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You are here: BAILII >> Databases >> England and Wales High Court (Technology and Construction Court) Decisions >> HTA Architects Ltd & Anor v Countryside Properties Plc & Ors [2002] EWHC 482 (TCC) (26 March 2002) URL: http://www.bailii.org/ew/cases/EWHC/TCC/2002/482.html Cite as: [2002] EWHC 482 (TCC) |
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QUEENS BENCH DIVISION
TECHNOLOGY AND CONSTRUCTION COURT
133-137, Fetter Lane, London, EC4A 1HD |
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B e f o r e :
____________________
| HTA ARCHITECTS LIMITED HUNT THOMPSON ASSOCIATES (A FIRM) |
Claimants |
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| - and - |
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| (1) COUNTRYSIDE PROPERTIES PLC (2) TAYLOR WOODROW PLC (3) TAYWOOD HOMES LIMITED |
Defendants |
____________________
David Friedman Q.C. and Nerys Jefford (instructed by Campbell Hooper for the Defendants)
____________________
Crown Copyright ©
H.H. Judge Richard Seymour Q. C. :
Introduction
The Preliminary Issue
"Was a contract made between the Defendants or any of them and the 2nd Claimant on or by 18 November 1997 and if so, what were the terms of the contract? (The Claimants' case on this issue is pleaded at paragraphs 13-19 of the Particulars of Claim; the Defendants' case on the issue is pleaded at paragraphs 11 to 30 of the Defence. Relevant background material is pleaded in the earlier paragraphs of the Particulars of Claim and Defence.)"
The Claimants' pleaded case
"13. The 2nd Claimants [that is, HTA] believed, for the reasons set out below, that it was essential to establish a binding agreement which (a) governed the terms on which the design team would provide their services in support of the competition bid; (b) secured the appointment of the 2nd Claimants/RE [that is, Ralph Erskine] team in respect of the subsequent design and development of the project, in the event of the competition bid being successful; and (c) governed the terms of that appointment.
14. The reasons for the 2nd Claimants' belief were (a) the scale of the input required of the 2nd Claimants, in particular, in the preparation of the competition submission (b) the very substantial financial benefits which would accrue to the JVP [an expression used in the Amended Particulars of Claim to mean the first and second, alternatively the first and third, defendants] if the submission were to be successful; (c) the danger that the JVP might, in the absence of a binding agreement, seek subsequently to impose whatever terms they wished and/or to find other consultants to take forward the proposals; (d) the personal commitment of the 2nd Claimants to the project and its underlying principles; (e) the potential benefits to the 2nd Claimants of the project.
15. Accordingly in August 1997 the 2nd Claimants entered into negotiations to achieve such an agreement with the JVP and/or its agents Trench Farrow & Partners ("TFP"). In conducting those negotiations the 2nd Claimants were acting on behalf of the design team as a whole (RE, BBMK, CT, BM and the 2nd Claimants) so far as concerned work carried out in connection with the competition bid and on behalf of the 2nd Claimants and RE so far as concerned appointment in the event of the competition bid being successful. TFP, by their letter of 10 November 1997 confirmed that they were fully authorised to act for JVP.
16.Between 26 August 1997 and 18 November 1997 there was a sequence of correspondence in which agreement was gradually negotiated until final, binding agreement was reached on 18 November 1997. The documents comprising and/or evidencing the agreement are referred to in paragraph 19 below.
17. The negotiations went through the following stages before agreement was finally reached:
(a) In their fax of 26 August 1997 the 2nd Claimants set out the basis on which the architectural team would be willing to work, addressing the issues set out at paragraph 13 (a), (b) and (c) above and confirmed its willingness to undertake the Stage 1 work at risk subject to an agreement being in place before the start of Stage 2 on 9 September 1997.
(b) In their fax of 17 September 1997 the 2nd Claimants confirmed agreement with JVP (reached orally the previous day) that the "at risk" period would be extended to 26 September 1997 on the understanding the agreement would be in place before that date.
(c) It was only on 9 October 1997 that any written response was received from the JVP. This response did not address the issues set out at paragraph 13 (a), (b) and (c).
(d) By their fax of 10 October 1997 the 2nd Claimants emphasised that the design team could not embark on Phase 2 without the JVP's confirmation of the basis for doing so and left open the question of the team's attendance at a crucial EP meeting the following Wednesday.
(e) In response to that fax, on 13 October 1997, Mr. Phipps of the 2nd and/or 3rd Defendants telephoned Mr. Hunt of the 2nd Claimants to confirm JVP's agreement to the principles set out in the 2nd Claimants' 26 August 1997 fax.
(f) On 3 November 1997 TFP wrote to the 2nd Claimants ..."at last") with proposals for a binding agreement which differed from the 2nd Claimants' original proposals. Further correspondence then ensued between the parties, in particular a fax dated 5 November 1997 from the 2nd Claimants to TFP and a letter dated 10 November from TFP to the 2nd Claimants.
(g) Despite the 2nd Claimants' endeavours to avoid such a situation, the design team were now fully engaged in the Stage 2 work, without having received JVP's written confirmation of the 13(a), (b) and (c) issues. On 12 November 1997, with the full support of RE and the whole design team, Mr. Hunt orally informed Mr. Springgay of TFP that the design team was on the point of pulling out of the project unless agreement could be reached.
(h) On 14 November 1997 there was a further conversation between Mr. Hunt and Mr. Springgay in which Mr. Hunt stated that the team would wait until 17 November 1997 for the resolution of the issues, failing which the team would pull out of the project. This was confirmed by a fax from Mr. Hunt to Mr. Springgay on 15 November 1997.
(i) On 17 November 1997 TFP wrote a letter to the 2nd Claimants dealing with the outstanding issues which remained to be resolved between the parties. Mr. Springgay was unable to fax the letter that day because Mr. Phipps of the 2nd and/or 3rd Defendants had asked to see the final wording before the letter was sent. Nevertheless, the terms contained in that letter were communicated to Mr. Hunt by Mr. Springgay in an oral conversation which took place on 17 November 1997. On hearing the terms, Mr. Hunt said to Mr. Springgay that the terms were acceptable and that the parties had a deal on which they could go forward. He withdrew the design team's threat to pull out of the project.
(j) On 18 November 1997, TFP faxed the letter of 17 November 1997 to the Claimants. The sending of that letter confirmed and evidenced final agreement between the parties as orally indicated the previous day. After receipt of that letter, there was no further negotiation between the parties. The design team continued with their work, which subsequently resulted in success for the JVP in the competition.
18. The terms of the agreement were as follows:-
(a) Composition of the design team
The design team comprised the 2nd Claimants, RE, CT, BM and BBMK.
