Variation to works under a construction contract does not amount to an oral variation to the contract

Under the Housing Grants Construction and Regeneration Act 1996 (known to its friends in the construction industry as the "construction act") the statutory Adjudication procedure enables disputes to be determined initially on a "pay now, argue in court later" approach. It can be very important to enable the statutory Adjudication procedure to be invoked to get an initial speedy determination of the issues in the dispute instead of a full-blown court case.

The Adjudication procedure can be invoked if it can be shown in a clear-cut way that all material terms of the contract in writing. But that does not mean that all material terms have to be in one document - it is legitimate to look at a number of documents (which may be or include letters) to establish that all the material terms have been set out in writing. If any of the material terms have been agreed orally then that can take the contractual arrangements outside the scope of the statutory Adjudication procedure under the construction act.

The Technology and Construction Court is disposed, if it can, to find "material terms" in writing so as to enable an Adjudicator to have jurisdiction under the statutory Adjudication scheme. At the end of last month a case in the Technology and Construction Court illustrated the aspects of a construction contract needed to be in writing to invoke the jurisdiction of the statutory scheme. The court made a distinction between oral arrangements to vary the works within the existing contractual machinery, as against an oral variation of the actual contractual arrangements themselves.

When the oral variation simply related to the works to be performed then that did not count as an oral variation of the contract itself. An Adjudicator therefore had jurisdiction under the statutory Adjudication scheme even if there had been an oral variation about the works under the contract.

For more information contact Simon Daw.

Filed: 05/05/2010 12:28:02