App. 597, at p. 608.
66 Compare the analogous case ofD. & C. Builders Ltd. v. Rees [1966] 2 Q.B. 617,i~u~trated
ante, Chap. 4, Section 3, para. 4·232, and also Chap. 1, para. 1·075. The case of Williams v.
Roffey Bros. [1991] 1 Q.B. 1, illustrated ante, para. 1·069, would not be applicable to the
facts here discussed.
67 See ante, Chap. 4, Section l(b )(ii), and the case of Wilkins & Davies v. Gerald[~~ Borough
[1958] N.Z.L.R. 985, following Thom v. London County Council (1876) 1 App. Cas.120.
SEcr. l] WHAT VARIATIONS ARE 893
be costly to t?e o~er may be avoided by the alteration, and furthermore
the engineenng difficulty may throw doubt on the long-term suitability of
the permanent work after completion, and hence in the owner's interest
may call for a design change which incidentally may assist the contractor.
The cases in fact may raise two somewhat different contentions-in the
first place, there may be a real and effective change in the permanent
work, b_ut th~ owner's case is that it was agreed to solely to assist the con-
tractor in a dtfficulty and not for any interest or advantage of the owner; in
the .se~ond place, the owner may contend that the work concerned is not a
vanation at all, but only contingent work which, on the true construction
o~the contract, was the obligation of the contractor. In both cases, that will
dispose of the matter on the basis of absence of consideration as stated in
paragraph (d~, sup~a. ~ere, h~wever, it is the element of advantage to
th~ owner which pnnc1pally motivates the instruction, sufficient consider-
ation may be present. 68
If such an order is g~ven when the owner is strictly entitled to rely on the 7·026
contract and do nothmg, and the A/E complies with the formal require-
ments of the contract for variation orders by issuing an instruction in writ-
ing, when in reality~~ cont~actor is only ?eing given permission to depart
from ~e c~ntract, 1t 1s obvious that a dispute over payment is likely to
?ccur.m which the tr.ue _reason for the instruction is likely to be in issue and
In which the owner IS likely to contend that the variation clause does not
app~y in such circwnstances,69 or to plead absence of consideration. To
avoid doubt, A/Es or engineers should be careful to use permissive lan-
gu~ge onl~ whe~ autho?sing s_uch an alteration, and should expressly dis-
claim any mtention to give an mstruction or order in the matter under the
terms o~ the contract variation clause. Better drafted contracts will avoid
such a difficulty by anticipating this common incident of construction con-
tracts? and expressly excluding additional payment for changes
occasioned by contractor breach, or designed to assist the contractor.10
It has a~eady b.een see?- that an A/E owes no duty to the contractor in 7·027
:egard t.o instructions or information other than to give sufficiently clear
1nstr_uct1on~ as to the final permanent result required by the contract, and
that m particular the A/E owes no duty to the contractor, in the absence of
express provisions in the specification or other technical documents to
prescribe or supervise or control his methods of working.1oa Nor doe; he
owe a duty of care in regard to his design of the work to safeguard the
contractor from.economic loss. 71 Nor does the A/E owe any duty to the
: See, e.g. ~e Gause 1(3) of the 1980 reasoning in Williams v. Roffey Bros. [1991 J1 Q.B. 1, CA.
Se~, for mstB?7e, the analogous case of the appointment of new sub.contractors in substi-
70 tution for on~al sub-contractors who have failed, ante, paras. 4·025 et seq.
See supra, Section 1(1), paras. 7·007-7·009, and perhaps doubtful Singapore SIA contract
there referred to.
