TABLE OF CONTENTS
Solution 01 ...................................................................................................................................... 2
Solution 03 ...................................................................................................................................... 4
Solution 04 ...................................................................................................................................... 6
Solution 06 ...................................................................................................................................... 8
CONCLUSION ................................................................... Ошибка! Закладка не определена.
BIBLIOGRAPHY ......................................................................................................................... 10
Solution 01
a) Letters of intent are in different forms, such as expressing hope, ensuring no legal
consequences and also to pre-tell the contract to agree to it, while some present contracts occur
in between the information in the contract1. The letter of intent is generally a document which
presents, the employer’s statement to entering a contract with the contractor for a work to be
done later or the instructions or authorization for the contractor to start mobilization work.
When considering any problems created by the “letter of intent” can be stated as below. The
main problems created by the letter of intent is due to the misunderstanding of the content by
the lawyers or the users2. It creates problems such as:

The parties of the contract may work according to their own assumptions which are not
similar at all. Both of them think they work according to the properly signed and approved
contract, but the original document may still have pending completion and under
negotiations3. According to the case of Walford v Miles, negotiations should prevent a
contract coming into being. It further states that no legal content is relevant for an
agreement to negotiate.

Another problem that may be created by letter of intent is that the parties of the contract
may not know on what terms and conditions are applied in the contract4. In the case of RTS
V Molkere, the parties have initiated a project without proper contract but with a letter of
intent which should have expired. Finally, the decision came as “The different decisions in
the courts below and the arguments in this court demonstrate the perils of beginning work
without agreeing the precise basis upon which it is to be done. The moral of the story to is
to agree first and to start work later”.

Next problem is that the temptations for a conclusion of a formal contract are not enough
to create any distractions for the project and results in the termination of the negotiations.
As in the case of HHJ Coulson in Cunningham v Collett5, a risk is there for the failure of
the agreement to create a full building contract and further, if no agreement is created, no
1
HHJ Humphrey Lloyd QC said, in ERDC v Brunel University [2006] EWHC 687 (TCC)
Fontaine,M and De Ly, F (2009). Drafting International Contracts. Martinus Nijhoff
3
Walford v Miles, [1992] AC 128, HL.
4
RTS Flexible Systems Ltd v Molkerei Alois Müller GmbH & Co KG [2010] UKSC 38, Lord Clarke
5
HHJ Coulson QC, Cunningham v Collet & Farmer [2006] EWHC 1771 (TCC)
2
main contract will be created too. “It seems to me that that is an inevitable risk of any letter
of intent which creates respective rights and obligations, no matter how carefully it is
drafted”.

Another problem created is that, the employer may get an illusion that he will be benefitted
by the early start of the project (McGuiness, 1998).
b) Effective drafting of the letter of intent may drove away these problems and drawbacks. For
effective drafting, certain provisions should be made with the letter of intent. They are as
follows.
1. Certainty: Ensure certainty by including essential terms in it which are compulsory to
enforce the contract without them. In the case of Cunningham v Collett6, the judge
recommended that a letter of intent should only be sent when the following terms are
agreed:

Dates of commencement and completion,

Terms of the contract

Work scope

Price.
2. Incentives: Further, three separate limits are used in the letter of intent in terms of work
scope, money and time. The City of London Law Society’s Standard Form Letter of Intent7
provides for following three limitations.

