The public perception of the requirements for a binding contract is consistently erroneous. Most people believe that there must be a document and that it must be signed by both parties. If it is decorated with red sealing wax and green ribbon so much the better. In the main they are surprised to learn that only a contract for the sale of land needs, by law, to be evidenced in writing, that binding contracts can be, and frequently are, made by exchange of fax or over the phone, and that they daily contract with suppliers and carriers when they buy a newspaper before catching the tube.
This misapprehension is carried over onto the building site. The corollary of 'no work without written order' is 'no payment without receipted order'. Some contractors, like the public, are surprised to learn that they are obliged to pay the plasterers they called onto site and kept busy for six weeks despite the fact that no written order was sent or acknowledged.
In the early stages of court proceedings commenced by the out-of-pocket plasterers they learn that even if there is no contract, the terms of which can be identified, whether agreed orally or in writing, the law of restitution will come to the rescue of those who carry out work pursuant to the request of others and entitles the providers to a reasonable sum or quantum meruit for their efforts.
What is a reasonable sum is decided by the court with the help of some expert evidence. It is not unusual for fairly sizeable claims for payment to brought on this basis, because the parties had not agreed vital terms as to payment and time for performance and therefore had no contract.
The fact that construction work is frequently carried out in the absence of contract, would appear to exclude large sections of work from the New Construction Act which only applies where there is a contract in writing. The act goes on to define what it means by a contract in writing and its proposed definitions stretch the imagination somewhat. They include:
1. Unsigned written agreements and agreements made by exchange of written communications. These provisions do not break new ground.
2. Oral agreements which are either evidenced in writing or where the parties have agreed with reference to written terms. Therefore, a telephone conversation along the lines of: 'Yes, we'll do those works for you. ok, jct Minor Works is fine,' would create a contract in writing.
3. Oral agreements recorded either by one of the parties or by a third party with their permission. Incidentally, the record need not be in writing, it can be 'recorded by any other means'.
4. Oral agreements which are alleged in written submissions in proceedings and not denied by the other party in their response. This one is frankly bizarre. The suggestion seems to be that the exchange of formal documents in proceedings in which the existence of the contract is admitted should amount to a written record. The point that you do not get off the starting block for adjudication proceedings unless you have a written contract seems to have been missed. Adjudication after litigation or other proceedings is not what is envisaged.
If the meaning of these provisions is unclear, the message certainly is not. Most of the written contracts defined by the act are oral agreements of which some record has been kept. It seems likely therefore that any oral exchanges, however informally agreed, will be subject to the act, and its adjudication and payment provisions, so long as they are jotted down in a notebook, captured on video or not denied in the pleadings.