No need to put that in writing – Re: Lumley v Foster & Co Group Ltd and others [2022] EWHC 54 (TCC)

The excitement builds as the months of contemplating, planning, and changing your mind on the scope of the building works you wish to undertake to your property ends: the time has come to instruct the contractor. No matter if you are a consumer or business, there is always a temptation to agree to the works verbally without a written agreement.

The case of Lumley v Foster highlights the importance of obtaining a written agreement with the correct party. Litigation is never in the forefront of your mind, however unforeseen issues including poor workmanship, defects, delays, costs pressure and so on, may force you to consider your position. If you have not entered into a written agreement with the correct party at the start of the instruction it may have a significant impact on you obtaining what you deserve.

In this instance, Ms Lumley was a residential homeowner who received an advertising flyer from “Foster & Co” outlining the variety of construction works the business can provide. Ms Lumley opted to contact the business and arranged a site meeting for 21 June 2016, a Mr Foster attended the meeting. Here, the parties agreed the scope of the works in broad terms as well as a contract price of £100,000.00.

Thereafter, the building works commenced however Ms Lumley soon became concerned that the workmanship was sub-standard. This culminated in the builders’ downing tools and Ms Lumley being left with a “scarcely habitable” home. Considering which, Ms Lumley issued Court Proceedings in breach of contract against the following six defendants: –

• Foster & Co Group Ltd (Defendant 1)
• Mr Nicholas Foster (Defendant 2)
• Mrs Joanna Foster (Defendant 3)
• Foster and Co Developments Ltd (Defendant 4)
• Foster and Co Construction Ltd (Defendant 5)
• Foster and Co Ltd (Defendant 6)

It was the position of Ms Lumley that she has contracted with Mr Foster who was acting on behalf of one of the said six defendants: however, in the defence it was put forward that the contract was concluded with Foster and Co Construction Limited, namely defendant 5.

In support of her claim, Ms Lumley argued that the advertisement flyer was in the name of Foster & Co and when making the initial call the telephone was answered in the name of that company. In addition, Mr Foster attended the site meeting in a company vehicle with the logo of Foster & Co and a witness attested that during the meeting Mr Foster stated he would be personally responsible for the works and spoke about Foster & Co, but not Foster and Co Construction Ltd.

During the course of the works invoices were provided to Ms Lumley in the name of Foster & Co but the bank account into which payment was made was for an alternative legal entity, namely Foster and Co Construction Limited.

When considering an oral contract the Court will ask, “what a reasonable person, furnished with the relevant information, would conclude” (Hamid v Francis Bradshaw Partnership [2013]).

The conclusion of the Court was that the contract had been entered into with Ms Lumley and Mr Foster directly: therefore, Mr Foster would be personally liable for any breach of contract and the six defendants could not be found liable.

The primary reasoning provided by the Court was that Mr Foster gave the impression to Ms Lumley that the agreement was with him and that he could be personally trusted to ensure the works were completed to a high/reasonable standard. At this juncture, Mr Foster should have documented and made it clear that the contract was with a different entity, which he failed to do.

The key point is to ensure that you obtain a written agreement which clearly identifies the scope of the work, the price and who you are in contract with. In addition, it would be prudent to undertake the following steps before agreeing to the works, no matter how small your project is: –

• Complete thorough due diligence on the contractor, including a review of their financial position, ask for confirmation of appropriate insurance and any reviews of their previous work
• A written contract should be in place at the start of the project, with the correct party, to help limit future disputes that may arise. There are standard form documents, such as the JCT Homeowner Building Contract, which are simple and straightforward to use
• Maintain records of all correspondence you receive from the contractor, including emails and any supporting documentation, such as a brochure, proposed plans, and invoices
• Seek early independent legal advice where required

For more information or advice on your position, please contact Andrew Dickinson (0113 225 8811 or [email protected]) or your usual Chadwick Lawrence contact.