Limit on work

Limit on employer’s liability for costs

Limit on time
3. Intention
The letter of intent should not: marked as “subject to contract”, refer negotiations or entering
of a formal contract in a standard form.
6
7
(A Firm) (TCC) [2006] EWHC 1771 (TCC)
Available from the City of London Law Society website
Solution 03
A contract administrator means the responsible party of the client with two main responsibilities
in a contract. One is to act as the responsible agent of the employer and the other advantage is to
having the judicial capacity which is mostly apparently given the right to administrate the justice.
Considering the first role: in any case the administrator was unable to meet any provided
obligations as in the main contract, the employer needs to bear the responsibility. There includes
provision of any information and issuing any instructions.
The other important role is to maintaining the main contract on line by making relevant decisions;
the decisions must be in the main contract as it is. As concluded in the case of Devlin LJ in Minster
Trust Ltd v Traps Tractors Ltd8, the role is “intended to embody a decision that is final and
binding on the parties”. Further, in the case Sutcliffe v Thackrah9, Load Reid stated about the
duties of the architect as the contract administrator to exercise due care and also to fairly reach the
decisions by balancing both the client and the contractor.
But on the other hand, the contract administrator cannot go beyond her authority and as example,
she would ask for due permission before signing any contract, make any changes in the contract
or to terminate the contract. When the administrator goes beyond her authority, the parties can
refuse complying, by following Stockport MBC v O’Reilly10 they can refuse to pay and also the
partners can agree on varying the contract separately. But if the employer knew about the decision
taken by the administrator, the administrator is treated an authorized person and the employer pays
the loss to the contractor. In such case, as in Sika Contracts v Gil & Closegen Properties11, the
contract administrator becomes personally liable for the cost.
During construction, the contract administrator has duties relevant for the identification of visible
defects before completion. Therefore, in any contract the powers are set out for the administrator
such as having the power to issue instructions to require the removal from site of work or materials
8
[1954] 3 All ER 136
Amec Civil Engineering Ltd v Secretary of State for Transport [2005] EWCA Civ 291
10
[1978] 1 Ll Rep 595
11
(1978) 9 BLR 11
9
not in accordance with the contract (JCT 2011 SBC clause 3.18.1) or other instructions as
appropriate (JCT clause 3.19).
In another case, considering the role of a contract administrator on the completion of a contract,
the administrator should know what the contract states on the completion. If the provided definition
is not clear enough, it provides the contract administrator the power and authority to act. If the
ractical project completion is enough, the administrator can provide a letter mentioning for a proect
completion, but no any guarantee is provided for a third party on satisfactory standards and
therforethe administrator does not intend the third parties to rely upon the issued letter.
If any time extention to be provided for a contract, the administrator should have information
confirming, if there is an event happening which causes the project a delay, or whether the delay
is caused by th proect contractor. As in the case of The Royal Brompton Hospital NHS Trust v
FA Hammond12, it was confirmed that the delay of issuing any information or drawings within
the schedule can not be considered as a rason to delay the completion of a contract.
In any case, the role of a contract administrator is to approach the process with logically analysis
the impacts of any event by the contractor as stated in the case of John Barker Construction Ltd
v London Portman Hotel Ltd13, mathematically calculated assessment on time required for various
items, properly applying provisions as in the contract and finally reasonable and logical allowance
on the delay and the corresponding item.
Further, as in the case of Dyson J in Henry Boot v Malmaison14, contract administrator is not
precluded when considering any effects by an event in determining whether it make any delay for
works which are beyond completion. As the contract administrator can make a proper assessment
on delaying the completion, she does not have any authority to bring the completion date any
forward.
12
(No. 7) (2001) 76 Con LR 148
(1996) 83 BLR 31
14
(1999) EMHC 1773
13
Solution 04
Liquidated damages are used by a party of the contract when the actual damages are difficult to
prove, even when they are actually happened (School, n.d.). It is normally a sum of money which
is fixed in a contract in order to be paid in a breach. The amount is a fair estimate on probable
consequences of breach (University, 1991) The approach of the courts to liquidated damages
clauses, once viewed with caution if not open distaste, has become increasingly favorable and now
