Sign Illinois Banking Letter Of Intent Secure

Add Letter of Intent countersign

okay good evening everyone and welcome to our first online seminar for 2021 um we may be back in lockdown but it doesn't stop us running the seminars for you um good to see you all hope you're all safe and well and happy new year to everybody um for information the seminar schedule for the first four months is now available on the website please feel free to view and book we've got some new topics um and some new series uh adjudication matters um uh with muhammad hack and we have wilson construction essentials the first one of which is tonight with richard silva uh tonight richard will be covering contract formation and letters of intent as always if you've got any questions richard please feel free to use the chat box or the q a panel in the bottom toolbar and he will happily answer your questions at the end if there's anything more specific or you don't wish to raise it in an open forum you are also free to email richard his email address is on his contact details there richard silva at silverllp.com so without any further ado i will hand over to richard thank you julie um happy new year to you all [Music] my name is richard silva i am the senior partner of silver law my background is in construction i previously held the roles of chief survey and construction director um before moving into the legal arena i presently deal predominantly with disputes either as a party representative or as the adjudicator arbitrator mediator i'm on a number of panels including the rics and the c i are giving the matter some thought over the christmas period i thought it might be useful to present a series of seminars on what i find are the major issues of dispute that ultimately lead to problems be it through adjudication arbitration and mitigation and on that basis i thought the first one we should deal with is contract formation and letters of intent it is my view that this is the most important course of the ten that i will be doing and generally dictates which party is likely to be successful in any particular dispute now you might find that somewhat surprising i suppose one must start off and look at reality and what i would ask is is of the contracts you start on as let's say main contractor how many of them actually have the contract signed and sealed before you start it's my experience um it's not a lot and quite often contracts aren't signed until well into the construction process and unfortunately on occasions not until the job has actually been completed and then if we look at the subcontracts and the consultants agreements quite often they're in place but actually how many of them are signed again you know the loads of people come to me with disputes and they could give me copies of the contract and they're not signed therefore it's difficult to know whether they actually reflect whether or not that's what the parties have agreed and it's this that we're going to deal with through the course because ultimately if you're going to determine who is responsible for a particular problem be it defective work late completion one needs to determine what is the contract and what does that contract provide because if you can't do that you will not be able to determine who is ultimately going to take responsibility so let's start the very beginning what is actually the purpose of a contract what's the difference between one type of contract and another you will be aware of the jct the nec the aca the ppc the icame and i can go on and on and on there's hundreds of them out there why have so many contracts and i'm only talking about jct as a suite of contracts if we look at all the contracts within that suite there's loads of them so what's the difference why does one particular contract make a difference to another and the important point to start is is that what a contract does is it sets down procedure and risk so i'm going to give you the standard one i go through exceptionally adverse weather conditions it's a problem on construction projects you are delayed generally where there are external works by the weather and the question is who is responsible for it well the answer to most of my questions is always the same it depends upon the contract so for jct the exceptionally adverse weather conditions is considered a neutral event it is an event which a contractor is entitled to an extension of time but is not entitled to loss an expense but if one looks at the nec form of contract it is a compensation event and therefore provided that contract has not been amended the contractor will get both time and money but if we look at certain of the gc works forms of contract you will actually see that it's not an event at all so the contractor gets no extension of time and no loss in expense so on the same basic facts under one contract the contractor can get extensions of time and additional money and under another contract they will get nothing so what you need to understand is what does a contract initially do it allocates risk now i'm sure it will not have escaped your attention that nearly every contract that is produced is either on the employing party's standard terms and conditions or where a standard form is used it is highly amended and i'm sure it will be no surprise that where they are amended it is to change the risk certain things in these contracts may will benefit the contractor and if it's been amended it is most likely that those amendments are increasing the risk particularly on design and build forms by creating a far more onerous obligation upon the contractor with regards to that design so what i'm pointing towards is if you're going to deal with a lot of problems you need to know what is the contract and what are those obligations but equally if you can get out of that contract it may very much assist you so what does a contract do the first thing is to set down the risk the second thing is it sets down procedure it says what you should or should not do and again