10a See ante, Chap.!, paras. 1·297 et seq., 1·312-1·313 and 1·383-1·384· Chap 2 paras 2·138-
71 2·140 and 2·196--2·19~; Chap. 4, paras. 4·053-4·054, 4·179-4·180. · ' · ' ·
Edgewo,:th Construction Ltd. v. Lea & Associates Ltd. (1991) 53 B.C.L.R. (2d) 180, British
Columbia C.A., and see Pacific Associates v. Baxter [1990} 1 Q.B. 993. But see the Edg-
worth case now overruled in the Supreme Court of Canada [1993] 3 S.C.R. 266 see ante
Chap.l,paras.1·296--1·296B. ' '
 894 VARIATIONS [CHAP. 7
contractor to detect defects at an early stage or, when they have been dis-
covered, to tell the contractor how they should be remedied, once it has
been established that they are due to breach of contract by the con-
tractor.11a Contractors, when faced with unexpected di:fficulties,71 bor even
with the emergent symptoms of their:_ own or their sub-contractors' defec-
tive work, invariably seek to obtain formal instructions from the architect,
or purport to confirm advice given by him as if it was an instruction, with a
view to preparing the ground for a financial claim based on the instruction.
A careless acknowledgment of such a letter can, under the remarkable
policies of the RIBA forms, have disastrous consequences for an owner.72
The following cases are examples of the difficulties which can arise.
ILLUSTRATIONS
7°028 (1) An architect, prior to letting the main contract, which was in the 1948
RIBA standard form, arranged with a nominated supplier of facing bricks for
stocks to be held available for delivery by certain dates. Later the contractor
placed his order with the supplier, being informed by the architect of the
arrangements made for delivery. The supplier defaulted on delivery, and the
architect authorised the contractors, who were unable for this reason to keep
to their planned programme, to build only the inner brick skins of the walls,
leaving the outer skin of facing bricks for completion as a separate operation,
which necessitated re-erection of scaffolding and an overall delay of four
weeks. The builder claimed additional payment on the ground that the orig-
inal arrangement for delivery and the later instructions to build the walls in
two stages were "architect's instructions" involving a variation within
Clause 1 of the contract. Held, by Sellers J., that the original ai;rangements
were merely part of the nomination, and the later instruction, being the result
of the failure of the supplier to deliver bricks and designed to assist the build-
er, was not an instruction for the postponement of the work within the mean-
ing of Clause 1, and consequently the claim must fail: Kirk and Kirk Ltd. v.
Croydon Corporation (1956). 73
7-029 (2) Contractors undertook to design and carry out by sub-contractors pil~-
driving work for the foundations of a block of flats for the defendan~ COUJ?-ctl,
and that the piles would satisfy certain tests. By Clause 7 of the specification,
the contractor was liable to make good at his own cost any failure or inad-
equacy due to failure of the sub-contractor's design. Conditions were enco"':1°-
tered which rendered it impracticable to carry out the work in the way which
had been contracted for, orto satisfy the tests. The contractors then suggested
two other methods of providing the necessary foundations, one which they
could carry out themselves, and one involving the engagement of other sub-
contractors. After they had submitted the sub-contractors' prices to him, in a
letter which concluded with the words: "We shall be glad to have your instruc-
tions and views on the extra cost involved", the architect wrote: "we are pre-
pared to accept your proposal that the piles ... should be of the bored type in
1
See ante, Chap. 2, paras. 2·196-2·197; Chap. 5, paras. 5·019 and 5·038.
" Q.B.D., R No. 269, 1953. The case was distinguished and not followed on very similar facts
nb See also the cases on the obligation to complete, ante, Chap. 4, paras. 4·046 et seq.
12
See particularly the Gloucestershire County Council case, illustrated infra.
?l [1956] J.P.L. 585, unfortunately reported very shortly. See also the case of Tharsis Sulphur
& Copper Co. v. McElroy (1878) 3 App.Cas.1040, illustrated infra, Subsection (J:,)(i), para.
7·059, and the part of Lord Blackburn's judgment cited in the illustration ante,.Chap. 4,
Section 1, paras. 4·046-4·048.
