Cases - Diamond Build Ltd v Clapham Park Homes Ltd

Record details

Name

Diamond Build Ltd v Clapham Park Homes Ltd

Date

[2008]

Citation

EWHC 1439 (TCC)

Keywords

Tendering and procurement

Summary

A letter of intent was issued with an authorised upper limit or 'cap' for expenditure of £250,000. Work commenced but no contract was formalised. The court noted that this meant that formalisation of the contract would have to be achieved within a relatively short time period. One of the issues for the court was whether the cap was unfair.

Akenhead J was invited to, but did not, find that the cap produced an unfair position for Diamond Build. Explaining this, he said:

'(a) It was always open to DB to commit itself to its subcontractors and suppliers in a similar way to that predicated by the Letter of Intent.

(b) If the cap was being approached it would have been open to DB to approach CPH for an increase of the cap.

(c) If the sole reason why the formal Contract was not being executed was the withholding of signing by CPH, the insistence by CPH that DB proceed beyond the cap would lead to at the very least an equitable claim for additional payment ... .

(e) The Letter of Intent, and the cap, relate to the work which was the subject matter of the tender. If additional or different work was ordered by or on behalf of CPH to be done by DB, that would attract payment in addition to and above the cap on a quantum meruit basis; that could be by way of a mini or implied contract or in restitution. Similarly, any breach of express or implied terms of the Letter of Intent agreement would attract damages which would not be caught by or subject to the cap.'