better reflects commercial realities15.
When discussing about the completion of a contract, it means the completion of all work and
further addressing all defects, so that liquidated damages are not further provided as stated in the
case of Judge Newey in Emson Eastern v EME Developments16.
As discussing on the extension of the time period of the contract also, liquidated damages plays a
great role as there is a misunderstanding as it benefits the contractor to reduce the exposure of
liquidated damages by giving more time to complete the project. Further, there is a legal problem
which occurs considering the extension of time. In the contract, the stated damages should be
therefore a genuine pre-estimate done as the result of the delay incurred by the employer. But if
the contractor is able to prove that any penalty should be given for the damages, it avoids the
deductions which happens automatically. In that case, the employer has to prove the losses he
encountered and recover the damages by presenting in a court.
Considering the contractor remedies, as in the case of City Inn v Shepherd, even if the
[contractors] were entitled to an extension of time to resist liability for liquidated and ascertained
damages, they were not automatically entitled to prolongation costs for an identical period17. In
the case of Multiplex Construction (UK) Limited v Honeywell Control Systems Limited18
disagreed with the decision of the Supreme Court case of Gaymark Investments Pty Ltd v Walter
Construction Group Ltd19 and concluded to held that a provision of a notice was not absolute and
setting of time had not been large.
The prevention principle after Multiplex v Honeywell’, SCL paper
(1991) 55 BLR 114
17
[2010] at [59]
18
(No.2) [2007] EWHC 447 (TCC)
19
(2005) 21 Const LJ 71. Supreme Court of Northern Territory of Australia
15
16
When delaying claims also, liquidated damages are accounted. For claiming for the breach of the
contract, causation of damages is taken into account and damages which are reasonably
foreseeable and arising naturally as a result of the breach are considered as instances for claiming
for breach of contract. When considering the recovery, the contractor cannot recover twice for the
same loss20 the choice of the contractor does not affect for the amount of recovery. According to
the court in Wraight Ltd v PH & T21, grounds are not relevant for direct losses or determining any
damages caused to contractor.
The court decides any claim is acceptable in instances such as the responsibility of the employer
is eliminated on any loss and expense22, proved at a trial any link between event and the claimed
money and finally, determination of impossible circumstances 23
Below given are some cases regarding liquidated damages and penalties by the court. In the case
of Philips Hong Kong Ltd v A-G Hong Kong24, Lord Wolf stated that “the court should not adopt
an approach to provisions as to liquidated damages which could…defeat their purpose.” In the
case of Azimut-Benetti v Healey25, The High Court held that there can be a half-way house, where
the sum represents neither a genuine pre-estimate of loss likely to be suffered from the delay, nor
a penalty. Also in the case of Temloc Ltd v Errill Properties Ltd26, LADs provision was marked
as ‘n/a’ and on the facts this was consistent with the parties’ agreement that no damages,
liquidated or unliquidated, were to be payable for late completion. Finally, as in the case of Alfred
McAlpine v Tilebox27, the rule about penalties is an anomaly within the law of contract, the courts
are predisposed and also according to that case only four cases out of all were struck down for
penalty.
20
Temloc Ltd v Errill Properties Ltd (1987) 39 BLR 30, CA
Wraight Ltd v PH & T (Holdings) Ltd 1968 13 BLR 26
22
John Doyle v Laing [2004] ScotCS 141
23
London Borough of Merton v Stanley Hugh Leach Ltd (1985) 32 BLR 51
24
Philips Hong Kong Ltd v The Attorney General of Hong Kong Co (Hong Kong) [1993] UKPC 3a
25
Azimut-Benetti Spa (Benetti Division) v Healey [2010] EWHC 2234 (Comm)
26
(1987) 39 BLR 30
27
Alfred McAlpine Capital Projects Ltd v Tilebox Ltd [2005] EWHC 281 (TCC)
21
Solution 06
Mediation means the collaboration of a neutral person in promoting the communication between
two disputant parties. It starts when the negotiation fails or when a mutual agreement is needed
between two disputant parties before staring any negotiation. When deciding the amount of costs
in accordance with Part 44 of the Civil Procedure Rules, mediation is considered effectively
important as the penalties may be used by the court for unreasonable parties by limiting recovery
of legal costs.
When considering any differences between the ADR methods such as mediation with litigation
methods, mediation methods are future-oriented and it aims at determining the interests of the
parties. Further, it is flexible and less structured than litigation procedure. Further, the third party
and the two main parties are voluntarily articipating and at any stage of the process, any arty can