SECT.1] WHAT V ARJATIONS ARE 895
accordance with quotations submitted by [the sub-contractors]." It was found
as a fact that the architect, who was concerned by the prospect of delay, had
intended to order a variation, and only subsequently realised that the con-
tractor might not be entitled to a variation order. The contract conditions
were in the RIBAfonn. Held, by Edmund-DaviesJ., although the contractors
would have had no defence to an action for breach of contract when it became
clear that the design was impracticable, the architect's letter was an archi-
tect's instruction involving a variation in the design or .quality of the work
within Clause 1 of the contract conditions, and the contractors were en.titled
to be paid for the varied work in accordance with the sub-contractor's quo-
tation and not at the price originally tendered: Simplex Concrete Piles Ltd. v.
St. Pancras Borough Council (1958).74
[Note: This decision of Edmund-Davies J. seems wrong in principle, since
the architect's subjective intentions are, it is submitted, irrelevant, and an
architect has no authority to depart from the contract in the absence of a
binding certificate provision; but the case emphasises the failure of the drafts-
manship of the RIBA conditions in this very common situation, maintained in
the post-1980 forms, and in this case defeating a clear provision in the specifi-
cation showing the real contract intention.]
(3) Vandals broke into shop premises, which were being converted, the day 7·030
before they were due to be completed, and did considerable damage. There
was a·provision in the specification for protection of the works. The owner's
surveyors instructed the contractors to make good the damage at the earliest
possible moment. Held, by Nield J., that the contract was an entire contract
which needed to be completed before the contractor was entitled to the price,
and the contractor was therefore bound to reinstate the damage and could not
recover extra payment: Charon (Finchley) v. Singer Sewing Machine Ltd.
(1968)."
( 4) By Clause 13 of the ICE conditions the contractor was required to com-
ply with and adhere strictly to the engineer's instructions and directions on
any matter. A contractor driving a sewer in heading under a road ran into an
old sewer, which collapsed into and flooded his heading. At a meeting on the
site with the engineer it was decided to stank off the old sewer at a point off the
site, and sink a shaft on the far side of the road and work back to the crossing,
which would be completed in open-cut. The contractor asked about payment,
and the engineer replied: "I'm not talking to you about money. The inquest
will come later." The work done was the only practical way of dealing with the
matter, and the contractor admitted he would have done the same thing him-
self. Held, by Paull J., what had been done was in the nature of a joint decision
as to the best way of doing the work. Even if there were instructions under
Clause 13, they would not create any financial liability for the work, which the
contractor was bound to do to complete the contract: Pearce v. Hereford Cor-
poration (1968). 76
(5) Clausel20 of the RIBA (1957 revised) conditions permitted the con- 7·031
tractor to determine the contract77 if the works were delayed for one month by
74
Now reported in 14 BLR 80. Compare, in relation to re-nomination of sub-contractors, the
decision of Lord Goddard LC.J. in Rogers v. East Suffolk County Council, unreported,
by Judge Newey Q.C. in Howard de Walden Estates Ltd. v. Costain Management Design
Ltd. (1991) 55 BLR 124.
1
s 112 S.J. 536, illustrated more fully ante, Chap. 4, para. 4·051.
76
66 L.G.R. 647. (The wording of Clause 13 has expressly permitted a claim for unforesee-
able expense since the fifth edition contract in 1973.)
77
For a criticism of the policy of such grounds of determination by a contractor see post,
Chap. 12, Section 1(4)(b), and see C.C.P.P., paras. 29-20 to 29-23 and 30-24.