it is not uncommon for that contract to be amended and one particular area which is often a problem is the issue of notices and whether they are a condition precedent in other words whether you have an entitled to entitlement to extension of time or loss and expense and whether it is conditionable conditional upon you having previously issued a particular notice within a particular time some contracts in their standard form for example the jct if not amended does not make such notice condition precedence but the nec is quite different certain of the compensation events require the contractor to have issued an early warning notice and a compensation event notice and if they fail to do so in the required time may lose all entitlement so we must look at this particular contract to establish what the terms are and what the obligations imposed on both parties are if we are going to resolve disputes and the difficulty is is that all too often there is uncertainty as to what is the contract i cannot impress upon you enough i have got out of so many contracts for my clients simply because they have not been signed and or agreed we're going to go through that process now so sure most of you will be aware that in order to have a contract you need to have four essential elements an offer an acceptance consideration and an intention to create legal relationships so let's deal firstly with an offer fairly simple in the main it will be the submission of some form of tender but it should be distinguished from what is an invitation to treat which is in construction terms generally the invitation to tender now the important point to raise here is quite often what the person asks in the invitation to tender is not complied with by the tenderer for contractors when you go out for invitation to tender to subcontractors very often you will say and these will be the terms that we will be seeking for you to agree to but when you get the subcontract quotes back they say quite the opposite they have all their standard terms that are quite the opposite of what you wanted it's not unusual in main contracts that when the employer goes out to tender the contractor comes back with a whole list of things within the proposed form of contract that they do not agree with now the point is unless the invitation to treat is incorporated and expressed provisions are included generally the invitation to tender is not relevant in determining what the contract is because what we need is is an offer and an acceptance we do not need an invitation to treat to form a contract so what is the difference clearly in regards to an invitation to treat and an offer well put simply if you go into a shop and you see an item that is normally priced at a thousand pounds which has a penny on it and you pick it up and say i'll accept this i'll buy it you can't because in shots where things are up for sale they are an invitation to treat they are inviting you with the opportunity to buy it and when you actually take that up that item up to the counter to pay for it you are making the offer and the person who accepts your money is creating the acceptance i've got a case there the carlyle carbolic smoke ball company which represents an exception it's the original case but you would have heard of some others more recently one that got quite a lot of press is hoover what hoover did was they made an offer saying if you buy our hoovers we will give you two free flights with ba and the problem was that someone obviously had poor mathematics because roughly speaking the hoover cost a hundred pounds and the flights could be three thousand pounds so everybody bought their hoovers and wanted the free flights and to try and get out of it hoover said this was an offer to the world at large and in other words was an invitation to treat and was non-binding the courts did not agree where you make an offer to the world at large it is not an invitation to treat it is an offer and which can be binding once accepted this is why whenever you hear on the radio on the television it says please see our terms and conditions so that they are seeking to incorporate those terms into the contract so we've dealt with an offer so the next question is is if there is an offer how long does that offer last how long after having been submitted can it be accepted and the answer is is that an offer is open for a reasonable period of time unless the particular offer says it's open for a set period of time so i make an offer to you which i don't stay any period within it for its acceptance it will be open for a reasonable period of time and depending upon the offer will dictate what is a reasonable period of time but where it says it's open for three months once the three months comes to an end you can no longer accept it however where a tender is stated to be open for three months doesn't mean it has to be left open for three months because it is not a contract it is purely an offer and a party can withdraw an offer at any time prior to acceptance now as i said my background is in construction um and i used to be a site surveyor and when we secured a new project what would happen is the buyer would send a big box of files to me and we included within that was all the tenders the buyer had obtained when seeking to produce his tender and which had ultimately been accepted and my first task ideally was to go through all those tenders obviously looking for further discount but seeking to place the orders at the same price or less than that which was included within our tender now what would occasionally happen was we'd included a very very good price for a certain tender of works i'd then go to the subcontractor and seek to accept it and they'd say sorry we've withdrawn it we've noticed a mistake and we're not going to stand by it and i'd get into big arguments but it says open for three months and the three months hasn't elapsed well the simple rule is a party can withdraw it at any time prior to acceptance so if you want to keep those tenders