Forrest decided to rebuild their house in Bothwell, Scotland. Fleming was the contractor. During an adjudication Forrest claimed the adjudicator did not have jurisdiction as there was not a contract between Forrest and Fleming. The adjudicator decided there was a contract, and awarded that Fleming be paid £112,598.75 plus interest.

Forrest did not pay Fleming. Forrest contended that the contract was between Fleming and KWF Homes Ltd (“KWF”), a company of which Forrest were the only shareholders and directors. At first instance, the judge found that there was a contract between Forrest and Fleming, as reported in our previous case note on enforcement.

On appeal Forrest submitted that there was not a contract between Forrest and Fleming because:

1. When properly analysed, a letter of 20 December 2005 which stated “We have been authorised by the client KWF Homes Limited… to accept tenders submitted by you…” or alternatively an oral request after a site meeting when Forrest asked Fleming if it would be happy if KWF was its client, should be construed as a counter offer and by starting on site without rejecting it Fleming had accepted that offer. Payments having been made by KWF confirmed this and the judge placed too much weight on a point about an F10 form indicating that Forrest was the client, as this was only a technical matter.

2. Alternatively, it was clear from the 20 December 2005 letter and what was said after that meeting that Forrest could not reasonably be taken to have intended to contract as individuals. Therefore there was no consensus as to parties and no contract.

These arguments were rejected as the letter could not be considered a counter offer as it did not come from the parties to whom the original offer was addressed; Fleming was entitled to treat the reference to KWF (that had never been mentioned before) as a mistake and need not have acknowledged it.

Additionally the informal discussion did not amount to a counter offer as there was no indication that Forrest would be unhappy to proceed unless KWF was the client. In those circumstances Fleming was entitled to treat this as a suggested change to the parties to a contract Forrest were otherwise prepared to enter as employers, and Fleming could continue on the basis that Forrest were the employers unless Fleming accepted this change.

His Lordship also stated that the F10 form should be seen as confirmation for Fleming that Forrest was the employer and Forrest could not underplay the significance of this form.

Finally, payment being made by KWF was not enough to show that it was the employer as it was not unusual for payments to be made by a third party, a fact which both sides accepted.