The Employer, Pro-Duct (Fife) (“Pro-Duct”) asked Specialist Insulation (“Specialist”) to provide a quote for the supply of ductwork. Specialist provided a quote, stating that the quote was subject to its standard terms and conditions which could only be altered by its written agreement. Those terms did not include any reference to adjudication.

Pro-Duct then issued a purchase order and enclosed with it a document describing the nature of the contract being entered into and a schedule of conditions (the “Purchase Order”), which included an adjudication clause. The Purchase Order was addressed to a non-existent company and included a space for Specialist to sign to accept its terms, which it did not do.

Specialist supplied the ductwork. A dispute over payment arose and Specialist referred the dispute to adjudication, relying on the adjudication clause in the Purchase Order. Pro-Duct disputed the adjudicator’s jurisdiction claiming the contract was for the supply of goods, and so did not fall within the definition of "construction operations" in the HGCRA 1996. The adjudicator disagreed and reached a decision. Specialist sought to enforce the decision in the Court of Session. Pro-Duct defended the action claiming that the Purchase Order (with the adjudication clause) was not in fact entered into between the parties and the adjudicator therefore had no jurisdiction.

His Lordship held in favour of Pro-Duct. In first determining that an objective approach was required, His Lordship found that Pro-Duct had failed to incorporate its own terms (i.e the Purchase Order) into the contract and as such there was no entitlement to adjudicate. There was nothing to indicate that Specialist was supplying the product pursuant to the Purchase Order and Pro-Duct had accepted the supplied goods without checking that Specialist was accepting the terms of the Purchase Order.

Specialist had also argued that Pro-Duct waived its right to rely on its jurisdictional argument in the proceedings, having not been raised this in the adjudication. His Lordship rejected this argument and was of the opinion that Pro-Duct's position had been consistent throughout, even if the legal ground of challenge had changed.