open the only way of doing it is to actually make the tender a contractual obligation and that would be easy you could say for example we ask you to submit a tender and that tender shall be open for three months and you shall not be entitled to withdraw it and for this we will pay you a pound because as we can deal with in a moment you have to have some consideration your consideration is the pound that they will not withdrawing so that's the answer to get over that problem so we're going to deal with acceptance in the moat in a moment but will we have an offer if a counter offer is made this counter offer effectively displaces the previous offer and the offer the previous offer can no longer be accepted so i have for example a tender submitted bias subcontractor and the subcontractor has said their terms and conditions are to apply and i send out a subcontract order saying i agree your tender subject to my terms and conditions i've not accepted i've made a counteroffer and that other tender that original offer is now rejected if the subcontractor comes back and says i'm sorry i'm not willing to agree to your terms so i say okay i'll agree to your previous tender they can say well i'm sorry that tender's no longer available you've rejected it so that's a very important rule it's called the fighting of the forms it is a common spattling of the forms it is a common problem on construction projects everybody sees subcontract orders but they're not subcontract orders they are nearly always counter offers and therefore what we need to do is to establish whether they have been accepted so do be mindful of this we need to have a clear acceptance it must exactly fit the offer if there is anything in the subcontract order that is different to what is the offer and it is a substantial point then it is likely not to constitute an acceptance moving on now to acceptance acceptance can take three forms written oral and conduct written is easy the subcontract can be signed and we can see it's been agreed because there it is it's been signed in agreement we can have an exchange of correspondence and we can look through that correspondence and see what the parties have agreed orally just as binding but a bit more difficult to prove it is my experience that unfortunately not everybody tells the truth and some people will swear that black is white they will deny that they ever agreed things the amount of adjudications that come before me whether both parties say the complete opposite with written statements and promises and everything whether one is lying or whether they simply have a difference of a view i will leave that to you to determine but it is much more difficult when you're seeking to rely on oral acceptance now the final one is conduct and what we're looking for is for something that indicates that a party has accepted the offer now quite often people will say oh yeah i've got a subcontract holder i know the subcontractor hasn't signed it but they're on site they're working we've paid them there's a contract must be obviously is that right if you've got a contract and it's unsigned if you're looking for acceptance by conduct what you must look for is that the acceptance must have followed the offer you can't accept something until you've received the offer so if you've sent out the subcontract order after they've started on site you can't rely upon their starting of site on site as acceptance of something that hasn't been offered so starting on site can be the acceptance of an offer made before and indeed allowing a party to start on site could be your acceptance of their tender i do remember a subcontractor um that no longer with us when i was in construction who would receive a subcontract order but refused to sign it but he would come to site eight o'clock before starting work and issued to the site agent a letter and then he would start work you would then open the letter and it said i confirmed my quotation to you for this and by you allowing them to start you'd accept it no surprise um people don't employ them anymore but what you need to understand is so far as conduct is concerned what we're looking for is something that after the offer has been made constitutes acceptance and do be mindful that if there has been a counter offer you can't accept something so if someone has submitted a subcontract order and the other party has come back and said i don't agree with this i propose the following but then starts on site they cannot possibly have accepted your order because they've rejected it and that's what we're looking in the background of the forms what is the agreement that's been reached what was the last offer and what constitutes acceptance now it may be for example that it was starting a site or allowing the parties to start on site but equally it could be you relying upon certain of the provisions of the contract for example if you've got a jct contract and you start spouting out relevant event crawls numbers you may by your conduct have accepted that contract so do be aware i have had to spend considerable time in seeking to establish what the contract is which neatly brings me to this slide because you can only have a contract something that is enforceable if we know what we're seeking to enforce if the contract is so uncertain then you can't enforce something that no one understands now certain implied terms can jump in to assist us in certain circumstances if i place an order for you to wash my car but i don't agree a price you're entitled to a reasonable amount if we fail to state how long you've got you have a reasonable period of time so these things can be established even if they're not expressly stated but one thing that cannot be established by case law the case law i was referring to is the wagon round is what you're actually down to do you can't enforce something if you don't know what it is that either party was down to do so if i don't know the work i'm giving you there cannot be an enforceable contract of something that is