(b) Stage1 Fee
All Stage 1 work would be carried out at the risk of the design team.
(c) Stage 2 Fee
There would be a fixed fee of £150,000 for the Stage 2 submission (which would be deducted from the Stage 3 payment referred to below in the event of the competition bid being successful).
(d) Success Bonus
In the event of the bid being successful a lump sum bonus of £150,000 would be paid to the design team, which sum would become due on exchange of contracts between JVP and EP and would be payable by four equal instalments at six monthly intervals starting on the date of exchange.
(e) Terms of Appointment
The terms of the contract would be the RIBA standard form adapted so far as necessary to the particular project.
(f) Appointment
If the submission was successful, the 2nd Claimants and RE, would be appointed as the architectural team in respect of the Millennium Village project for 100% of RIBA Stages C to E and a guaranteed minimum of 50% of Stages F to L. The appointment was to take place after the competition had been decided and before commencement of the planning application which was due for preparation between February and April 1998.
(g) Fees on Appointment
The fees for the design team would be 5.5% of the project value payable in accordance with the RIBA stages:-
Stage C (Outline proposals) 15%
Stage D (Scheme design to planning application)15%
Stage E (Detailed Design) 20%
Stage F-G (Production information, tendering) 20%
Stage H-L (Post contract administration) 30%
(h) Expenses
Fees were to include all normal expenses and disbursements but foreign travel, printing of documents for planning applications and tender documents were to be reimbursed at net cost.
(i) Copyright
Copyright in all documents and drawings would remain the property of the relevant Architect or Consultant.
(j) Termination
The 2nd Claimants' appointment would be terminable only for non-performance.
19. Agreement in relation to the terms referred to in paragraph 13 above is contained in and/or evidenced by the following letters:
(a) Composition of Design Team
26 August 1997 (the 2nd Claimants to JVP)
17 September 1997 (the 2nd Claimants to JVP)
(b) Stage 1 Fee
26 August 1997 (the 2nd Claimants to JVP)
(c) Stage 2 Fee
3 November 1997 (TFP to the 2nd Claimants)
17 November 1997 (TFP to the 2nd Claimant)
(d) Success Bonus
17 November 1997 (TFP to the 2nd Claimants) – amount of bonus
10 November 1997 (TFP to the 2nd Claimants) – time of payment
(e) Appointment
17 November 1997 (TFP to the 2nd Claimants) – extent of appointment
10 November 1997 (TFP to the 2nd Claimants) – timing of appointment
(f) Terms of Appointment
10 November 1997 (TFP to the 2nd Claimants)
(g) Fees on Appointment
17 November 1997 (TFP to the 2nd Claimants) – overall percentage
3 November 1997 (TFP to the 2nd Claimants) – percentage at each Stage
(h) Expenses
3 November 1997 (TFP to the 2nd Claimants)
(i) Copyright
5 November 1997 (the 2nd Claimants to TFP)
10 November 1997 (TFP to the 2nd Claimants)
(j) Termination
10 November 1997 (TFP to the 2nd Claimants)."
The correspondence between 26 August 1997 and 18 November 1997
"I am delighted to confirm that Ralph Erskine has agreed to act as lead architect (see Architectural Review article June 1995 attached). I cannot think of any other architect of international standing whose design approach comes closer to the underlying philosophy of the Millennium Village competition, and it is marvellous to be working with him.
As per item 7 of the minutes of 11 August GMT meeting I have discussed and agreed with Nick Thompson [of CTA] the following Heads of Terms for your comment prior to formalising appointment of the architectural team before the start of Phase 3. Please could you let me have comments/queries by return as I am on holiday from 29 August to 6 September inclusive.
1. Architectural team structure
1.1 Ralph Erskine (RE)/ Hunt Thompson (HTA)/ Cole Thompson (CTA)/ Baker-Brown McKay (BBMK), will function as a single integrated architectural team; flexible and overlapping roles, but broadly defined as follows:-
1.2 Ralph Erskine. Lead architect/urban designer.
1.3 Hunt Thompson Associates. Executive architect; single point responsibility for delivery of design to client and for project management of architectural and design team.
1.4 Cole Thompson. INTEGER architect; responsible for delivering "intelligent and green" input into design.
1.5 Baker-Brown McKay. Architects for Teleservices Centre.
2. Fee basis.
2.1 Stage 1 (concluding 8 September). All work at risk.
2.2 Stage 2 (concluding 10 November).
All work at cost, i.e. salary + overheads + expenses only. Activity and resource plan agreed with developers/client in advance and translated into an agreed lump sum for architectural services. E.g. (i) 7 week design period. Average 6 person team @ £250 per day = £52,500. (ii) Average 4 persons @ £250 = £35,000. Plus VAT, plus expenses (printing, model, travel/accommodation – including from Sweden etc.).
Subject to competition timetable not being extended.
2.3 Stage 3 (finalising design, obtaining necessary approvals, construction details, contract administration etc.)
To win it will be necessary to be innovative – time for design and for contract administration/quality control will be significantly greater than usual. Hence the amount of work will equate to the RIBA "Normal Service" (Stages C to K) and fees for architects services will be at RIBA recommended scale (6% of construction cost), less fees paid for Stage 2, plus VAT and expenses.
i.e. Stages C to E as "Normal Service". Role in Stage F to K dependent on procurement route – e.g. could be Employers Architect for traditional procurement or Novated to Contractor or Employers Agent for design & build.
2.4 Underlying assumptions
(i) Heads of terms for the appointment of the architectural team as above and in accordance with RIBA Conditions of Appointment will be agreed before the start of Stage 2, conditional upon winning the competition.
(ii) The design team's ability to deliver a high quality service and to manage its time effectively depends on a clear structure within the overall development team. We believe it is essential for the successful delivery of the project that one individual is given high level responsibility for co-ordinating the consortium's requirements and for being the single point of contact with the design team and our fee proposal is based on this assumption. (HTA would be willing to provide this expanded project management service if required)."
"(ii) The team
- Role of each. Contribution to the vision.
- Any gaps? Cost? Landscape?…
(vi) Consultants terms."
"1. To confirm some key points from yesterday's meeting:-
(i) Taylor Woodrow (PP)/Countryside (RC)/HTA (BH) will act as a steering group responsible for shaping the form and content of the 26 September presentation, and for co-ordinating the input of other team members. HTA will be responsible for the project management of this process.
(ii) The main task is to present "a greater evidence of a ground breaking, visionary approach" on 26 September. HTA will be responsible for developing this, with Erskine as a key element.
