In the following article, Emma Rooney considers the lessons to be learned from the recent Judgment in the case of Lumley v Foster & Co Group Limited and others  EWHC 54 (TCC) in which the Technology and Construction Court in England had to determine, in the absence of a written and signed contract, which entity out of six potential defendants, the Plaintiff had entered into a construction contract with.
This case involved a meeting at the property in question on 21 June 2016 and was attended by the builder, Mr Foster and the Plaintiff, a residential homeowner. At this meeting the parties agreed the scope of the works in broad terms and the contract price of £100,000 (inc. VAT). No formal contractual documents were provided following this meeting.
The works were carried out but they were so sub-standard that the property was “scarcely habitable” and substantial remedial works were required. Eventually the builders downed tools with the works remaining incomplete. The Plaintiff then issued proceedings against six different defendants for breach of contract on the basis that Mr Foster had entered into the contract on behalf of one or all of them.
The Court was required to determine who was the correct defendant?
To answer this question the Judge considered the objective test set out in the case of Hamid v Francis Bradshaw Partnership  EWCA Civ 470:
“The question is what a reasonable person, furnished with the relevant information, would conclude. The private thoughts of the protagonists concerning who was contracting with whom are irrelevant and inadmissible.”
The Judge found that “the onus was on Mr Foster to make clear that he was not contracting in a personal capacity.”
The Court found that Mr Foster failed to make it clear that he was not acting in a personal capacity at the time the contract was entered into and therefore he had entered into the contract in his personal capacity.
Although this is an English Judgment it is likely to be of persuasive value to the Courts in Northern Ireland when considering this issue.
This Judgment is a good reminder of the importance of having a written contract in place prior to the commencement of any construction works. The contract should clearly identify the contracting parties. This need is heightened by the fact that it is commonplace for builders to trade under various names and under the umbrella of various legal entities. If a contracting party fails to make the other party aware of the correct identity of the contracting entity at the time of entering into the contract, that party could be found to be personally liable for any breach of the contract.
This article has been produced for general information purposes only and not advisory purposes.
Should you require advice or assistance in relation to any construction dispute, then please do not hesitate to contact Emma Rooney on 028 90 2000 50.