uncertain the last one well we've got consideration and an intention to create legal relations just on intention to create legal relations and this is simply to deal with the situation where friends or relatives enter into agreements where friends and relatives enter into agreements it's generally considered to be a social arrangement and hence quite often unenforceable clearly in construction that is unlikely to occur moving to consideration um one of my favorite statements consideration must be sufficient but need not be adequate doesn't seem to make sense well it is my view in my cynical mind that the person who wins any invitation to tender any contract is generally the person who has underpriced the job my experience says that in the main the lowest tender is normally the one who is accepted and they've generally underpriced the job now let's just say they've woefully underpriced the job can they get out of it no they can't because once there is a contract that contract is binding and what we must have is consideration now the fact that i may only be paying you a pound for something that's worth the million pounds is irrelevant because the consideration is sufficient it might not be adequate but it is sufficient and for a contract it has been said that a peppa call is sufficient consideration you will be aware that quite often deeds are entered into by writing off across the face of a stamp because the stamp has value and therefore that is shown as the consideration you will often see it saying for a payment of a pound that is because that is consideration it is binding even if the consideration is insufficient and it is my experience experienced too often on construction projects people have underpriced the works hard luck so consideration must be something of value but it doesn't necessarily have to be financial so in any construction project what is the general situation is that the contractor has an obligation to carry out the work so they are providing consideration and there is another party who is paying for that consideration an amount of money thereby creating a contract but what if it is an existing order obligation or where it's in an obligation not to walk off sign or not to take legal action but in certain circumstances these can be consideration but let's give an example what about the situation where a subcontractor says i'm not doing any more of this work um i'm walking off site and you say but i've got a contract you're obliged to do it well i might be obliged to do it but i don't care i'm walking off site if you then agree to pay them extra money to do that it is unlikely to be enforceable even though you may have paid the money because that agreement is created through duress and as a consequence it is likely to be unenforceable because there has been a conflict complete failure of consideration because what has the subcontractor provided nothing they were obliged to carry out the work and that's what they only what they're doing there has been no change so in order for there to be a contract or an agreement because do remember quite often it's in an agreement after the contract you're going to pay them extra money or it's a final account you need to show there has been some consideration now for example paying a day early would be consideration you wrote five thousand pound i'll pay you two but i'll pay it today rather than so i'd help you out that would be binding but if i only agreed to pay tomorrow and i was obliged to pay you tomorrow in any event then there's a lack of consideration example of another form of consideration um i'm going to take you to adjudication well look i'll pay you some more money okay provided it was my honest intention to go to adjudication if you didn't agree to more that will be good consideration this case is quite an interesting one i've given you quite a lot of information in the notes what it shows and it's not unusual sorry it's this one is that on construction projects quite often i've found that progress is a problem and things are not going maybe as quickly as you would have liked and therefore what happens is you seek to negotiate with the subcontractor to do something more and you say to them if you achieve this or achieve that i'll pay you a bonus now it may be what you're agreeing to is just for them to do what was their original contractual obligation and therefore the question is is are they getting something for nothing but if you can the other party can show that by their actions they have done something new they've given new consideration it will be binding now under most contracts we have a completion date and if that completion date is not met there's a liability for potential damages what that shows is a party has a right to complete late i don't have to complete by the completion date because if they don't you can levy damages so if there's a consequence you are even where it's their own delay you enter into an acceleration agreement where they look to complete by the original completion date that is likely to be binding because they have provided consideration in the they've agreed to complete by the completion date even though they were entitled to complete late but be liable to liquidated damages so we've covered a lot of information there and what i want to do is to try and summarize the situation it is very nice and easy if we have a contract and it's signed by both parties and provided we know all the documents that are incorporated and provided there is no conflicts then we should be able to determine exactly what the parties entered into and what their respective risks are but where either the contract has not been signed or where there is a letter of intent the situation can be far less clear where there has been a contract issued but not signed we are likely to be looking for acceptance by consideration sorry acceptance by conduct and what we need to look at is okay number one when was the contract sent tick box we know that okay what are we saying is the acceptance