An adjudicator had concluded that there was a contract between the parties, proceeded with the adjudication and awarded the claimant £5,762,691.00 plus interest. The defendants sought to strike out the claim on the basis that there was not a contract. The claimant argued that an associate with a firm of quantity surveyors connected with the project had authority to bind the defendant either by express authority, implied authority or ostensible authority. They further argued that the defendant had ratified the contract and was estopped from arguing otherwise.

The key document was a letter of intent of 22 August 2000. That letter stated that further to the negotiations, the defendant intended to engage the claimant subject to the “terms and conditions of contract to be agreed” and the claimant “entering into a formal contract with” the defendant.

The claimant argued that the quantity surveyor had settled all of the terms, and therefore concluded the contract. It was clear that the quantity surveyor had negotiated on behalf of the defendants. The defendants argument was that there was a significant difference between negotiating the terms, and actually entering into the contract. The claimant argued that the quantity surveyor appeared to negotiate the terms without reference back to the defendant which gave the impression that the quantity surveyor could bind the defendants. They recognised that the quantity surveyor did in some instances need to refer back to the defendant in respect of some issues.

HHJ Kirkham considered that reference back in respect of some of the issues meant that there were obviously limits to the quantity surveyor’s authority. In particular, the letter of intent made it clear that the quantity surveyor did not have ostensible authority. This was because the letter envisaged a “two-stage process”. First, the claimant and the defendant were to agree terms, and then as a separate stage there was to be a “formal execution of a contract”. While the quantity surveyor could agree terms, referring back to the employer in some instances, the quantity surveyor did not have the power to execute the formal contract.

Her Honour held that the claimant had no prospect of succeeding with its claim. The requirements of Part 3.4(2) and 24 were met such that the claim was struck out and summary judgment was given in favour of the defendant.