Construction Contract Chaos – Supplier Delivery Notes and Terms

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Construction Contract Chaos – Supplier Delivery Notes and Terms

It is a common running theme within the construction industry that when parties are embroiled in a dispute, there generally tends to be a dispute about whose terms apply. This not only applies to the Employer/Contractor and/or Sub-Contractor relationship, but it is also becoming predominantly common in disputes involving the supply of products for any construction works.

The construction industry is notoriously known for contract chaos where the parties exchange a number of conflicting terms prior to any works being performed by the parties.

Suppliers to construction contracts frequently argue that their delivery notes containing their own terms would govern the contractual relationship with a Contractor. This has become a common argument adopted by suppliers within the construction industry. This always has a Contractor up in arms. It does appear extremely unfair for a supplier to argue that a delivery note accepting goods and containing terms signed by an employee with no contractual background or involvement, would allow the supplier’s contractual terms to apply between the parties.

Universal Sealants (UK) Ltd (t/a USL Bridgecare) v Sanders Plant and Waste Management

The recent case of Universal Sealants (UK) Ltd v Sanders Plant and Waste Management highlighted the importance of understanding what contractual terms exchanged prior to the performance of any works applied. The case had to deal with a number of construction related determinations. However, for the purpose of this article, we will solely concentrate on the supplier delivery element of the dispute.

The case involved a contract for the supply and delivery of concrete to the Claimant for works carried out at Bladon Haugh Viaduct on the A1 in Gateshead. The Claimants had specified a specific grade of concrete (M5) to the supplier but had instead been supplied with an inferior grade concrete (ST5).

The Claimants had telephoned the supplier on 21 February 2017 stating they required delivery and installation of M5 concrete and argued that a representative of the supplier confirmed that the supplier would be able to provide and pour the specified concrete. For completeness it should be mentioned that the supplier’s representative maintained that she had told the Claimants the strongest grade of concrete that could be supplied was ST5.

A subsequent email was sent to the supplier’s containing a sub-contract for an order of M5 concrete. The sub-contract contained a link to the Claimant’s standard terms. The concrete was delivered to site on 07 March 2017. It was the Claimant’s case that the initial telephone call was an invitation to treat whilst their subcontract was the offer to purchase M5 grade concrete. The offer was accepted by the supplier’s conduct in delivering the concrete to site irrespective whether it was M5 or ST5 grade concrete.

It was founded that the terms of the contract were those attached to the subcontract order emailed by the claimant. This amounted to the offer to purchase the concrete which the supplier accepted when they delivered the goods to the site. The delivery note incorporating the supplier’s standard terms had not amounted to a counteroffer as it was only signed after the concrete had been poured by which time the contract had already been performed.

Mrs Justice Jefford determined that the order was accepted by the delivery of the concrete to the site. There was then a concluded contract on the terms of that order. The production of the delivery note on dissimilar contract terms was not effective. It was too late to be a counteroffer.

Observations for clients

As we all know, construction sites are busy and high-pressured environments. It would sometimes be difficult for a site employee to read everything on a delivery note. Suppliers commonly argue that their delivery note terms apply.

Whilst the above case does appear helpful, Contractors may be minded to advise their site employees and employees who may collect goods/materials for site from a material branch that when signing for deliveries, they note that they are simply signing for a delivery of the goods and they are not and cannot sign an agreement to any new contractual terms. This should assist a Contractor if they are ever in a dispute of a similar nature. Contractual disputes can be messy and expensive. In order to protect the position as far as possible, Contractors should maintain throughout any correspondence or communications received relating to any delivery what terms apply and confirm any refusal to accept any other terms exchanged.

For more information on this topic please contact our litigation team.

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