starting on site okay tick that has there been well first of all was the starting on site post the issue of the contract because if it wasn't you can't accept something that hasn't been issued if the contract was issued prior to starting on site the next question is is has there been any counter offer issued between the issue of the contract and the starting on site if there has is that a counteroffer and has that counter offer been accepted by the employer employing party allowing the contractor to start on site so what we're looking for is often acceptance if there's simply a rejection of the contract but nevertheless the party's started on site there is no clear offer and there is no clear acceptance and hence there is no contract and it happens a lot more times than you might imagine but then we will need to look at is following the issue of whatever is subsequently seen to be an offer be a contract that's suddenly issued has a the party done something to accept it silence won't be enough carrying out the works won't be enough because they were carrying out the words before the order and they were carrying out the works after they haven't changed they've done nothing else so it is not uncommon surprising as you might think to find that people are working on site with no contract so if they're working on site with no contract why are they there and what are the parties obligations we're going to address that as part of the topic of letters of intent so what is a letter of intent in my experience these are the nature of terms included in a letter of intent more often the letter of intent starts with it is our intention to enter into contract sometime in the future so the letter initially gives an indication that it is not a contract because the contract is going to be entered into sometime in the future not now but having said that it's our intention to enter into a contract in the future it then says but we would like you to start on site but it usually has a cap it might well say for example please proceed with the carrying out of the works up to 50 000 pounds whereas the tender is submitted was a million pounds so clearly it's not an acceptance it might say please carry out the initial enabling works but the tender was for the whole of the work so again it cannot be an acceptance because it is only limiting the work it might say please carry out the works up to the end of march whereas the original contract duration was going to be another year thereafter so again it cannot be an acceptance quite often the letter of intent also states that there are matters still to be agreed for example the terms of the future contract we're still yet to agree on the completion date the value of the works the scope of the works the terms of the contract itself the design obligation it then often says that subject to when this agreement is in place at present the contractor shall be entitled to a reasonable amount or it may say quantum merit but it will then also quite often say that once the contract is put in place it shall displace the letter of intent which is again indicating to us fairly clearly that the letter of intent in itself is not the contract now in my experience letters of intent are issued for a number of reasons some of these reasons are poor ones now with respect to a number of people who are listening it is my experience that quite often letters of intent are issued by local authorities and i know there are a number of people from local authorities who are listening now the reason that they may be issuing these letters of intent is because i time it takes a long time to get all the contract documents together and put together and issued so we issue a letter of intent in the first place it may be that we've got to get certain approvals in place or other factors so that's one reason another reason is that there needs to be something obtained so we've got time we've got some form of approval funding for example or it may be for example that there's a piece of land we haven't acquired yet these are all reasons why letters of intent are issued but as far as time is concerned i would suggest you should not be issuing a letter of intent where the only problem is time as we've identified all we need is a contract is an offer and an acceptance consideration and intention to create legal relations so if you're a local authority what i would suggest that you should be doing is you issue your invitation to tender and you say to the contractor that no tenders will be accepted that are non-compliant with the requirements of the letter invitation to tender so they price everything without amending it you've now got your tender and your terms are the tender is on the terms that you have requested you can then simply respond saying we accept we'll forward the contract documents in due course for signature and ceiling but as soon as you say we accept you've got a contract the fact that the contract has still to be signed is irrelevant it does not present a problem but where the issue is not time but is other factors then it is your decision whether you want to elicit a letter of intent or rather a pre-contract service agreement which indeed is one of the questions that was asked prior to the seminar so which one should you do the answer is a simple one it depends it depends which of these resultant effects you would prefer if there is a letter of intent and it includes a cap it states matters have still to be agreed and indicates the contractor is going to be entitled to quantum mirror it and that the contract will displace the letter of intent once signed you are not in contract you are instead in an area called quasi contract and restitution you have asked the contractor to carry out certain works and in return the contractor is entitled to a reasonable amount quantum merit now in view there is no contract there can be no completion date you can't have a completion date to something that is not a contract there can be no completion no provisions for