(iii) The desirability of presenting Taylor Woodrow's input as coming from the PLC, and drawing on Capital Developments track record was agreed. PP will discuss this with Chief Executive John Castle, and requested "demystified" version of "vision" for this purpose from HTA. (Post meeting note: I will get onto this but would request PP not to wait for further material in view of tight deadlines. HTA's original text referred to by Nick Thompson is attached.)
2. Consultant team appointment.
It was agreed that the consultant team will work "at risk" up to 26 September. The developers agreed to reimburse travel/accommodation costs during this period expended in integrating Ralph Erskine Architects into our team. I assume (unless I hear to the contrary) that the same applies to direct expenses incurred in producing the presentation (e.g. printing).
The consultant team's input at no cost is made on the understanding that terms will be agreed in principle before 26 September along the lines of my 26 August fax (copy attached).
3. Progress report.
My partner Ben Derbyshire had a long and productive conversation with Erskine yesterday, and is now en route to meet him. His enthusiasm and commitment appears to be growing. We think a joint Erskine/Derbyshire presentation of the vision, with sketches of initial design concepts, would be ideal – but it is too early to say how good a chance we have of delivering this. "
"We have very much enjoyed working with you on the project, and are delighted that the team has been shortlisted. It goes without saying that we are keen to work with you in whatever capacity you judge most helpful. Clearly we need to establish an action plan for Phase 2 as soon as possible, and as agreed with Richard I will set out some thoughts for discussion with you, hopefully before the end of this week.
First, in view of the need to get in place a high calibre team to undertake a substantial piece of work at short notice, it is essential that we formalise the basis on which the design team is working. I enclose a copy of my 26 August fax setting out my proposals, and also of my 17 September fax confirming our understanding.
Since those faxes English Partnerships have twice moved the goalposts, such that the Stage 2 design period has been almost doubled. I have not looked at the cost implications in any more detail, but £100K now looks a more likely figure to cover the cost of design team time (compared with £32K to £52.5K previously estimated) and even this may prove to be inadequate when we look closely at what we need to do to win.
Before we get into detail. I would be grateful to you for your in principle confirmation that the basis outlined in my fax is acceptable to you. In addition HTA/Erskine have incurred expenses totalling around £7K (mainly travel/accommodation/and production of submission document) and I would be grateful for you [sic] confirmation that we may now invoice you for this – and procedures for doing so.
I know that Richard and Paul are meeting tomorrow, and I would be grateful for your urgent response to this fax following your meeting so that I can mobilise the design team."
"Firstly, I note that you are proposing an overall fee of £100,000 to cover the cost of the design team through Stage Two, and I must confess to being slightly surprised that this has increased bearing in mind that the time has been almost doubled.
I do not think it is appropriate for us to finalise any form of fee until we have firstly established a greater appreciation of what is required during Stage Two, the briefing meeting has taken place, the level of activity which may be undertaken by our appointed Project Manager, and the extent of the involvement by Taylor Woodrow Construction's R&D Department – they would also be acting as a fee paid consultant.
Also, on discussing matters with Richard and Alan Cherry yesterday, we would favour an arrangement whereby costs are kept to a minimum, but all parties did benefit from enhanced success bonus on our winning the project. Regarding your expenses to date, i.e. those relating to Stage One, I note your figure of £7,000 and would suggest that you provide a breakdown and invoice the three parties one third accordingly."
"I was extremely concerned to receive your 9 October fax.
I thought we had a common understanding of the basic principles regarding the design teams involvement in the project, as set out in my 26 August fax, (and you will recall we discussed this when we met at Moat's offices). I hope our willingness and enthusiasm to be part of your team for this project go without saying. However the scale of the task in preparing a Phase 2 submission is such that we cannot embark on it without confirmation of the basis for doing so. I have been trying to reach you by 'phone but without success, hence this fax. However we clearly need to discuss and resolve this issue urgently, and in the meantime I suggest we leave open the question of the design team's attendance at the English Partnerships meeting on Wednesday."
"Thank you for telephoning this morning and for your reassurance that the basic principles for the design team's involvement outlined in my 26 August fax (copy attached) are agreed by Countryside and yourselves. I confirm the outcome of our discussion as follows:
(i) Stage 2 costs
• design team's time and expenses on Phase 2 will be paid by the GMT developers, however
• cost estimates quoted by me are illustrative only, and not yet agreed
• HTA will prepare design team programmes, propose team structure and composition, and projected staff resources for your comment and approval, leading to an estimate of the cost of design team time which will be paid by the developers
• we will aim for an initial agreement on these costs within the next two weeks
(ii) Stage 3 appointment
• if we win the competition the design team will be appointed to carry out full design services in accordance with the relevant institute's Conditions of Appointment and recommended fee scales.
(iii) Success bonus
We would be happy to discuss a formula along the lines suggested in your 9 October letter; I suggest we wait till we have an initial estimate of the Stage 2 costs before progressing this.
(iv) Project Manager
You have appointed Paul Springgay of Trench Farrow and are briefing him this evening. (Please could you ask him to contact me asap).
(v) Project steering group
We agreed the need for a small group of principals (e.g. Taywood, Countryside, MHG, HTA, PS) to agree strategy and meet regularly to oversee progress. (We urgently need to get together to discuss strategy)."
"1) Design team appointment
You agreed the current situation is a serious obstacle to progress (with 3 weeks of tight programme now elapsed) and undertook to agree and document scope of service and terms of appointment by the middle of this week (Copies of faxes dated 26 August, 2, 10 and 13 October attached)"
"First, though, I should confirm our discussion mid last week. As regards Stage 3 (i.e. if we win) I confirmed the position as stated in my 26 August fax and agreed at my 16 September meeting with Paul and Richard at Moat. As regards the costs in the current Stage 2, I confirmed our willingness to discuss a reduction linked to a success bonus. I imagine that the bonus would need to be say three times the amount of the cost reduction to make sense of this. N. B. It is important to recognise that the design team has already undertaken a considerable amount of work on spec, and that the costs quoted for Stage 2 are already on a non-profit basis. I await your response."
"…Members of the team must know whether they are appointed, and what role they have. We urgently need a reply to my fax of yesterday. And as regards roles, following receipt of your Action Plan yesterday I am completely unclear as to the role of the leader of the design team vs. the project manager."
"I need to report to you that lack of resolution as to whether members of the design team are appointed, and if so in what capacity and on what commercial basis, is now jeopardising the project.
As requested by the development team on 11 August I set out in my 26 August fax the basis on which we would be happy to undertake the project, including the need to formalise the appointment of the team before the start of (the current) Phase 3.
