Cases - Lancaster v Bird

Record details

Name

Lancaster v Bird

Date

[1999] (2001)

Citation

73 Con LR 22

Keywords

Contracts - construction contracts - lump sum contract - contract for erection of a small agricultural shed - implied terms - VAT - contract between builder and private individual - whether there was an implied term that the price was exclusive of VAT

Summary

A contract for the supply and erection of a small agricultural shed was between a builder seeking to be paid in cash and a part-time farmer. There was no evidence that it was an implied custom that VAT would be paid on top of the cash payments. The 'officious bystander', when asked whether the parties to a such a transaction intended that VAT should be paid on top of the cash payments, would say: 'No, of course that was not the intention of the parties.'

Chadwick LJ said that, whilst it would normally be made expressly clear, the question whether the price for a building contract was inclusive or exclusive of VAT turned on the terms of the particular contract. It was in the interests of the builder to make it clear because, as between the builder and the Commissioners for Customs and Excise, the builder would be liable to pay VAT on the goods and services provided. If the builder failed to make it plain to the employer that he was stipulating payment of VAT in addition to the contract price, he would be left to account to the Revenue for the VAT out of what he receives.