liquidated damages and no need for extensions of time either because the contractor is entitled to quantum merit doesn't need to claim loss and expense otherwise they're entitled to be paid a reasonable amount for the works they have been requested to undertake what's more they have unless there is specific provisions no commitment to complete the works now this raises a number of situations what happens where the letter of intent has a cap and a party exceeds the cap so it says carry out the works up to 50 000 pounds but because instructions keep being issued the contractor carries on carrying out works over and above the letter of intent put simply if the letter of intent says you're entitled fifty thousand pounds you do a million pounds worth of work you're entitled to fifty thousand pounds not up anymore that's it the only way you can get around it is if the employer with the letter of intent in place saying we will not pay you fifty thousand pounds any more than fifty thousand pounds proceeds to pay fifty thousand pounds and one penny by their auction they have indicated they are no longer bound by this restriction and they will likely to be stopped from relying upon it so very simply where the letter of intent stipulates a cap that cap is enforceable unless the other party by their conduct indicates they no longer want to be bound by it so do be careful if you exceed the letter of intent you are not entitled to be paid beyond it equally where you're under a letter of intent and for whatever reason you don't like those works you can pull off that's a worry as well now i'm going to give you two cases which i was involved in and they show you the significance of knowing whether you're in contract or not the first one concerned the renovation of an area in central london where there was high contamination contractor had submitted what was several million pounds worth of a tender and had started on site having looked um at the works what they found was their estimator had woefully underpriced the element of contamination and its removal of and which was seen as being a specific lump sum they were losing a fortune as is not unusual that where a party is losing money they seek help they're not interested whether they're right or wrong they just want to get out of it and i was called to site to have a look at the matter and as is always the case i started off by saying can i have a look at the contract he said oh yes we've got this here it is and i said hold on this isn't sign oh yeah we haven't signed it yet we're actually working under a letter of intent at the moment okay very interesting and how are you submitting yours interim applications well in accordance with our tender and indeed for those of you are working under a letter of intent i guarantee every one of you is submitting in accordance with your tender that's not what the letter of intent says it says you're entitled we paid a reasonable amount so you should be submitting your applications based upon a reasonable amount which provided you're doing the works reasonably is your cost cost plus marvellous so in this particular situation i looked into the letter of intent and it was quite clearly not a contract so i said to the contractors very simple this particular project you've got no completion date no liability to liquidated damages all the decontamination you don't need to stick with your price and you're entitled to a reasonable amount but do be aware your invitation your contract your tender at the moment remains open and as a consequence the employer can accept it tomorrow no surprise what we did we withdrew our tender the following day pointed out around a letter of intent and quantum merit and to say the least the employer wasn't very happy nor were the professionals the consultant's team who had to call upon their pi now i'm going to give you a second scenario this is another case i was involved in it was the construction of new offices on ground floor and um very expensive flats above in central london above a railway station or at least a railway line tube line um now for those of you who have maybe been involved in a project of that nature you will be aware you've got to have track monitoring in place you've got to have a process where if there is any problem that affects the tube line there's a monitoring system in place that gives warning and hence stops tubes and that's what had in this particular contract and what had happened was the whole obligation of getting this approved this track monitoring late clearly with the contractor now the contractor had been on site for a year had a full crash deck in place and all scaffolding in place for a year and had done no work and they called me up to say can we have an extension because we're losing money we can't get the work started because we cannot get lul's approval of our track monitoring system doesn't matter what we do whenever we send it they come back and reject it what should we do as is always the case i ask the simple question well can i have a copy of the contract and which they truly uh obliged and said here it is we signed it and returned it yesterday ah and the simple situation was the day before they were working under a letter of intent letter of intent was not a contract they were entitled to quantum merit no problems but because they had and which is not uncommon simply signed and returned the contract once received they were now bound by that contract and having reviewed the contract it was very well drafted and it said the obligation for obtaining lul's approval of truck monitoring laid with the contractor and hence the contractor had no intent to look entitlement to extension of time in other words the difference between the day probably cost them something like seven or eight million pounds they didn't need to send the contract they knew they had problems and they ought not to have signed it but the process is so common in construction people think as a matter of course you should sign the contract but