Four weeks have now passed since the start of Phase 3. Despite confirmation by me of your agreement to this basis in my faxes to Paul Phipps and Richard Cherry on 17 September, to Paul Phipps on 13 October, and numerous other communications the appointments have still not been formalised. This despite Paul Springgay's undertaking to me on 16 October to do so by the middle of last week.
The goodwill that the team has shown in committing itself to the project is now wearing extremely thin. There is concern that if the situation is allowed to drift any further, the consequence will be either no formal design team appointment, or else appointment on a basis less satisfactory than that which we have discussed over the last two months – neither of which is acceptable.
HTA and TF & P are finally in a position to communicate our requirements for inputs from the design team, yet uncertainty over the fundamental issue of appointment is jeopardising its ability to respond. We need to make rapid progress on all fronts and I have therefore requested the team to continue to allocate the necessary staff resources on a goodwill basis up to the end of this week to allow time for us to agree heads of terms, with a view to finalising formal appointments by 14 November.
I hope you will agree the urgent need to resolve this issue within the timeframe I have indicated and look forward to working with you to do so. "
"Further to our recent discussions on the Design Team's terms of appointment, I have discussed the issue with the members of the Consortium and we are able to offer the following proposal:
1. Stage 2 Submission (up to formal presentation at end January)
The Design Team, comprising Ralph Erskine, HTA, Cole Thompson, Battle McCarthy and Baker Brown McKay, will be paid a fixed fee of £110,000. This is as my faxed spreadsheet of 21. 10. 97 and our subsequent discussion. You will need to agree the exact distribution of this sum to the various members of the team.
2. Success Bonus
If we are successful, the same Design Team will be paid a bonus of £150,000. This will become due on exchange of contracts with English Partnerships and will be paid in four equal instalments at six-monthly intervals, commencing on exchange of contracts.
3. Subsequent Appointments
a) Architecture and Masterplanning
The RIBA Scale of Fees as recommended in the "yellow book" only addresses projects up to £5m in value and, as such, is not really relevant to this £70m+ project. Allowing for the involvement of a "signature" architect, a fee for a full all-inclusive service of 5% is therefore considered appropriate. This would normally be broken down as follows:
Stage C: Outline proposals 15%
Stage D: Scheme design to planning application 15%
Stage E: Detail Design 20%
Stage FG: Production information and tendering 20%
Stages HJKL: Post contract administration 20%
For this scheme we will, in theory, achieve Stage C by the end of the submission on 5th January, and Stage D by 30th April 1998. Stages E-L will be carried out in phases to suit our build programme. As I understand the working relationship between yourselves and Ralph Erskine, Ralph's involvement will largely finish at the end of Stage D with yourselves and others responsible for the detailed design and production information.
At this stage the Consortium, with the exception of Moat, have not worked previously with the proposed Design Team and do not feel that it would be right to commit themselves to the team for 100% of all future work unless and until a satisfactory working relationship has been established and can be seen to be working. They also do not want to preclude introducing other designers if it is felt they can bring something special to the team. As such, we propose to appoint the existing team (including Cole Thompson) for 100% of the work during Stages C and D and to guarantee a minimum of 50% of the work for Stages E-L. In practice, this may well rise to a much higher percentage if all goes well.
With regard to Cole Thompson, we do believe the Integer concept is important to our submission and they must be accommodated within the team. Their request to be appointed for Stages E-L for 50 houses does not seem an unreasonable reward.
Based on an overall fee of 5% of total construction costs, we propose therefore that the stage fees should be broken down as follows:
Total R Erskine HTA(with Other architects
BBMcK" eg Cole Thompson
Stage C 0.75% 0.50% 0.20% 0.05%
Stage D 0.75% 0.25% 0.40% 0.10%
Stage E 1.00% - 0.50% (min) 0.50% (max)
Stage FG 1.00% - 0.50% (min) 0.50% (max)
Stage HJKL 1.50% - to be decided to be decided
We invite your comments on the proposed Erskine/HTA split.
b) Civil and Structural Engineering
It is considered that an overall fee of 1% of the total construction costs for the Battle McCarthy team would be appropriate. This would be broken down as follows:
Stage C 0.15%
Stage D 0.20%
Stage E 0.25%
Stages FG 0.25%
Stages HJKL 0.15%
c) Mechanical and Electrical Engineering
It is considered that an overall fee of 1.45% of the total construction costs for the Battle McCarthy team would be appropriate. This would be broken down as follows:
Stage C 0.10%
Stage D 0.15%
Stage E 0.35%
Stages FG 0.55%
Stages HJKL 0.30%
The £110,000 paid for the Stage 2 submission will be deducted from the Stage C payments paid above.
The fees are to include all normal expenses and disbursements but foreign travel, printing of documents for planning submissions, tender documents, etc. will be reimbursed at net cost.
The fees indicated above are based on a fully designed and co-ordinated scheme. In the event that a procurement route is selected which reduces the design workload for the consultants, the fees will be adjusted by negotiation.
The above are to be regarded as the main Heads of Terms which will be fleshed out into a comprehensive formal agreement. Because, at this stage, neither the Consortium nor the Consultants can envisage whether a good working relationship will be established, it will be a condition of the Agreements that either side can terminate the Agreement at their discretion and without penalty at one month's notice.
I will look forward to your response to this proposal."
"With respect to your appointment for this project, I have agreed the following points of principle with the Consortium:
1. The Design Team, of which you are an integral part, will be paid a fixed contribution towards their total costs for the current Stage 2 submission. Bernard Hunt is aware of the total amount and, as Design Team Leader, will allocate the portion of this fee to be allocated to your INTEGER team.
2. In recognition of the fact that the above is only a contribution, not a full commercial fee, the Consortium will pay a success bonus to the Design Team of £150,000 in the event that we are successful. Again, Bernard is responsible for allocating this bonus.
3. If we are successful, you will be appointed to carry out the preparation of construction drawings, tender documentation and contract supervision for the equivalent of 50 dwellings for 3.5% of the relevant construction cost.
The fees are to include all reasonable expenses and disbursements but foreign travel, printing of tender documents, etc. will be reimbursed at cost.
The above is intended to set the parameter for the minimum level of input and fee you will receive. In practice, your expertise may be better applied to the design of the visitor experience centre and show houses or, indeed, a mix of this and "normal" dwellings. This will become clearer as the Masterplan develops.
