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Oh no - not more letters of intent I can almost hear the groans but hope for sighs of relief when I say that this case has nothing to do with adjudication or main stream construction. The case is Skanska Rashleigh Weatherfoil Ltd -v- Somerfield Stores Ltd in the Court of Appeal. As an aside, we are reminded by the appellant's name of the amount of take over/amalgamations which have been taking place - its not just the corner shop which is disappearing. Somerfield, one of the smaller of the major supermarket chains, own a large number of stores throughout the country. All of these stores require on running maintenance and repair. Somerfield decided to let a number of term 'Facilities Management' contracts. Skanska quoted and Somerfield decided to appoint them for a particular package, comprising a number of stores in three regions. The final contract would be complicated but the maintenance and repair was needed straight away. Somerfield used a letter of intent which included the term 'While we are negotiating the terms of the agreement, you will provide the services under the terms of the contract from ….. to …. ' Disagreements arose and ended up in court. In particular, the court had to decide on what the term mentioned above actually meant. At first instance, the judge gave a restricted interpretation, that the terms of the 'contract' were only incorporated into the letter of intent to the extent necessary to define 'the services'. In this, the judge had directed himself in accordance with the approach set out in Mannai Investment Co -v- Eagle Star Life Assurance [1997] and in Investors Compensations Scheme -v- West Bromwich Building Society [1998]. The Court of Appeal came to the conclusion that all of the terms of the contract were incorporated except where in conflict with the letter of intent - in other words, everything applied and ambiguities would be settled in favour of the letter of intent. This case is of general significance as I believe that it is indicative of the current thinking of the Court of Appeal - applying the wide interpretation. As a decision of the Court of Appeal it has significance but the binding precedent (if any) is not easy to identify. Peter Horne |
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