quite often you shouldn't but equally on the employer's side quite often they think we'll send off a letter of intent the other side will surely sign the contract sometime in the future they might not so in answer to the question quite often i would suggest you are much better off to use a pre-contract service agreement and not a letter of intent okay um covered quite a lot there julie are there any questions there are indeed um quite a few in fact first question um so if you allow the subcontractor start on site while they have provided a counter offer does this mean you have accepted their counter offer very simply yes okay provided they've submitted a counteroffer by way of a revised quote and that immediately thereafter with no subsequent counter offer in between by you allowing them to start on site you have accepted their offer yes okay um there's two questions which uh relate to one pound being deemed unreasonable consideration um one piece is unreasonable consideration it's either consideration or not and a pound is sufficient consideration the law has said a peppercorn could be good consideration so the ladies who are listening i should tell you a quick case that's quite amusing and shows this situation so what happened was a husband left his wife for a much younger woman he was having a great time and decided that he needed some more money because he was spending it very quickly so he contacted his um wife who's no longer with and said you know i know this is a bit of a cheat but you know would you do me a favor would you sell my car for me and send me all the proceeds you'll find that all the deeds for the car are in the top drawer can you send it to me sell it for me and send me the proceeds and the wife looking back at the good days and everything else says yeah of course i'll help him out even though his runoff with a younger woman and indeed she did sell his brand new car and she sent him the proceeds a pound she sold his car for her pound and it was found to be binding because he was acting as his agent he had given her the necessary authority and he she had sold it for good consideration so it's binding there's a lesson in there um someone else is saying that they often sign contracts with one pound consideration but this consideration never passes from one party to the other irrespective of whether consideration is adequate or not what is the case if it never passes from one party to the other has a contract been formed yes generally it will be because the consideration is the duty to pay so when you enter into a contract on day one the party a has an obligation to carry out the works and party b has an obligation to pay for those works but the contract's been put in place because of that obligation so as far as the pound is concerned there is an obligation to pay it the fact they haven't paid it does not prevent the contract being formed because the consideration is the obligation to pay the pound okay someone else is asking is it a sensible policy to only use pcsas instead of lois that's the question i dealt with a little bit earlier um the answer to that is i would suggest yes because if you enter into a pre-contract service agreement it's a contract it's clear you set down what the party's obligations are so where you're entering into an agreement for cert things that are uncertain what i would certainly suggest is an enabling works contract so let's go for an example um i've given advice recently on a project that involves the redevelopment of a listed building changing it from what was a very large stately house into a hotel problem with that is and those that have dealt with these sort of natural problems of projects is you never know what you're going to find so rather than enter into a contract which is likely to be very uncertain or issuing the letter of intent what you would be better off doing is issuing an initial enabling contract for opening up areas and then once having opened up areas you then know what the scope of works will be and what the contract will be so generally you can do a letter of intent but you are putting yourself at risk okay next question up is what is the situation if the loi incorporates the contract terms contract or terms just for the loi work okay what you're looking for is has everything been agreed if you look at the letter of intent and any other documents that are incorporated and you find that everything has been agreed it's a contract a letter of intent where it is not a contract is because something has not been agreed but if it's for example limits the price the fact that contract is in there but there is a cap on the scope or a cap on time then there's a problem because you haven't agreed everything the contract cannot complete everything so you haven't reached agreement okay um someone else is asking if the owner gives an oral command to start work at site does this should this be considered as an acceptance or should he send it written and if if this person concerned if they'd started does the project time start to count okay um there is no difficulty of proceeding following an oral request then a written request other than proving it because you've got the oral request and now you say he asked me to start and then surprisingly six months down the line he says oh no i didn't it's like the pantomime time again so it's always easier to prove something if it's in writing so ideally you want the other party to write to you to confirm to start or alternatively simply say i confirm your phone call this morning requesting me to start tomorrow you've got it recorded you then start even though silence is never acceptance and therefore their failure to respond doesn't mean they've accepted but the question is they have allowed you to start and you've recorded that it was upon their request can it be difficult for them to prove otherwise what was the latter part of that question julix i've asked you questions um if the if the person concerned has started does the project time start to count