The planning and detailed design of the dwellings will be carried out by Ralph Erskine to ensure continuity and that the whole scheme is seen to be by Erskine. Your role will be to work his design up into production drawings and oversee the implementation. You will, of course, work with Ralph during the design development to advise on the INTEGER aspects to be incorporated…"
"I am responding as requested to your 3 November letter regarding terms of appointment. First some general points:
i) The proposal falls short of the terms that the design team believed had been agreed, as confirmed in my 13 October fax to Paul Phipps. However my aim is to respond constructively, and to resolve the position swiftly.
ii) I note that your letter was not copied to the development team, likewise this reply. Please may I have your confirmation that you are fully authorised to act as their agent on their behalf, and that we can treat correspondence from you as if it were from them.
iii) In view of the fast programme and the need to create a climate of confidence, any agreement must incorporate (a) monthly invoicing and (b) payment within 14 days, interest at 3% over base payable on sums outstanding.
Turning to your letter, and taking the items as numbered in it:
1 & 2. Stage 2 submission
Your fee of £110,000 compares to our estimate of £203,466. You are asking us to forego £93k and offering us a 1 in 4 chance of £150k in return. Just to break even the bonus needs to be 4x the amount foregone and I therefore suggest increasing the fixed fee to £150k and the success bonus to £200k.
The bonus payment is payable in full immediately if the GMT submission is selected as winner or joint winner of the competition.
3. Subsequent appointments
(a) Architecture and Masterplanning
(i) Your proposed fee of 5% compares with 6% stated in my 26 August letter (and as indicated for projects over £3m in the RIBA yellow book). We believe that the fee we proposed is the appropriate one in the particular circumstances, but we are prepared to agree to 5.5% subject to agreement on the other issues in this letter.
(ii) Ralph Erskine has confirmed that his involvement is on the basis of designing the whole scheme up to Stage E. (The executive architect is involved in earlier stages, and works closely as part of Ralph Erskine's team in Stage E to ensure a smooth handover.)
(iii) I believe Ralph Erskine's appointment to develop the design for the whole development to Stage E is agreed, and our understanding to date has been that the same commitment applies to HTA as executive architects. We do however acknowledge the concerns raised by the developers, and propose as follows: (i) HTA appointment for whole development (ii) agreed procedures for terminating the appointment, whilst safeguarding HTA's reasonable wish to ensure that the commercial benefits flowing from winning the competition are not jeopardised.
See "Termination" below.
(iv) Cole Thompson. We are keen to ensure the benefit of Nick Thompson's input. We are happy that he should obtain a "reward" which is at least the equivalent of what he is asking for. Our sole concern in meeting his request is the inefficiency of dealing with a small portion of Stages F to L differently from the whole. If HTA is protected from the cost, management and liability implications of this, we have no objection, other than that it is against the clients' interest. However I believe that the interest of both Nick and the client would be better served if he were to take on a show house/visitor experience role instead, and as agreed, I will therefore explore this further with Nick.
(v) Fee split within the consultant team. I think it is premature to attempt a breakdown along the lines of the table at the top of page 3.
(b) and (c) Civil , Structural, M&E Engineers
Please liaise directly with Chris McCarthy. I understand that he is concerned about the overall fee level proposed for engineering services.
N.B. We need to address the need for landscape and ecology services.
Expenses
Need to clarify that all costs incurred in the current Stage, and the cost of printing drawings generally, will be reimbursed.
Copyright
Copyright in all documents and drawings will remain the property of the relevant architect or consultant.
Termination
Termination by either party at one month's notice is accepted. If the services of a member of the design team are terminated, the developers will pay a sum equal to 20% of the portion of the consultants fee which would have been chargeable if the commission had not been terminated. The payment reflects loss of profit which would have been earned, and of the other benefits of reputation etc. which the consultant would have received.
Client/Employer
Clarification as to what legal entity(ies) will formally appoint consultants, and how the liability of the various developers will be reflected in workable appointment and payment arrangements.
Formal Appointment
The parties undertake to enter a formal agreement on the RIBA Standard Form of Agreement incorporating the above, and to complete this no later than Friday 12 December 1997."
"Further to your fax of 5.11.97, I have discussed your points with the client and the following is our response (your refs.):
General
ii) I confirm we are fully authorised to act for the developers.
iii) Monthly invoices are agreed, based on percentages of pre-defined stages having been achieved. The developers fully intend to pay promptly and do not consider it necessary to incorporate an interest clause.
1&2: Stage 2 submission
The £110,000 fixed fee must stand, but the developers are prepared to increase the success bonus to £200,000. However, this bonus will only become due upon exchange of an unconditional contract with E.P. and payment will be phased as my previous letter of 3.11.97. I would suggest that this should not be an issue as, once contracts are exchanged, you will be receiving almost immediate cash flow through the detailed design appointment.
3. Subsequent appointments
(a) Architecture & Masterplanning
i) the proposed fee of 5% must stand. Your letter of 26th August was misleading in any event in not pointing out that the RIBA Scale fee of 6% was in fact for projects only up to £5m in value.
iii) The developers share my confusion over the respective roles of Ralph Erskine and HTA during Stage E. Please provide a workplan showing exactly how this will work and the respective fees for each stage (C, D & E) proposed for Ralph Erskine and HTA.
With respect to our commitment at this stage, the previous proposal (100% up to Stage D; min. 50% for Stages E-L) must stand. This may be amended to 100% for Stage E once we fully understand how this stage will work in practice.
iv) The Cole Thompson involvement can be effectively managed and we are keen to secure their participation along the lines discussed.
v) At this stage, we envisage a separate contractual relationship between the developer and each consultant, hence why we must understand the relationships and the fee splits.
(b) & (c): Civil, Structural, M&E Engineers
I will speak directly with Chris McCarthy.
Expenses
Agreed.
Copyright
Agreed in principle, but a clause in the formal appointment will need to be drafted to ensure that the client can still use and develop the scheme design if for any reason another architect is introduced after the completion of Stage D (or Stage E, depending on (iii) above).
Termination
Your proposed amendments are not acceptable as, in practice, your appointment would only be terminated for non-performance. In such a case, it would not be equitable for you to receive compensation for loss of profit. In this respect, the formal appointment will include a schedule of information to be provided, a programme for production of information and response times, etc.
Client/Employer
The legal entity to be formed to cover the three developers has yet to be defined but this should become clearer in the next few weeks.
Formal appointment
The RIBA Standard Form of Agreement will form a basis for your formal appointment, but amended to reflect this particular project and its requirements. It will be completed after GMT is selected as the preferred developer and before commencement of the planning application envisaged in the Stage 2 Brief for preparation between early February 1998 and end April 1998.
I firmly believe that the terms now offered are very generous and should provide the motivation you need to focus on winning the competition. The developers are not at this stage prepared to enter any further negotiation. I am concerned that the discussions on this issues [sic] have deflected your efforts at a crucial time and we must get back on track to achieve the programme circulated on 21st October."
"As requested, this is a brief summary of what I said to you on the phone yesterday.