896 VARIATIONS [CHAP. 7
reason of, inter alia, "architects' instructions", and also delay in giving such
instructions. Cracks appeared in concrete columns supplied by nominated
suppliers and erected by the main contractor, and the contractors admitted
that they would have stopped work at once in any event. However, the clerk
of works in fact had orally told them to do so. The contractor then wrote to the
architect: "with reference to the above site, and the instructions to stop all
work connected ... to the perimeter columns, we wish to place on record that
this will result in delay ... " The architect replied by letter: "Thank you for
your letter of August 21 ... the contents of which are noted." The contractor's
other work finally came to an end on September 23, while investigations as to
the cause of the cracking were still proceeding. The contractor wrote a further
letter reserving a financial claim but, after the month had expired, tenninated
the contract without warning on November 8. It subsequently transpired that
the cracks in the columns were due to faulty workmanship in their construc-
tion, there being excessive quantities of calcium chloride in the mix. The
official referee held that the oral instructions and letters were not "architect's
instructions" under Clause 1 of the contract, and that the delay was caused by
the defect, and not by the instruction, in any event. The Court of Appeal held
that there was an architect's instruction, and (Sellers L.J. dissenting) that and
not the defect had caused the delay. Held, by the House of Lords, that there
was an architect's instruction, obedience to which had caused the delay, and
the contractor was accordingly entitled to detennine the contract: Gloucester-
shire County Council v. Richardson (1969). 78
[Note: In the above case the report indicates that counsel for the owners
conceded that once the cause of the cracks in the columns was discovered the
contractors would be entitled to receive instructions from the architect. Nei-
ther Clayton v. Woodman79 nor East Ham Borough Councilv. Sunley 80 appear
to have been cited to the House, and it is submitted that this concession was in
fact wrong. 81 This view of the law, however, coloured much of the approach to
the question whether or not there was an instruction: see, e.g. per Lord Pear-
son, who was apparently even prepared to hold that the detennination clause
would be successfully invoked under its second limb if instructions necessi-
tated by a breach ofcontract by the contractor were delayed. In fact no instruc-
tions, itis submitted, are ever owed to a contractor under the tenns of building
or engineering contracts in respect of his breaches of contract. In particular,
there is no duty to tell him how to remedy defective work, it is submitted. The
true position when the cracks were discovered was, it is submitted, that the
owner was strictly not bound to take any action at all, and the contractor was,
strictly, bound to complete the works, whether or not ( as held by the House of
Lords, ante, Chap. 4) he was in breach of contract in regard to the cracks in the
columns. The practical situation was that, on the one hand, the owner had a
practical interest to investigate the cause in order (a) to consider varying the
work if the pennanent result after completion would be unsuitable for its
purpose in along-life building, assuming that the contractor managed to bring
it to completion; or (b) to avoid delays in construction if the building failed
during construction, or if remedial work at the expense of the contractor took
place later, and also possible claims by third parties; and, on the other hand,
the contractor had an interest since, whether or not he was originally in
78 [1969} A.C. 480. Illustrated and considered at length on the question whether or not the
contractor was in breach of contract, ante, Chap. 4, paras. 4·119-4· 123.
7~ [1962] 2Q.B. 533,per SalmonJ.; [1962] 1 W.L.R. 585, C.A., illustrated and referred to ante,
paras. 1·318-1·319, and see the passages cited in paras. 1·312-1·313 and 2·196-2·197.
80
[1966) A.C. 406. See the passages cited therefrom, and also from A.M.F. In!<;rnational,
ante, Chap. 5, paras. 5·021-5·023. ,,.
81
See also the Kingston-upon-Hull case, ante, Chap. 5, para. 5·023.
SEcr. l] WHAT VARIATIONS ARE 897
breach, he would be bound to complete at his own cost if the building failed
during construction, and he too would be exposed to claims in tort by third
persons. Viewed in this light, the exchange of letters between contractor and
architect seems difficult to construe as an architect's instruction to cease work
and an acceptance of responsibility on behalf of the owner, or as other than
acquiescence in an inevitable situation, and it is hard not to approve of the
original reasoning of the Official Referee.]