withdraw form the process, if it is uncomfortable for that party. Further, when considering
advantages of mediation over other ADR method, the significant points are: wide range of issues
and solutions can be discussed and it helps the two main parties to avoid future disputes that will
occur in the future. Further, the process is confidential and the neutral third party is normally
skilled and provides successful solutions considering all possibilities.
In mediation, the most important aspect is the timing. As in Coulson J in Nigel Witham v Smith28,
both parties should know of the details of the claim and the relevant response before incurring the
costs because settlements are unable to be done after having any costs. Further, the mediation
process is private and confidential and it is without prejudice.
But, although it is an effective method, the court does not penalize for not attending for mediation
process in very few instances as in Hurst v Leeming29. The powers of the court for costs under
Part 44 of the CPR provides a connection between mediation and litigation. In the case of Halsey30
in The Court of Appeal, the reasons and the methods for using the powers of the court to settle the
disputes are addressed as: not contravening the article 6 of Human Rights Convention by
28
[2008] EWHC 12
[2001] EWHC 1051 (Ch)
30
As set out by the Court of Appeal in PGF v OMFS, [2013] EWCA Civ 1288
29
compelling the parties to mediate using the powers, paying the costs by the unsuccessful party as
it refuses to attend to ADR under no reasonable reasons and etc.
There are several cases where the mediation was considered as an effective ADR method such as
the case of Dunnett v Railtrack plc31. There, the death of several horses has happened as the door
was kept open there, mediation was proposed as the best process to address this problem but the
Rail track refused this. There, although the rail track won the appeal, the costs order was not made
against the unsuccessful horse owner. Likewise, the court has encouraged the public to use the
mediation process along with a skilled mediator who would resolve the differences between the
two parties and finally achieving a positive result.
Further, as in the case of PGF SA v OMFS32, considering the cost sanctions, the court stated that,
being silent when inviting for mediation is unreasonable and failure to provide fair reasons destroy
the objectives or ADR processes. Moreover, even one party has fair reasons to refuse any invitation
to follow an ADR method, a serious invitation should also be sent to engage for an ADR process
Further, considering the economic considerations also, following an ADR method can be
considered as an appropriate way of emphasizing the message by a sanction, as it is the task of the
court to encourage mediation process.
31
32
[2002] EWCA Civ 303 Court of Appeal
[2013] EWCA Civ 1288
BIBLIOGRAPHY
Cases:
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Alfred McAlpine Capital Projects Ltd v Tilebox Ltd [2005] EWHC 281 (TCC)
Azimut-Benetti Spa (Benetti Division) v Healey [2010] EWHC 2234 (Comm)
City Inn v Shepherd [2010] at [59]
Coulson J in Nigel Witham v Smith [2008] EWHC 12
Cunningham v Collett (A Firm) (TCC) [2006] EWHC 1771 (TCC)
Devlin LJ in Minster Trust Ltd v Traps Tractors Ltd [1954] 3 All ER 136
Dunnett v Railtrack plc [2002] EWCA Civ 303 Court of Appeal
Dyson J in Henry Boot v Malmaison (1999) EMHC 1773
Fontaine,M and De Ly, F (2009). Drafting International Contracts. Martinus Nijhoff
Gaymark Investments Pty Ltd v Walter Construction Group Ltd (2005) 21 Const LJ 71.
Supreme Court of Northern Territory of Australia
HHJ Coulson QC, Cunningham v Collet & Farmer [2006] EWHC 1771 (TCC)
HHJ Humphrey Lloyd QC said, in ERDC v Brunel University [2006] EWHC 687 (TCC)
Hurst v Leeming [2001] EWHC 1051 (Ch)
John Barker Construction Ltd v London Portman Hotel Ltd (1996) 83 BLR 31
John Doyle v Laing [2004] ScotCS 141
Judge Newey in Emson Eastern v EME Developments (1991) 55 BLR 114
London Borough of Merton v Stanley Hugh Leach Ltd (1985) 32 BLR 51
Multiplex Construction (UK) Limited v Honeywell Control Systems Limited (No.2)
[2007] EWHC 447 (TCC)
PGF SA v OMFS [2013] EWCA Civ 1288
Philips Hong Kong Ltd v The Attorney General of Hong Kong Co (Hong Kong) [1993]
UKPC 3a
RTS Flexible Systems Ltd v Molkerei Alois Müller GmbH & Co KG [2010] UKSC 38,
Lord Clarke
Sika Contracts v Gil & Closegen Properties (1978) 9 BLR 11
Stockport MBC v O’Reilly [1978] 1 Ll Rep 595
Sutcliffe v Thackrah Amec Civil Engineering Ltd v Secretary of State for Transport [2005]
EWCA Civ 291
Temloc Ltd v Errill Properties Ltd (1987) 39 BLR 30, CA
The Royal Brompton Hospital NHS Trust v FA Hammond (No. 7) (2001) 76 Con LR 148
Walford v Miles, [1992] AC 128, HL.
Wraight Ltd v PH & T (Holdings) Ltd 1968 13 BLR 26
Books and other Documents:

McGuiness, J. B., 1998. The Effects of Letters of Intent, s.l.: CIOB.

School, C. L., n.d. Cornell Law School. [Online]
Available at: https:/www.law.cornell.edu/wex/liquidated_damages
[Accessed 07 05 2020].

University, O., 1991. A Concise Dictionary of Law. s.l.:Oxford University Press.