1. Your memo of 10 November does not represent an acceptable basis on which the design team can proceed. The issues are set out in my 5 November fax, but the headlines are:
2. Stage 2 submission. I have been unable to get agreement from team members to reduce the package from £203k to £110k as you propose. I believe I will be able to get agreement to the £150k+ package I proposed on 5 November. If you are unable to agree this please let me know by close of play tomorrow. I will then fax the team immediately, and let them know that you will negotiate with them directly.
3. Scale fee. It is disingenuous to suggest my 26 August letter was misleading. The figure quoted unambiguously was 6%. (Note that a fee in excess of the 6.5% recommended for Class 4 buildings, (apartment blocks) as opposed to Class 3 (estate housing and flats) would be appropriate for this project. 6% represents a reduction on this.)
4. Ralph Erskine. I consulted him via Johannes Tovat. His reaction: £203k package and 6% "not negotiable".
More fundamentally he reinstated his position that if he is to be the architect, it means that it is his design, from concept to detail and execution. We have discussed how he achieves this in practice, working closely alongside an executive architect. Your proposal that the clients' commitment should extend to only 50% of Stages E to L is not compatible with this principle. Ralph said that if this is not resolved before close of play tomorrow he will withdraw.
5. Confirmation is required that if we win the team will be formally appointed before being asked to proceed with any further design development/preparation of planning application; and that payment for Stage C will be due at that time (early February anticipated). "
"To confirm our conversation yesterday. We agreed to defer the deadline for resolution of the outstanding issues to close of play on Monday. To summarise where we now stand:
(i) I set out proposals on 26 August, and we have committed substantial resources since in the belief that these were accepted by the developers. (ii) The counter proposal in your 3 Nov. fax is not acceptable. (iii) We demonstrated our flexibility and willingness to compromise in my 5 November response. It is important to be clear that we must reach agreement on all the issues covered by this fax on Monday, and that although I hope we will always be flexible in our search for "win/win" solution, we cannot agree to further concessions.
I hope our absolute commitment to working with you to win this competition for our clients is not in doubt – but that neither is our resolution, and Ralph's, to terminate our involvement if we cannot agree on Monday."
"20.1 On Monday 17 November 1997 I was telephoned by Paul Springgay who informed me of the terms which were going to be offered by the JVP in respect of the remaining outstanding issues. He was acutely aware of the deadline we had set and the need to conclude a deal on that day. Although he had a letter already drafted, he apologised for the fact that he was not faxing the letter but explained that Paul Phipps had asked to have sight of the final wording, and was not available. However, he provided his assurance that Paul Phipps's agreement was not in doubt. Accordingly our conversation was conducted on the basis that the JVP's offer was firm, and that Paul Phipps's agreement was taken as read.
20.2 The key issues were that the Stage 2 Bid Submission fees would be agreed at £150,000 together with a success fee of £150,000 and that the architectural and master plan fee was to be increased to 5.5%, i.e. the figure that we had insisted on in my letter of 5 November 1997. As regards the extent of the appointment it was confirmed that Ralph Erskine/HTA team would be appointed for 100% of the development stages C to E, and a guaranteed minimum of 50% of Stages F-L for the remainder of the project with the prospect of this being extended to 100%. This was subject to termination as before for non-performance, i.e. confirmation that termination would only occur for non-performance as per Trench Farrow's letter of 10 November 1997.
20.3 I was pleased that the JVP had understood that the threat made in my letter of 15 November 1997 to terminate our involvement if we did not reach agreement by 17 November 1997 was absolutely serious, and that they had responded by the deadline.
20.4 I was satisfied that that [sic] the negotiations, culminating in the improved terms now being offered were an acceptable basis for the Design team's appointment and that the negotiations had covered all the issues necessary to conclude an appointment of the Ralph Erskine/HTA team. Accordingly, I told Paul Springgay that we accepted the terms, that we now had a deal on which we were prepared to go forward, and that we accordingly withdrew our threat to pull out of the project. This was a watershed moment in the project and I was delighted that I had achieved my objectives in relation both to the Design team's remuneration for preparing the submission, and for HTA/Ralph Erskine's appointment in the event of winning the competition."
"3.1 This deals with my phone conversation with Mr. Hunt on 17 November 1997, which I deal with at paragraph 26 of my first statement. Mr. Hunt says that I informed him of the terms which were going to be offered. What I was actually discussing was in principle heads of terms and I covered the issues which I subsequently committed to writing in my memo to Mr. Hunt of the same date (which was finally sent on the following day)… For the avoidance of doubt, if that is what is being implied by Mr. Hunt, I did not read out to him on the telephone the memo which I subsequently sent to him, nor did I suggest to him that I was doing so.
3.2 Further on in the paragraph, Mr. Hunt said that I provided my "assurance that Paul Phipps' agreement" to the draft memo was not in doubt. This is not true. I said that I believed Mr. Phipps would find the contents of the memo to be acceptable but would need to seek and await his approval. The conversation was not conducted on the basis that what I said was any sort of firm offer, nor that Paul Phipps' agreement was taken as read."
"Bernard, I finally obtained Paul Phipps agreement to the attached this morning. There is still obviously some flesh to put on the bones but these are the main points."
"Further to my memo of 10 November, your subsequent fax of 13 November and our discussion this afternoon, the Consortium will agree to the following revisions to the heads of terms:-
Stage 2 Submissions
Increase the design team fees to £150,000 with a success bonus of £150,000 (as your fax of 27 October). The success bonus had previously been increased to £200,000 in recognition of a £110,000 Stage 2 fee.
Architectural & Masterplan Fee
The fee for a full design to be increased to 5.5%.
Extent of Appointment
The Ralph Erskine/HTA team will be appointed for 100% of the development for Stages C-E (subject to termination as before for non-performance). For a minimum of 50% of the development they will also be appointed for Stages F-L inclusive, with the possibility of this being extended to 100% of the development. The formal agreement will make it a condition that Ralph Erskine maintains the Lead Designer role throughout Stages C-E. As requested in our memo of 10 November we still require a workplan to show how you will interface with Ralph Erskine and the proposed fee split between HTA and Ralph.
With request [sic – presumably "respect" was intended] to the last point above your most important role will be to act as the interface between Ralph Erskine and the rest of the design team and the clients. The debacle last night when a number of people gave up their Sunday evening to come to HTA's office to hear a presentation of Ralph's latest Masterplan, only to discover that he hadn't turned up, does raise concerns about how effectively you will be able to perform this role. This is obviously something which will need to be carefully monitored.
I hope you will now feel able to move forward and focus fully on winning this competition."
