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Construction Law & Dispute Resolution

1) To consider Chapman's legal entitlement, if any, to receive reimbursement from Anglo for the work already undertaken, it must be recognised that the letter from Anglo's architect, confirming that their tender had been accepted "subject to formal contract" and that their clients wanted work to start on the site in six weeks, could be perceived to be a letter of intent. Therefore, the letter of intent from Anglo could, in the circumstances, be considered to be a conditional contract, according to the decision in British Steel Corporation v. Cleveland Engineering Co, so that Chapman were right to start work and expect reimbursement for the resources expended in doing so. However, this must also be contrasted with the decision in Regalian Properties Plc v. London Dockland Development Corporation because whilst one party, in British Steel Corporation v. Cleveland Engineering Co, requested the other to perform services and supply goods under the expected contract, the costs Regalian sought reimbursements for arose from seeking to obtain and then perform the contract.

Nevertheless, if it is accepted that Anglo's letter was a letter of intent and, thus, a conditional contract then, where Anglo ousts Chapman from the site or otherwise shows an intention not to be bound by the contract, Chapman may claim the value of the work done and damages, on the basis of the decision in Bank of Boston Connecticut v. European Grain & Shipping Ltd. Moreover, Chapman may also be able to claim payment at contractual rates or prices for work not already included, illustrated by the decision in Felton v. Wharrin, along with a reasonable sum assessed and payable as a contractual entitlement. But, of course, Chapman also needs to be advised that Anglo will be entitled to an abatement of the sum otherwise due if the work that already been done is defective in any way, according to the decision in Slater v. CA Duquemin Ltd.
Furthermore, by way of conclusion, in effectively advising Chapman, any action taken with a view to recognising their legal entitlement may also lead to a claim for specific performance of the contract where it should not have been terminated, illustrated by the decision in Palmer v. Lark and Beswick v. Beswick. Therefore, with this in mind, it must be recognised that the doctrine of frustration has evolved, illustrated by the nature and scope of the decision in J Lauritzen AS v. Wijsmuller BV, The Super Servant Two. On this basis Chapman needs to be advised that the courts may elect to give effect to the demands of justice where injustice would result by looking to effectively 'kill' the contract and discharge all of the parties from further liability under it within very narrow limits due to some outside event or extraneous change of situation without blame or fault on the side of the party seeking to rely upon it - i.e. in this case in view of Anglo's change of ownership brought about by their takeover by another company.

Moreover, in advising Maxwell, it is also to be recognised, on the basis of Rule 44.3 of the CPR 1998 that the conduct of both parties will be taken into account at all stages during proceedings and will be taken into account when the court in question comes to awarding costs. As a result, in view of Maxwell's conduct, they need to be advised the court may move heavily in favour of the Whitworths' in this respect for their having inflated the costs of proceedings unnecessarily. Such a view arises in view of the fact that it is also important to recognise the fact that mediation, as part of the ADR process, is meant to be non-adversarial. Therefore, with this in mind, it is actually supposed to encourage communication, before a third party, with a view to reaching an agreement that is in the best interests of all concerned without having to resort to the process of litigation to resolve their dispute, whilst the decision in Halsey v. Milton Keynes General Trust NHS also discussed whether the court had the power to order parties to submit their disputes to mediation.

However, by way of conclusion, in looking to advise Maxwell, "to oblige truly unwilling parties to refer their disputes to mediation would be to impose an unacceptable obstruction on their right of access to court" under Article 6(1) of the European Convention on Human Rights 1950. Moreover, even if this were not the case, the court stated it would be "difficult to conceive of circumstances in which it would be appropriate to [order unwilling parties to refer their disputes to mediation]". Therefore, in looking to effectively advise Maxwell, it must be recognised that, whilst the judiciary should always look to explore the reasons for any resistance to ADR procedures, where a party, such as Maxwell, remains "intransigently opposed to ADR ... it would be wrong for the court to compel them to embrace it" the option is still available for them to go to court where it suits the parties in question - in spite of the fact that its features directly addressed the problems that had been felt by the business community.

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