well projects start time to start it will only start if there's been a full agreement and which includes a completion date so it may be the case that asking you to start you've got to look at was was there previously an offer what was that offer has it been accepted and has that contract got a completion date to it the answer to all of those is yes then you have no problem or a problem depending on which side you're looking okay um last question that's been flagged up here uh knowing that we're still an ongoing pandemic do you believe that implications similar to covid or any other global catastrophe within contracts and their false measure clauses clauses favors a contractor over the clients um as extension of time or any compensation specifically towards a contractor rather than this event being unreasonable on all parties how can we achieve the implied fairness no one said contracts would be fair and no one said there is no implied term of fairness no contract is meant to be fair the parties have reached an agreement be it good or bad there are certain provisions that look to protect people for example example the unfair contract terms act but if you look at that act it doesn't say you can't have unfair terms what it does is apply to exclusion clauses limitation clauses otherwise but it does not say you cannot have an unfair term so it is down to you as to whether you've reached an agreement now let's just deal with a couple of points the first thing is quite often i get involved in the dispute and party a says i think we've agreed this and party b says i think i've agreed this and i say well sorry you're both wrong because this is not what the parties believe they've agreed it is what the reasonable person on the clapham omnibus or on the london underground now looks at the documents alone and says i think that's what you've agreed and if that's what's agreed be it good or bad that is what you are bound to okay now there may be reasons why those terms are unenforceable unclear uncertain or contrary to a statute but generally what you've agreed is what you've agreed now let's turn to covid false measure act of god something that the parties were unaware of but we are aware of it so the false mojo clause is only likely to apply to contracts entered into pre-knowledge of the corona virus if you now enter into a contract it is unlikely that the false measure crawls will work or sorry will apply so going forward if you are a contractor and you want to ensure that you are not responsible for delay caused by coronavirus or any other virus of past which is reasonably known of in the past it's very simple get a clause in there written saying it do not rely simply on a false measure clause because it is unlikely to work going forward okay um another question here what needs to go into a pre-contract service agreement to make it binding offer and an acceptance okay the answer is very simple is what whoever asked the question let's put you in as the judge and the two parties are seeking to argue lots of different things and you've got to decide what you're going to have to look at is what does that service agreement provide and do i understand it so the first thing it must set down is what the hell one party is to do and provided you've got that then most the other things can be complied with so you are to do x what are you going to be paid doesn't say reasonable amount how long have you got doesn't say reasonable period of time no problem but if it doesn't say what you're going to do you've got no hope so the most in thing is it must set down clearly the scope of the works then ideally if you do not want reasonableness and implied terms coming in you want to stipulate time payment and other provisions the more details you put in the more certain it will become now if we look at the jct suite of contracts have a look at the miner works and have a look at the design and build version and what's the difference very simple one's very heavy and got lots of pages and one hasn't why is that because the minor works deals with far less it's not expected to be a complicated project and hence it doesn't have as many provisions the designer build has much more provisions so depending upon how much control you want that will then dictate how much information you need to put in the pcso okay that appears to wrap up our questions for this evening um thank you very much richard um as we said earlier if anyone wants to contact you direct directly it's richard silva at silverllp.com happy to answer any and all questions that you receive and then i believe the next one is next month for the next construction essentials in the new series that you're doing so thank you very much just a couple of things just to add um if you found the course useful i would appreciate for you to put a like against it on linkedin if you thought it wasn't very good please keep your thoughts to yourself as far as the nature of questions that you've put to me hopefully you've seen that i've been able to answer them very quickly and hopefully succinctly we have a helpline where you can either email in or call and ask a particular question someone is likely to call you back the likelihood is it will be me and then i will give you the answer to your question of course you all know what the answer to the question will now be it depends upon what the contract says but generally i can tell you what the standard forms say and also identify where within them you should be looking for any amendments the other thing is is that hopefully you've found this course useful and there are nine more but if anybody is interested in a bespoke online summer of this nature to meet their particular requirements then we're happy to provide same and please do contact julie okay thank you very much thank you very much everyone for attending uh it's nice to see everyone back again in january for the the new year and uh we will see you all again soon thank you very much richard thank you thanks right thank you richard okay