The case for the Defendants
(i) the identity of the party to employ HTA and the other members of the design team;
(ii) the amendments to "The RIBA Standard Form of Agreement" which were "to reflect this particular project and its requirements";
(iii) termination;
(iv) the identity of the members of the design team;
(v) the relationship between the members of the design team;
(iv) the nature and form of the proposed contract or contracts, and in particular whether there was to be one contract to which all members of the design team were parties, or separate contracts with each, and what form of contract was to be made with BM as engineers;
(iiv) fees;
(iiiv) copyright;
(ix) payment terms.
Mr. Friedman and Miss Jefford also submitted that any agreement which could be discerned in the documents upon which Mr. Douglas relied was incomplete to such an extent that it was unworkable or void for uncertainty.
The Law
"Before I turn to the facts it is important to consider briefly the approach to be adopted to the issue of contract formation in this case. It seems to me that four matters are of importance. The first is the fact that English law generally adopts an objective theory of contract formation. That means that in practice our law generally ignores the subjective expectations and the unexpressed reservations of the parties. Instead the governing criterion is the reasonable expectations of honest men. And in the present case that means that the yardstick is the reasonable expectations of sensible businessmen."
I shall return later in this judgment to how that passage continues, but that the process of considering whether parties made an agreement is a purely intellectual one involving the dispassionate application of established rules – the adoption of an objective approach – cannot, it seems to me, be disputed. The same approach is, in my judgment, to be adopted to the issue of intention to enter into legal relations – that is to say, the question is to be approached objectively in the light of what the parties communicated to each other and how the parties acted, without regard to any private thoughts of one or other of the parties to the supposed contract which were not communicated to the other.
"3. We accept that the Court does have such a disposition but what it means requires further analysis. It is an encapsulation of three different propositions, all of which we accept. They are as follows:-
3.1 The Court does not require strict precision from businessmen: as to this see the passage from Treitel cited at paragraph 132 of the Claimants' Opening.
3.2 The Court does not require meticulous detail from businessmen: as to this see the second passage from Chitty cited at paragraph 133 of the Claimants' Opening.
3.3 Performance may sometimes make it easier to find a contract: as to this see G. Percy Trentham Ltd. v. Archital Luxfer Ltd. [1993] 1 Lloyd's Rep 25 at 27 per Steyn LJ. Two points about this should be noted.
3.3.1 We are not here addressing an issue about acceptance by conduct. That is a separate point. We are addressing the passage which appears about 20 lines from the end of the left hand column and begins "The third matter…"
3.3.2 This is not a case in which partial execution makes it easier to find a contract for any of the reasons suggested by Steyn LJ. The reasons are: (a) From a very early stage the partial execution was against a background of a dispute about the very matters which are now in issue. (b) Such partial execution as occurred before the dispute arose was partial execution which did not impact on the need for a formal appointment, on what the terms of that appointment were or on the importance of the matters which had not yet been agreed.
4. There are, however, two corollaries to the Court's broad disposition to find a contract if it can. They are equally or perhaps more important than the disposition itself. They are as follows:-
4.1 The Court does not impose on the parties contracts which they did not make. It is not for the Court to make a contract or impose terms which the parties did not agree…
4.2 The Court respects party autonomy. It is the parties who are masters of their own contractual fate. Thus the Court is bound if the parties agree that something further be required, whether it be the execution of a formal document or the agreement of further terms…"
"But it is clear that the parties both intended to make a contract and thought they had done so. Businessmen often record the most important agreements in crude and summary fashion; modes of expression sufficient and clear to them in the course of their business may appear to those unfamiliar with the business far from complete or precise. It is accordingly the duty of the court to construe such documents fairly and broadly, without being too astute or subtle in finding defects; but, on the contrary, the court should seek to apply the old maxim of English law, verba ita sunt intelligenda ut res magis valeat quam pereat. That maxim, however, does not mean that the court is to make a contract for the parties, or to go outside the words they have used, except in so far as there are appropriate implications of law, as for instance, the implication of what is just and reasonable to be ascertained by the court as a matter of machinery where the contractual intention is clear but the contract is silent on some detail."
"There are in my opinion two grounds on which the court ought to hold that there never was a contract. The first is that the language used was so obscure and so incapable of any definite or precise meaning that the court is unable to attribute to the parties any particular contractual intention. The object of the court is to do justice between the parties and the court will do its best, if satisfied that there was an ascertainable and determinate intention to contract, to give effect to that intention, looking at substance and not mere form. It will not be deterred by mere difficulties of interpretation. Difficulty is not synonymous with ambiguity so long as any definite meaning can be extracted. But the test of intention is to be found in the words used. If these words considered however broadly and untechnically and with due regard to all the just implications, fail to evince any definite meaning on which the court can safely act, the court has no choice but to say that there is no contract. Such a position is not often found. But I think that it is found in this case. My reason for so thinking is not only based on the actual vagueness and unintelligibility of the words used, but is confirmed by the startling diversity of explanations, tendered by those who think there was a bargain, of what the bargain was. I do not think it would be right to hold the appellants to any particular version. It was all left too vague. There are many cases in the books of what are called illusory contracts, that is, where the parties may have thought they were making a contract but failed to arrive at a definite bargain. It is a necessary requirement that an agreement in order to be binding must 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. In my opinion that requirement was not satisfied in this case.
But I think the other reason, which is that the parties never in intention nor even in appearance reached an agreement, is a still sounder reason against enforcing the claim. In truth, in my opinion, their agreement was inchoate and never got beyond negotiations. They did, indeed, accept the position that there should be some form of hire-purchase agreement, but they never went on to complete their agreement by settling between them what the terms of the hire-purchase agreement were to be. The furthest point they reached was an understanding or agreement to agree upon hire-purchase terms."
"Faced with the conflict of judicial opinion in this case, I prefer the views of Donaldson J and Cairns LJ as being more orthodox and in conformity with the basic principle that the court does not make a contract for the parties. The court will not even improve the contract which the parties have made for themselves, however desirable the improvement might be. The court's function is to interpret and apply the contract which the parties have made for themselves. If the express terms are perfectly clear and free from ambiguity, there is no choice to be made between different possible meanings: the clear terms must be applied even if the court thinks some other terms would have been more suitable. An unexpressed term can be implied if and only if the court finds that the parties must have intended that such a term would have been adopted by the parties as reasonable men if it had been suggested to them: it must have been a term which went without saying, a term necessary to give business efficacy to the contract, a term which, although tacit, formed part of the contract which the parties made for themselves."
"As to the law, the principles to be derived from the authorities, some of which I have already mentioned, can be summarised as follows:
(1) In order to determine whether a contract has been concluded in the course of correspondence, one must first look to the correspondence as a whole (see Hussey v. Horne-Payne).
