Can I adjudicate if I'm working on a letter of intent?
Often, yes, but only if the letter is a construction contract.
Updated: . By Jack Butler-Kettle, Construction Claims Consultant.
The answer
Under section 108 of the Housing Grants, Construction and Regeneration Act 1996, a dispute under a construction contract can go to adjudication at any time. A letter of intent that lets construction work start and says how it will be paid is usually one. Since October 2011, the contract need not be in writing for the Act to apply in England and Wales. But if no contract was formed at all, there is nothing to adjudicate under. A claim for a reasonable sum for work requested and done then goes to negotiation or the courts. Which side of the line your letter sits on is a question for your solicitor. Ask before you refer. If the adjudicator had no power to decide the dispute, the decision will not be enforced.
Example
Illustrative example. The scenario and figures are invented.
The facts
A subcontractor has worked past an expired letter of intent. It has valued the balance it is owed and wants to refer the dispute to adjudication.
What happens
- The subcontractor asks its solicitor whether the letter, and the work after it expired, sit under a construction contract.
- The solicitor advises that the letter was a construction contract and that both sides' conduct extended it, so the work falls under it.
- The subcontractor frames the referral around the letter, with its valuation as the sum claimed.
The outcome
The adjudication goes ahead on a basis the subcontractor has already checked, not one the main contractor can knock down after the decision.
Where the work is unpaid, our Letter of Intent Claim values it and runs the negotiation, or the adjudication where a route exists.