British Steel Corporation v Cleaveland Bridge & Engineering Co Ltd by ch3ryl89

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									British Steel Corporation v. Cleveland Bridge & Engineering Co. Ltd [1984] 1 All ER 504 Facts: The defendants sent the plaintiffs a letter of intent stating their intention to place an order for the steel nodes and proposed that the contract be on the defendants’ stand terms (providing for unlimited liability of the plaintiffs in respect of consequential loss from late delivery). The letter of intent requested the plaintiffs to commence work immediately pending the issue of the official contract. The plaintiffs refused to contract on the proposed terms and despite detailed negotiations, no formal contract was concluded. In the meantime, the plaintiffs had gone ahead with the manufacture of the nodes as requested. All but on of the nodes had been delivered but the last one was delayed. The defendants refused to pay and sought damages on the basis that there had been a breach of a binding contract. The plaintiffs sued for the value of the nodes on a quantum meruit basis, contending that there was no binding contract. Holding: As the parties had not reached agreement, it was impossible to say what the material terms were. Since there was no formal contract, the work performed under the letter of intent was not referable to any contractual terms as to payment and performance. However, as the defendants had requested the plaintiffs to deliver the nodes, and had therefore received a benefit at the expense of the plaintiffs, it would be unjust for them to retain that benefit without recompensing the plaintiff for the reasonable value of the nodes. Robert Goff J“By starting work in these circumstances [degree of uncertainty what the material terms of that contract would be], BSC not bound to complete the work.” Therefore there is no binding executory contract. If “no contract was entered into, then the performance of the work is not referable to any contract the terms of which can be ascertained, and the law simply imposes an obligation on the party who made the request to pay a reasonable sum for such work as has been done pursuant to that request, such an obligation sounding in quasi contract or, as we now say, in restitution.”


								
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