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We examine judgments on an architect's responsibility to produce a scheme within a particular budget, and a case concerning trading terms Legal round-up

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Turner Page Music v Torres Design Partnership

Clients' cost expectations are a constant source of dispute. In this case, Turner had bought the Shepherds' Bush Empire from the bbc in 1993, and Torres won the commission to provide design and professional services in connection with its development as a theatre. Eventually, a building contract was entered into. There was a separate m&e contract and Turner had other work carried out outside these contracts. A final certificate was issued in 1994 for £642,994.22. Turner sued Torres alleging various breaches of duty, but the main complaint was that the work cost £827,000 when, Turner contended, Torres had expressly warranted that the works would be accomplished for a total figure not exceeding £515,000. In a letter confirming Torres' engagement, the managing director of Turner had written: ' . . . cost controls are vital to me. If, during the development works, budgets are likely to be exceeded, I must know instantly. This gives me the opportunity of change/variation to the development within the original time frame, and hopefully budget . . . The final spec will include all the items which will make the venue operable. This will require a lot of input from me. I have enclosed a preliminary checklist for discussion. Tenders must come in on or below your budget figure of £515,000.'

The court drew a number of conclusions from the managing director's letter:

There is no hint in the letter of any earlier warranty or of any term in the contract of engagement relating to the £515,000. It is simply described as 'your budget figure'

It is apparent from the letter that the works were not defined when the letter was written

Not only is it beyond the power of any professional person to guarantee what a tenderer will do, it is the tenderers which must come in below the figure. Turner would know the situation as soon as tenders were opened and before any contract was executed. Even if the architect could be said to have warranted the tender sum, the chain of causation in regard to later events would be broken by Turner's decision to enter into a contract for the works and for the m&e work

In the letter, Turner neither excluded nor treated as a breach the prospect that budgets may be exceeded 'during the development works'. The vital consideration is that the work should be complete `within the original time frame'; Turner is simply hopeful that it remains within budget.

The court proceeded to make the point that, even if the architect did give a warranty about the final cost figure, it was not enough for Turner simply to point to the final cost. It had to bring evidence to show that the difference in cost was a result of the lack of care and skill on the part of Torres. This part of the judgment is of particular interest to anyone who commissions architects, and also to architects themselves, of course. It vividly illustrates the extent to which a court will analyse a letter which may well have been written quite quickly and may not, in fact, properly represent the intentions of its author. The court can normally consider only the words of the contract itself. The moral, as always, is 'think carefully before committing to writing'.

The architect is not responsible for excessive final cost of a completed project nor for producing a scheme within any particular budget figure unless his client has clearly made known his wishes on the matter. Each case will depend on its own facts, but ideally a client should embody his cost expectations in the terms of engagement.

Building Law Information Subscriber Service 1997, issue 21, page 12.

Judgment: 12 March 1997


Poseidon Freight Forwarding Co Ltd v Davies Turner Southern

This case concerned the wrong delivery of goods. The two parties had dealt with each other before and Davies Turner agreed that it would be liable for the loss unless it could show that its standard terms applied. It was argued that a fax incorporated the standard terms, stating at the foot of the page: 'note. The only conditions on which we can transact business are shown on the back.' The back of the page was not faxed and was never sent to Poseidon.

It might be expected that a court would hold that the terms did not apply, because the other party did not know what they were, but some might argue that the note at the foot of the page was enough to put the other party on notice that there were terms which applied and that it should enquire about them.

The court certainly held that the terms did not apply. As to the note, the court said that the reference to the terms was a forceful inference that they were not intended to apply in that instance.

It was also argued that the terms were incorporated into the agreement by course of dealing. The court rejected that too, because this particular contract was different to others which the parties had concluded. For contractual terms to be incorporated by a course of dealing, it has to be established that the same two parties entered into contracts on the same terms on a large number of consecutive occasions. In addition, the contracts must be very similar.

For example, if an architect was engaged on sfa 92 terms by the same client on 15 different occasions to design, say, a petrol filling station on different sites, and on the sixteenth occasion, the architect and his client omitted to execute a proper contract for another petrol filling station, a court would say that the parties' previous behaviour showed that they fully intended to contract again on the same terms, but had merely forgotten to do so.

Trading terms will not apply unless they are made known before the contract is entered into.

Construction Law Digest (1997) series 14 volume 4 page 24

Judgment: 8 February 1996

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