(6) By Clause 14 of the Fifth Edition of the ICE conditions, the contractor 7·032
was to submit a programme and a general description of his arrangements and
methods of construction, but approval by the engineer of his programme and
methods of construction was not to relieve the contractor of any of his duties
or responsibilities. The specification required the contractor, additionally to
the requirement in Clause 14, to supply a programme in bar chart fonn at the
time of his tender. The contractor did so, with a bar chart and method state-
ment showing that, in accordance with other tender documents issued by the
owner, the construction of the work, which was a tunnel, would be upstream,
and this was approved and accepted. Subsequently, the contractor contended
that in the event it was impossible to work upstream, and after delay he car-
ried out the work proceeding downstream. The contractor claimed to be
entitled to a variation order under Clause 51(1) of the conditions, which the
owners denied. Held, by Skinner J., that under Clause 14 the method of work-
ing would have been the sole responsibility of the contractor, but by virtue of
the specification and the approval of the contractor's tendered method of
working, upstream working became a "specified method of construction"
under Clause 51(1), and that, by virtue of Clause 13(1) and (3) of the con-
ditions, the contractor was entitled to a variation instruction in the event that
the method of working proved to be impossible: Yorkshire Water Authority v.
Sir Alfred McAlpine Ltd. (1985)P
[Note: This decision is, of course, inconsistent with the nonnal contractor's
completion obligation, which regards completion by whatever method is
found to be necessary as included in the contract price. As a fact the engineer
never gave an instruction, and it is difficult to see how a mere power to order a
change in the contractor's methods of working could be translated into a duty
to do so. The decision might perhaps be justified as turning upon the wording
of the admittedly very unwisely drafted and open-ended claim expressly perM
mitted by Clause 13(1) and (3) of the conditions, but again it seems difficult to
interpret those provisions as extending beyond the impossibility of carrying
out the permanent work, as opposed to one particular method of working.
The case is an example of English standard form draftsmanship apparently
quite deliberately exposing the owner to the possibility of generalised and
unpredictable compensation claims.]
(7) Main contractors found their nominated piling sub-contractors arriving 7°033
on site about two weeks late at the commencement of the project in June
1983, for worklwhich was estimated to take three and a half weeks. The sub-
contractors completed in early July about three and a half weeks late. Two out
of three piles then tested by the owner, in default of required testing by the
sub-contractor, were found to be defective, but the sub-contractors insisted
on leaving the job, asserting that their work was satisfactory, in spite of being
called on to test the remaining piles as required by their sub-contract. During
July and August the architect immediately took steps to obtain competitive
tenders in order to make a second nomination. On July 15, in response to a
letter from the contractor, he had written: "You should cease work on this
element of the contract." (There was no reference to ceasing any other part of
82
32BLR 114.
 898 VARIATIONS [CHAP. 7
the work.) Neither the architect nor the contractor interpreted the instruction
as one to postpone work on the contract as a whole; but in S~ptemb~r the
contractor, on advice, contended that the letter constituted an 1nstructron to
postpone work under Clause 23 of the RIBA/JCT ;980 contract, and pro-
ceeded to terminate the contract under Clause 28, since one month had al-
ready expired since the letter of July 15, and work on the project had been
effectively suspended for that period. The determination clause was.based on
a suspension of work for this period "unless caused by the negligence or
default of the contractor", or if the termination was "unreasonable or vex-
atious". It was apparently conceded in first instance that the architect's letter
was a postponement instruction under Clause 23.2 of the 1980 contract. Held,
by the Court of Appeal, that the words "negligence or default of the contract-
or" did not extend to the negligence or default of a nominated sub-contractor;
that the termination was not unreasonable or vexatious; and that it was there-
fore valid: John Jarvis Ltd. v. Rockdale Housing Association Ltd. (1987).83
[Note: This case has been exhaustively analysed ~n relation to it.s firs~ find-
ing, and criticised in relation to the second finding, by ~he editor !n the
Construction Law Journal. 84 On any view, it represents a senous reflection on
the policies of the RIB A/JCT contracts, not only in regard to their variation
clause draftsmanship, but even more so in reg~d to. ~e te~ati~n
clause,84• draftsmanship particularly since the startllngly s~ar dec1s10~ 10
the Gloucestershire case illustrated supra, and its anomalous mterpretation
of the 1957 RIBA/JCT t~rmination clause, could not have failed to be in the
drafting committee's mind when the clause was amended to its present form
in 1976.]
