In principle, I can see how this might apply in many situations (though in practice the courts seem most reluctant to imply terms even on the basis of the reasonable bystander test). However, a point I should have made abundantly clear in my summary of the case, but did not, was that, because there was only a finite amount of money which the Department would make available to them for the work, the farmers at all stages intended that the work - however much there was to be done - would be done for a fixed price. It was on this basis that they approached the contractor, and on this basis that the negotiations were conducted and concluded. Indeed, it was on this basis that the farmers at all times proceeded. In these circumstances, since the fixed price was the only basis upon which the farmers intended to contract, there would be no basis for a reasonable bystander to assume that the contractor expected payment above the fixed price.

Complicating the matter somewhat, however, is the undoubted fact that the written contract, although it embodied the fixed price, also contained a clause with a mechanism for charging for extra work: an engineer could certify their necessity and price. No engineer was ever appointed, the mechanism was never operable or operated. Now, the reason why the contract contained the clause was because the contractor's solicitor dug out a standard form contract and had the parties sign it, and the standard form contract contained that clause. One of the virtues of such standard form contracts is that, when they are appropriate, they contain the wisdom of the industry on the proper balance to be struck between the parties (many charterparties and bills of lading are excellent examples of this; so too are standard form building contracts). One of the vices of such standard form contracts is that, when they are inappropriate but applied, they cause havoc between parties. That is what happened here. The contract was entirely inappropriate for the work being done. It was inappropriate not least because it contained a mechanism which was contrary to the intention and agreement of the parties. But their intention and agreement might be seen to come through, nonetheless, by virtue of the fact that they never took the steps necessary to activate that mechanism: they never appointed the engineer to make the determination as to the necessity and value of the extra work. In the end, therefore, I return to my point that, on the facts of the contract as between the farmers and the contractor, there was no basis for liability in contract for the extra work.

Steve went on to comment that

I am not sure what more Eoin wants, when he asks for the "indicia of a contract".

Offer and acceptance, consideration, and intention to create legal relations.

Btu whatever it is, he would surely find it in the pre-contractual negotiations of the parties, a major function of which is to settle which items of work are to be paid for under the contract and which are extras.

Gordon Goldberg, writing in Steve's support commented to like effect:

the failure was by mutual consent; accordingly, there was a variation of the agreement; but the price of the extra work was not fixed by the terms of the variation; and so an undertaking to pay on a quantum meruit was necessarily implied - cf. s. 8(2).

In Cotter, neither the pre-contractual negotiations nor the parties execution of the contract would reach this result, because the negotiations settled that all the work would be paid for out of the fixed price. There could therefore have been no pre-contractual agreement as to extra payment for extra work, nor could there have mutual consent that the agreement be varied, since at all times the farmers intended and expected to pay no more than the agreed fixed price for any and all work done.

Of course, Steve's analysis would be applicable in cases where negotiations were conducted under the shadow of a standard form contract which both parties intended to enter, since all of the standard form building contracts contain extras clauses. However, in those cases where the issue of extras is not dealt with at all in the precontractual negotiations and not included in a specially drawn up contract (either because it is too small for a standard form, as was the case in Cotter, or because it is a case in which each issue is sought to be decided in advance but this issue is simply not considered), then a contract analysis based on what the parties actually agreed will not supply answer. In these circumstances, a non-contractual might very well be appropriate, and that non-contractual quantum meruit could be directed to reversing an unjust enrichment. In which case, the analysis would follow along the lines sketched by Ewan McKendrick in his essay in Cornish et al eds Essays for Jones and discussed by me in my last email on the point.

Finally, as to Gordon Goldberg's support of Steve's message, even though the Sale of Goods Act would not apply to building contract cases, the analogy is important if only because Chalmers was, to a very large extent, codifying a century's worth of common law, and many of the cases so codified contained principles which were not confined to the sale of goods context. The underlying common law principles could therefore be applicable to building contracts cases. However, even assuming that

the farmers could not take advantage of their own wrongful failure to appoint an engineer by claiming that it constituted a frustration of the agreement to pay for the extra work; and so they were regarded as having repudiated the agreement and thus liable on a quantum meruit or in damages - cf. s. 9(1) and (2).

or that

the failure was a genuine frustration, which the parties chose to ignore; and so the farmers were liable on a quantum meruit - cf. s.9(1)

However, the issue between Steve and myself is not whether the farmers ought to have been liable on a quantum meruit (we both agree that the farmers ought to have been made liable to pay a reasonable price), but whether that quantum meruit is contractual (as Steve has it) or restitutionary (as I argue).

Best from Dublin

Eoin

EOIN O'DELL
Barrister, Lecturer in Law, Trinity College, Dublin 2, Ireland
(353/0 1) 608 1178 (w) 677 0449 (fx); (353/0 86) 286 0739 (m)
(All opinions are personal. No legal responsibility whatsoever is accepted.)