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Well, you can see how it can happen, writes Kim Franklin.

Two bright young things acquire a smart house in Knightsbridge. They want to do it up on a grand scale. She has a good eye for design and is not fazed by the builders.

He provides the wherewithal to fund the vision. He deals with the contractual side.

She deals with everything else.

They start off by engaging a Polish contractor. There is no specification to speak of and limited supervision by the contractor's principal. Instead, she provides all of the management required and keeps the work going on a day-to-day basis. He pays cash as and when required.

There is no completion date.

Nine months on and £147,000 later, the couple are in despair. They have over-spent. The works are incomplete and defective, perhaps seriously so. The contract ends in acrimony.

Time to take stock, you might think, and to reconsider their overall strategy. Indeed this is what they did, after a fashion. They approach the contractor who is installing their new conservatory and take him down to the local coffee shop. The contractor outlines what is required and mentions the sum of £100,000.

He agrees to carry out the works at cost plus 20 per cent.

They shake hands.

However, this contract does not go well either. The work, which takes several months longer than anticipated, is defective. It costs more than the anticipated £100,000.

The bright young things refuse to pay, and the builder sues them for his money.

This is the sorry tale of Monavon Construction Ltd v Davenport (Judgment 22.05.06).

The judge decided various contractual issues on the contractor's claim and more than 60 items of defective work alleged by the Davenports. The judge concluded that, as there was no precise scope of work or defined contract period, there could be no concluded or enforceable agreement as to price. Such drawings as did exist were incomplete. There was no defi nitive specification and no definition of the remedial work required to correct previous defective work. Even if Monavon had said 'a maximum of £100,000' as the Davenports alleged, an objective bystander would have seen it as no more than a guide price, intended to persuade the Davenports to enter into the open-ended contract that they did.

The judge went on to find that much of the work carried out by Monavon was defective.

In the basement, in particular, the contractor had failed to achieve a damp-proof barrier between the floor screed and the plasterwork above, which had been left by the previous contractor. In the final analysis the cost of remedial works extinguished the builder's claim.

This case is evidence, if it were needed, of the pitfalls of embarking on building works on the strength of a chat over a cup of coffee and a handshake.

But there is an added sting in the tail: the judge described the outcome as 'a score draw' and decided that the Davenports, though successful, should bear their own costs.

Kim Franklin is a barrister and chartered arbitrator at Crown Office Chambers, London. Visit www.crownofficechambers. com

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