7·034 (8) A sea outfall pipe-laying sub-contract, incorporating main contract con-
ditions similar to the ICE conditions, required backfilling of the trench to sea
bed level using dredged material obtained from earlier excav~tion of the
trench and which had been temporarily deposited at a dumping ground.
Some ioss of material was inevitable in such an operation, and it was an
accepted practice to obtain additional backfill from areas ad~oining the
dumping ground, and by the standard method .of mea~urement 1?,1s was to ~e
covered by the excavation rates. In the event, msuffic1ent matenal was ava1~-
able from the dumping ground or adjacen! areas, and the contractor ~as ulti-
mately obliged to obtain backfill matenal from an onshore location. By
Clause 55(2) of the conditions any omission in the bill of quantities was to be
corrected and the value of the work actually carried out ascertained under the
variations clause. Held, by the Court of Appeal, that all the contract des~ri~-
tions regarding backfill referred to dredged material, and there was no 1nd1-
cation anywhere in the contract of an intention to excavate on shore. Clauses
46 and 47 of the Standard Method provided that disposal and backfilling of
dredged material should be included in the excavatio°: rates, but that in 01:1ier
cases where the required fill exceeded the amount available from excavation,
separate items were to be provided on a cubic yard basis, so that bot~ .con-
tractor and sub-contractor were, by virtue of Clause 55(2) of the conditions,
entitled to have the onshore excavation of fill valued under the variation
clause: Holland Dredging (U.K.) Ltd. v. Dredging and Construction Co. Ltd.
(1987).~ . _
[Note: This case, though not so anomalous as the others illustrated, since
contractor fault was assumed not to be present, turns upon the very specific
claim openly permitted by Clause 55(2) of the (ICE) conditions, together
SJ 3 Const. L.R. 24.
84 "The Bickerton Albatross Once More". (1987) 3 Const. L.J. 274
84.o See also ante, Chap. 5, paras. 5·035-5·037.
ss37BLR1.
SEcr.1] WHAT VARIATIONS ARE 899
with its incorporation of the Standard Method; but it illustrates how a Stan-
dard Method incorporated in this way can defeat the inclusive price principle,
which would otherwise have operated to defeat the claim.]
(9) Rainwater penetration occurred in aluminium window assemblies dur- 7·035
ing the construction period due to their defective design by the nominated
sub-contractor; his selection of an unsuitable sealant compound; and to a
much lesser degree his bad workmanship. The main contract was in the 1963
RIBA/JCT standard form. The main contractor demanded a variation
instruction to cover remedial works which had been proposed by the nomi-
nated sub~contractor, but the architects, who had condemned the work under
Clause 6(4) of the contract, although they had not ordered its removal, and
who agreed with the proposals, refused to give such an instruction on the
ground that the main contractor was contractually responsible to the owner
for the remedial work. Held, by Judge Newey Q.C., that, since they had not
l required the demolition and removal of the work, the architects were obliged
by Clause 3(3) of the main contract to give the variation instructions, as being
f "reasonably necessary ... to enable the contractor to carry out and complete
l the Works'' under that clause, and the owner was liable to grant an extension
of time and pay for the additional loss and expense to the main contractor for
failure to give the instruction: Holland Hannen & Cubitts (Northern) Ltd. v.
