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The man standing centre stage asked the audience: 鈥淒id the subcontract come into existence?鈥� Those from Laing O鈥橰ourke yelled: 鈥淥h yes it did.鈥� Those from Hayden Young yelled: 鈥淥h no it didn鈥檛.鈥� Titans at loggerheads. Two enterprises that needed each other trying to find a way of living together. Two firms trying to get into contract spent two years trying and still didn鈥檛 make it.

Meanwhile, Hayden Young got on with the work and Laing O鈥橰ourke paid. In the end they fell out and nobody could work out whether they鈥檇 agreed the rules of the game.

Coventry City football club played its first game at the new Ricoh arena on 20 August 2005. Practical completion was achieved the day before. Mind you, this Laing O鈥橰ourke project was much more than just a soccer venue 鈥� it had a hotel, a swish casino, exhibition halls, banqueting suites and a fitness fanatic鈥檚 pleasurama. Hardly surprising that the talents of the M&E engineering folk at Hayden Young was vital.

So, why all the fuss about the wedding of main contractor and subcontractor? Well, unlike many a subcontractor, Hayden Young is big enough to share risk, so it鈥檚 fair for the likes of Laing O鈥橰ourke to strike a deal that means that if everything goes belly-up at the hands of its specialist subcontractor, then it would pay up to the main contractor and the injured customer.

Living and working together on site? Dear me, yes. Hammering and screwing? Dear me, yes. Come the date of the first football match they had practical completion but still had not wed

For Laing O鈥橰ourke it was essential that the deal would pass on millions of pounds worth of risk and for Hayden Young it was essential that it was not exposed to that risk. That鈥檚 sound commercial behaviour. It鈥檚 not just big contractors who look carefully at the smallprint nowadays. Many a minnow baulks at tough terms that would blow their outfit out of the water if the blame game gets under way. Even tiddler-sized outfits attempt to limit liability proportionate to the value of the contract. Anyway, Hayden Young said it would do the job only if liability were capped.

The crucial word in all this is 鈥渆ssential鈥�. Hayden Young sent a bid to Laing O鈥橰ourke in June 2003, but soon thereafter Laing O鈥橰ourke tempted the M&E boys to accept liabilities, none of which were out of the ordinary, but none that Laing O鈥橰ourke expected to be accepted lying down.

So they toed and froed. They wrote, they met, they phoned, they wooed. A year into all this wooing (yes, a whole year) Hayden Young commenced work. Yet the toing and froing continued. Laing O鈥橰ourke prepared a new set of contractual documents, which Hayden Young said it was unable to sign. Again the word 鈥渆ssential鈥� popped up. There were essential conditions both parties needed to hammer out before this contract became live.

Meanwhile, no wedding. Living and working together on site? Dear me, yes. Hammering and screwing? Dear me, yes 鈥� but still no wedding. Come the date of the first football match in August 2005, they had practical completion, but had still not wed.

Lawyers call these conditions 鈥榚ssential terms鈥�. The snag is, the word 鈥榚ssential鈥� can be ambiguous

Credit: Simone Lia

Mind you, when the question 鈥淒id the subcontract come into existence?鈥� was asked and we learned no, it was damn near another three years before the answer was given in the High Court. Mr Justice Judge Ramsey, the judge in the case, had to decide what the conditions were in giving life to the contract and whether these were agreed as a matter of law. Lawyers call these conditions 鈥渆ssential terms鈥�. The snag is, the word 鈥渆ssential鈥� can be ambiguous. Sometimes an ingredient is essential to make a contract work. Sometimes one party makes a particular ingredient essential when bidding. An essential term might be an agreement as to a start or finishing date, or signing the contract documents as a specific bundle. Got the idea?

Laing O鈥橰ourke said certain matters were not essential and other matters were, and had been agreed. Hayden Young said not so.

In the end the judge said the subcontract was not concluded. Actually, he said 鈥渘o subcontract was concluded鈥�. Puzzled? The two parties had at least agreed that Hayden Young would get on with the work until one or the other said enough, and they let that go on for a year. Sounds like a contract to me, but what do I know. Be that as it may, Hayden Young will be entitled to reasonable remuneration under quantum meruit 鈥� 鈥渁s much as deserved鈥�. And if there鈥檚 no quarrel about how much is deserved, I鈥檒l eat my hat! Tony Bingham is a barrister and arbitrator