It may seem an obvious point to make, but before signing a contract it is important to always read the contract carefully to ensure that you ensure your rights and obligations under that contract before you commit to be bound by the contract. If you are unsure, it is always best to take some legal advice. The terms may not be set in stone, and you may be able to negotiate a compromise on some of the more onerous terms. If not, then at least you know what will be expected of you and you can make a judgment call on whether you wish to operate that particular contract on those terms.
The same can apply with repeat contracts; just because you have done business with a company or organisation before doesn’t meant that you can be lazy and not properly read the next contract that is sent out to you assuming it to be the same as all the rest. There is a salutary lesson from a recent case which highlights these points (Dynniq UK Ltd v Lancashire County Council)
This case involved interpreting the wording within a pricing document referred to in a service contract produced by Lancashire County Council. The contractor signed a contract with the Council for the maintenance of traffic signal installations and the construction of new or replacement traffic signal installations.
The contract was based upon a standard construction contract which the person reviewing this particular contract had probably seen a thousand times before. This probably led to that person just signing off the contract without carefully reviewing it. This particular contract however had some additional bespoke provisions added to it which were not standard. It seems that these additional points had been either overlooked, not noticed or not understood by the contractor before the contract was signed.
Inevitably, the contractor and the council fell out about how certain works were to be paid for. The dispute raged on for some time and ended up in Court. The Judge hearing the case however found in favour of the Council saying that the wording of the contract was clear. While it was acknowledged that the Council’s approach to the particular element of work and how it was to be paid for was unusual and out of line with the way in which such works are ordinarily paid for the Judge found that this approach reflected “the clear and unequivocal meaning of the words used in the contract.”
In other words, the relevant provisions were unusual but as they were in the contract which both parties signed, the provisions were binding. The Judge hearing the case heard evidence from both parties and in his Judgment he referred to some of the evidence put before by the contractor whom he said “simply failed to read the relevant provisions, and so simply assumed that this was a standard form contract without these bespoke amendments.”
The practical point here is this: Parties need to be alive to any wording within a contract which changes the “usual” position or standard form approach. Where the effect of such wording is clear – even if included (as here) in the technical or pricing documents annexed to the contract – parties will not be able to rely on what is common practice, if this is contrary to the words used.
Instead, a careful review of these documents should ensure that any provisions which relate to the mechanics of the contract are fully appreciated and considered in the context of the contract as a whole.
For further information about the topics raised in this article, please contact Susan Lewis free on 03303 001103.