Welsh Health Technical Services Organisation (1981).86
[Note: This case is illustrated in more detail and the judge's interpretation
doubted ante, Chapter 287 and further considered in Chapter 4,88 but it serves
J to illustrate the anomalous weakness of the English standard forms in a mat-
l ter which should be expressly governed by contract and admit of no contro-
versy if the principle is accepted that liability should accompany fault. These
weaknesses have already been listed and discussed in detail ante, Chapter 5.89]
The above cases illustrate how easily express powers conferred on 7·036
architects in construction contracts can be confused with duties to inter-
vene and give instructions, and also how easily the courts can be per~
suaded that there has been an instruction of the A/E carrying financial
liability under a carelessly drafted variation clause, or even under a con-
tractor's determination clause, in obviously unintended and anomalous
situations. They also illustrate the persistent failure of many English
standard form contracts, in the face of a number of important reported
cases, to amend the forms promptly in the owner's interest and to use the
simple draftmanship needed to protect the owner from unreasonable
financial claims or contractors' terminations based on A/E's instructions
given as a result of4<:ontractor or sub-contractor breach or default.
(g) Temporary works and methods of working
It has been seen that, in the absence of express provision, the choice of 7·037
his existing working methods and temporary works (that is, the "how" as
86 l8BLR80.
~ See paras. 2·200-2·201.
88
See para. 4·095.
!Ill See paras. 5·035-5·037.
 900 VARIATIONS [CHAP. 7
opposed to the "what'' of construction) will be a matter for the contractor
to decide, and that correspondingly the owner or his A/E will owe no duty
of guidance or intervention to the contractor in that re:gard. 90 It follows
that a contractor who is using unsafe or unsatisfactory working methods
and temporary works may not necessarily be in breach of contract, and in
the absence of express provision may be in a position to resist advice or
instructions of the AJE to use better or safe methods or temporary works.
It has already been pointed outsupra91 that the great majority of stand-
ard forms are deficient in that they do not confer an express power to
order changes in working methods or temporary works when defining the
powers of the A/E in their variation clause. In such cases, owners and their
advisers may be forced to fall back on some generalised obligation of the
contractor, particularly in older contracts, to carry out the work generally
to the satisfaction or in accordance with the directions of the AJE,'12 but
this is an obviously unsatisfactory substitute for a clear express power.
Clause 14 of the post-1973 ICE conditions did, for the first time, confer a
power on the engineer to require information or calculations about the
contractor's methods of working or temporary works, but the clause is
potentially damaging to the owner's interest, since it provides that, if such
an inquiry is made, the engineer then becomes under a contractual duty
either to express his satisfaction and adopt the contractor's proposals him-
self, or else to give his own instructions, thereby creating an express poten-
tial financial liability of the owner, rather than take a neutral position
leaving responsibility with the contractor while withholding expressed
approval, which in many situations may in the owner's interest be the most
desirable course, and which the law as here stated would otherwise allow
him to do.
This is a potentially serious weakness in many contracts, since con-
tractors habitually resist requests or instructions requiring more careful,
and therefore more expensive, working methods or temporary works
while progress is rapid and therefore profitable, arguing, often correctly,
that no power to give such an instruction exists, while immediately assert-
ing a duty to give instructions the moment a failure or serious difficulty
results--even if of the contractor or his sub-contractors' making-with a
view to formulating a claim based on the argument that the instruction
constitutes a variation.
7·038 However, the one respect in which contracts undoubtedly may, and do,
prescribe working methods or temporary works expressly will be in the
90
See ante, Chap.1, Section 12(2)(d)(ii), paras.1 ·295 et seq. and 12(10)(c), paras.1 ·383--1 ·384;
Chap. 2, Section 6(2)(d), paras. 2· 138-2·140 and (k), paras. 2· 196-2·197; and Chap. 4, paras.
4·053-4·056 and 4·179--4·180. See also the leading cases of Kingston-Upon-Hull Corpor-
ation v. Harding [1892] 2 Q.B. 494; Clayton v. Woodman & Son (Builders) Ltd. [1962] 2
Q.B. 533, per Salmon J.; [1962} 2 Q.B. 533, C.A.; and A.M.F. International Ltd. v. Magnet
Bowling Ltd. [1968] 1 W.L.R. 1028, there illustrated or cited.
91
Section 1(3), paras. 7·008-7·009. ·-:.