(2) Even if the parties have reached agreement on all the terms of the proposed contract, nevertheless they may intend that the contract shall not become binding until some further condition has been fulfilled. That is the ordinary "subject to contract" case.
(3) Alternatively, they may intend that the contract shall not become binding until some further term or terms have been agreed; see Love and Stewart v. Instone, where the parties failed to agree the intended strike clause, and Hussey v. Horne-Payne, where Lord Selborne said at p.323:
"…The observation has often been made, that a contract established by letters may sometimes bind parties who, when they wrote those letters, did not imagine that they were finally settling terms of the agreement by which they were to be bound; and it appears to me that no such contract ought to be held established, even by letters which would otherwise be sufficient for the purpose, if it is clear, upon the facts, that there were other conditions of the intended contract, beyond and besides those expressed in the letters, which were still in a state of negotiation only, and without the settlement of which the parties had no idea of concluding any agreement [ My [Lloyd LJ's] emphasis]
(4) Conversely, the parties may intend to be bound forthwith even though there are further terms still to be agreed or some further formality to be fulfilled (see Love and Stewart v. Instone per Lord Loreburn at p. 476).
(5) If the parties fail to reach agreement on such further terms, the existing contract is not invalidated unless the failure to reach agreement on such further terms renders the contract as a whole unworkable or void for uncertainty.
(6) It is sometimes said that the parties must agree on the essential terms and that it is only matters of detail which can be left over. This may be misleading, since the word "essential" in that context is ambiguous. If by "essential" one means a term without which the contract cannot be enforced then the statement is true: the law cannot enforce an incomplete contract. If by "essential" one means a term which the parties have agreed to be essential for the formation of a binding contract, then the statement is tautologous. If by an "essential" one means only a term which the Court regards as important as opposed to a term which the Court regards as less important or a matter of detail, the statement is untrue. It is for the parties to decide whether they wish to be bound and, if so, by what terms, whether important or unimportant. It is the parties who are, in the memorable phrase coined by the Judge "the masters of their contractual fate". Of course the more important the term is the less likely it is that the parties will have left it for future decision. But there is no legal obstacle which stands in the way of the parties agreeing to be bound now while deferring important matters to be agreed later. It happens everyday when parties enter into so-called "heads of agreement"."
"The modern commercial practice of making quotations and placing orders with conditions attached, usually in small print, is indeed likely, as in this case, to produce a battle of forms. The problem is how should that battle be conducted? The view taken by the judge was that the battle should extend over a wide area and the court should do its best to look into the minds of the parties and make certain assumptions. In my judgment, the battle has to be conducted in accordance with set rules. It is a battle more on classical 18th century lines when convention decided who had the right to open fire first rather than in accordance with the modern concept of attrition.
The rules relating to a battle of this kind have been known for the past 130-odd years. They were set out by the then Master of the Rolls, Lord Langdale, in Hyde v. Wrench, and Lord Denning MR has already referred to them; and, if anyone should have thought they were obsolescent, Megaw J in Trollope & Colls Ltd. v. Atomic Power Constructions Ltd. called attention to the facts that those rules are still in force. "
"My Lords, there may be certain types of contract, though I think they are exceptional, which do not fit easily into the normal analysis of a contract as being constituted by offer and acceptance; but a contract alleged to have been made by an exchange of correspondence between the parties in which the successive communications other than the first are in reply to one another is not one of these."
"In considering this question, I do not much like the analysis in the text-books of inquiring whether there was an offer and acceptance, or a counter-offer and so forth. I prefer to examine the whole of the documents in the case and decide from them whether the parties did reach an agreement upon all the material terms in such circumstances that the proper inference is that they agreed to be bound by those terms from that time onwards. "
The purpose of reminding me of that expression of opinion was, I think, to suggest that it was not necessary, in order to find a contract, to ask the traditional question, was there an offer which was unequivocally accepted, and answer that question in the affirmative. Rather, it was, or might be, enough to justify the finding of an agreement, that by trawling through correspondence one could find that at different times particular matters had been agreed which in sum could be said to amount to an agreement.
"Secondly, it is true that the coincidence of offer and acceptance will in the vast majority of cases represent the mechanism of contract formation. It is so in the case of a contract alleged to have been made by an exchange of correspondence. But it is not necessarily so in the case of a contract alleged to have come into existence during and as a result of performance. See Brogden v. Metropolitan Railway (1877) 2 AC 666; New Zealand Shipping Co. Ltd. v. A. M. Satterthwaite & Co. Ltd. [1974] 1 Lloyd's Rep 534 at p.539 col.1 [1975] AC 154 at p. 167 D-E; Gibson v. Manchester City Council [1979] 1 WLR 294. The third matter is the impact of the fact that the transaction is executed rather than executory. It is a consideration of the first importance on a number of levels. See British Bank for Foreign Trade Ltd. v. Novinex [1949] 1 KB 628 at p. 630. The fact that the transaction was performed on both sides will often make it unrealistic to argue that there was no intention to enter into legal relations. It will often make it difficult to submit that the contract is void for vagueness or uncertainty. Specifically, the fact that the transaction is executed makes it easier to imply a term resolving any uncertainty, or, alternatively, it may make it possible to treat a matter not finalised in negotiations as inessential. In this case fully executed transactions are under consideration. Clearly, similar considerations may sometimes be relevant in partly executed transactions. Fourthly, if a contract only comes into existence during and as a result of performance of the transaction it will frequently be possible to hold that the contract impliedly and retrospectively covers pre-contractual performance. See Trollope & Colls Ltd. v. Atomic Power Constructions Ltd. [1963] 1 WLR 333. "
"I quite agree with the Lords Justices that (wholly independent of the Statute of Frauds) it is a necessary part of the Plaintiff's case to shew that the two parties had come to a final and complete agreement, for, if not, there was no contract. So long as they are only in negotiation either party may retract; and though the parties may have agreed on all the cardinal points of the intended contract, if some particulars essential to the agreement still remain to be settled afterwards, there is no contract. The parties, in such a case are still only in negotiation. But the mere fact that the parties have expressly stipulated that there shall afterwards be a formal agreement prepared, embodying the terms, which shall be signed by the parties does not, by itself, shew that they continue merely in negotiation. It is a matter to be taken into account in construing the evidence and determining whether the parties have really come to a final agreement or not. But as soon as the fact is established of the final mutual assent of the parties so that those who draw up the formal agreement have not the power to vary the terms already settled, I think the contract is completed. "
Application of the law to the facts of the case
The answer to the preliminary issue