RJT Consulting Engineers Ltd V DM Engineering (Northern Ireland) Ltd (Part II)

The true construction of the requirement in section 107 of the Construction Act 1996 that a construction contract must be in writing

Court of Appeal
Auld, Ward and Robert Walker LJJ
8 March 2002
The Court of Appeal gave the following guidelines as to the true construction of the requirement in section 107 of the Construction Act 1996.
Subsection (1), which limited the Act's application to construction contracts in writing, should be seen against the background of the Act origin having been an unsuccessful attempt to force the construction industry to submit to a standard form of contract and meant that writing was important on the basis that it provided certainty insofar as the adjudication process was envisaged to take place under a demanding timetable and the adjudicator had to start with some certainty as to the contract's terms.
Subsection (2) gave three categories where the agreement was to be treated as being in writing, ie where the agreement, whether or not signed by the parties, was made in writing which meant where the agreement was contained in a written document which stood as a record of the agreement and of all the terms of the agreement ((2)(a)), where there was an exchange of written communications which was capable of containing everything needed to be known about the agreement ((2)(b)) and where the agreement was evidenced in writing which, by the application of the eius generis rule of construction, meant evidence of the whole of the agreement ((2)(c)).
Subsection (3), which provided that an agreement was in writing where the parties otherwise than in writing referred to terms in writing, was consistent with subsection (2) insofar as Parliament envisaged that all the material terms were in writing and the oral agreement referred to the written record. Subsection (4), which provided that an agreement was evidenced in writing if it was recorded in writing with the parties' authority, contemplated a record of the whole agreement.
Subsection (5), which provided that an exchange of written submissions in adjudication, arbitration or court proceedings in which the existence of an agreement otherwise than in writing was alleged by a party and was not denied by the other party in his response constituted an agreement in writing to the effect alleged, meant that the terms alleged were those which it was material to allege for the purpose of the adjudication.
Advice Note The Court of Appeal judgments emphasise that generally a contract will only be in writing (and therefore subject to the Construction Act 1996) where all the agreement's terms have been recorded in writing.