92
Compare the old Clause 1 of the pre-1963 RIB A/JCT standard forms, and Clallse 13(1) of
the ICE Conditions, and see the Neodox case illustrated infra.
SECT. l] WHAT VARIATIONS ARE 901
specification or equivalent documents where, invariably in the interest of
satisfactory permanent work being constructed, some of the contractor's
working methods or temporary works may be specified, sometimes in con-
siderable detail. Where this is so, of course, no difficulty arises if the works
currently being done do not conform with the specification, and will be a
breach of contract for that reason. Instructions strictly enforcing the
requirements of the specification in regard to working methods or tem-
porary works will clearly not be a variation.
Ideally, therefore, a construction contract should accept and indeed
expressly state the general principle that temporary works or methods of
working will, in the absence of express provision in the specification or
elsewhere, be the choice and responsibility of the contractor93 ( thus entit-
ling the owner or his A/E in an appropriate case to exercise the valuable
right to refuse to become involved, and leaving the contractor to over-
come the difficulty), while at the same time reserving an express power to
order different working methods or temporary works from those cur-
rently being used in defined situations where additional payment will not
be due, 94 ideally with a wider general power to order variations of this kind
where the change is ordered purely for the owner's own reasons, where
the change will be valued as a variation in the normal way. 95
In the absence of sufficiently precise draftsmanship of this kind, difficult
and sometimes anomalous decisions can be expected from the courts. 95
ILLUSTRATION
Clause 10 of an engineering contract provided that the work should be car- 7·039
ried out under the direction and to the satisfaction of the engineer.97 By clause
18 the work was to be executed with the best workmanship and in the best
manner to the satisfaction of the engineer. The specification provided that the
precise position of trenches would need to be determined by the engineer as
the work proceeded, and that trial holes were to be opened ahead of the
works and precise distances on plan between new and existing sewers deter-
mined as the work proceeded. Clause 6 of the specification also provided that
excavations should be timbered with suitable timber or alternative forms of
sheeting other than timber as and where necessary to the satisfaction of the
engineer. An arbiJ:rator found that the resident engineer unreasonably
required timbering in places where excavation by machines and battering the
sides of trenches to a slope was practicable, and also unreason,ably prohibited
the laying of pipes until trenches were excavated for long lengths in bad
ground, and that these combined requirements caused the contractor heavy
additional expense. The contractors had protested at the time and claimed
93 See Clause 2 of the post-1980 Singapore SIA contract, C.C.P.P., pp. 556-557.
94
For these see supra, Sub-section l(e), paras. 7·008-7·009, and Clause 1(3) of the SIA 1980
contract.
95
See Subclauses (1), (3) to (6) of the SIA conditions, reproduced in C.C.P.P., pp. 555-556.
96 See, in addition to the case illustrated, the cases illustrated supra under para. {f).
97
Compare Clause 13(1) of the 1955 ICE and subsequent forms.

902 VARIATIONS [CHAP. 7
extra payment, but the engineer had upheld his resident engineer's decision
and refused to issue a variation order. Held, by Diplock J., that Clauses 10 and
18 of the conditions and clause 6 of the specifications gave the enginee~ power
to determine the method of working. The owners did not warrant his com-
petency or skill, or that his decision should ?e rea~o~abl~, provided that ~e
was honest- and that a direction by an engineer mtimating the manner in
which work was to be carried out in order to satisfy him was neither a breach
of contract nor, in the absence of a specific method of carrying out the wor_ks
being required by the contract, a variation of the work: Neodox Ltd. v. Swin-
ton and Pendlebury Borough Council (1958). 98-99
SECT. 2] VARIATION CLAIMS AND EXPRESS PROVISIONS 903
the work knowing it to be such.' The contractor, therefore, is unlikely to
be in a difficulty in advancing a variation claim unless either:
(a) the owner does not know of and so has not authorised the variation,
or
(b) the contract has been so worded as to deny legal effect to any
request or authorisation by or on behalf of the owner or his A/E
which is relied on by the contractor.