Every so often a case comes along that perfectly illustrates the risk of not getting your commercial contracts drafted by a Solicitor. The relatively recent decision in Grain Communications Limited v Shepherd Groundworks Limited [2024] EWHC 3067 (TCC) does just that, illustrating that parties cannot rely on the Court to rescue them if they are careless in the drafting of an agreement.

Background to the decision

The two parties, with Grain Communications being the employer, entered into a framework agreement to carry out groundworks. Works and services were to be performed by Shepherd in accordance with a Work Order provided by Grain Communications.

The contract contained the following provisions concerning variation:

11 Variations

11.1 The Employer may, without invalidating this Work Order, issue instructions requiring a Variation. The Contractor shall forthwith comply with all instructions issued to the Contractor under this clause 11.

11.2 Any oral instructions given by the Employer requiring a Variation shall be confirmed in writing by the Employer.

11.3 The Contractor shall not be entitled to payment for any Variation for which the instruction is not given or confirmed in writing.

11.4 Variations shall be valued by the Employer on a fair and reasonable basis with reference to, where available and relevant, rates and prices in the Pricing Document.

11.5 Notwithstanding any other provision of this Work Order, the Contractor shall not become entitled to any additional payment for any Variation where the Variation has been instructed on account of any circumstance arising by reason of any error, omission, negligence or default of the Contractor or of the Contractor’s subcontractors or suppliers, or of any of the Contractors or their employees or agents.

The day before the works were due to start under work order no. 11500, a staff member of Grain Communications telephoned Shepherd to inform them that work order no. 11500 would not be starting the following day as had been previously agreed.

An email was sent from Shepard to Grain Communications asking:

“Can we just have conformation [sic] that all contracts signed will not be going ahead as mentioned today”.

Grain Communication replied:

“Thank you for your emails. As discussed, it remains our current intention to continue with all Work Orders signed between Grain Communications Ltd and Shepherd Groundworks Ltd.

However, as mentioned on Monday’s call, we are in further discussions with relevant stakeholders in relation to our build programme, and it currently does not look like we will be able to commence Works on Site in relation to the following Work Orders before the end of 2023.”

Shepard claimed that the phone call and email indicated that the contract was terminated and brought adjudication proceedings for the mobilisation of staff and equipment as well as loss of profits.

The Adjudicator ruled that as the word ‘variation’ did not appear in the email, it was reasonable for Shepard to conclude work order no. 11500 had been cancelled.

Grain Communication appealed to the High Court.

The High Court’s decision

Her Honour Judge (HHJ) Kelly overturned the Adjudicator’s decision.

Shepard argued that there was an implied term in the agreement that Grain Communications would not postpone any of the works. HHJ Kelly disagreed, stating that the contract proved express provisions (including clause 11) that allowed for variation.

She went on to say:

“I do not accept the submission made by the Defendant that implication of the term would be required to give business efficacy to the agreement. The parties could have agreed a specific term that the Claimant would not postpone commencement of work required by any Work Order. They did not do so.” [emphasis added].

What lessons can be drawn from Grain Communications Limited v Shepherd Groundworks Limited?

The decision in this case is short, sharp, and fairly brutal. The Court made clear that the contract entitled Grain Communications to vary the period in which a work order would be performed and that varying instructions should not be read “strictly or pedantically”.

It can be read from this decision that if a party wants to ensure work cannot be postponed, it needs to negotiate and include such a term in the contract in clear, concise language. This is especially the case in situations where the supplier is a small business that needs to invest in hiring equipment and people to perform the work stipulated in the agreement.

Grain Communications Limited v Shepherd Groundworks Limited also shows the importance of expert contract drafting to avoid contract disputes. It is crucial to talk over the express terms you require in  a contract to protect your best interests. A Solicitor who has overseen and drafted many commercial agreements will have the experience required to point out terms or wording that you may not have thought about. In some cases, this can save you tens of thousands of pounds in lost work/productivity and legal costs.

To learn more about how our team can assist you,please email us at [email protected] or phone 0121 249 2400.

The content of this article is for general information only.  It is not, and should not be taken as, legal advice.  If you require any further information in relation to this article, please contact 43Legal.

“Melissa Danks is the founder of 43Legal. She has over 20 years’ experience as a solicitor working within the legal sector dealing with issues relating to risk management, dispute resolution, and advising in-house counsel in SMEs and large companies. Melissa has extensive expertise in providing practical, valuable, modern legal advice on large commercial projects, joint ventures, data protection and GDPR compliance, franchises, and commercial contracts. She has worked with stakeholders in multiple market sectors, including IT, legal, manufacturing, retail, hospitality, logistics and construction. When not providing legal advice and growing her law firm, Melissa spends her time running, walking in the countryside, reading and enjoying downtime with close friends and family.”