Sorry, my mistake...

What if your contract is wrong? What if it doesn’t reflect what you agreed? What if it contains a mistake?

The law recognises that mistakes happen and the courts of equity long ago developed the doctrine of rectification. This means that the courts have given themselves the power to “rectify” a contract that contains a mistake.

When you go to see your lawyer about the dispute you’ve just got into, the first thing they will ask to see is the contract. This is because, in a construction context, your dispute is most likely to be contractual and your rights and liabilities will be governed by it.

The contract will say who has to pay whom how much and when, who has responsibility for what and who bears the risk of other eventualities. Contracts can be lengthy formal written documents signed and sealed by the parties after months of negotiation, or they can simply be the acceptance of a quotation and the start of work on site. The first thing the lawyer will do is look to see what you agreed would happen and then fit that to what actually happened.

It’s easy to see how, after a contract has been circulated in various drafts over a long period of time, the parties might lose track of specific clauses that were added, or removed, at some point, or some wording that was altered. These days, word processing “track changes” helps to keep an eye on these things, but it’s still possible for the final signed contract to contain, or leave out, something that was removed, or added, previously, or just for something to be plain wrong. In those circumstances, the party who spots the mistake (usually the one who can’t find the clause he wants to rely on) can ask the other to agree to rectify it. If the other party disagrees that the contract contains a mistake, an application can be made to court. The court will the look at the various previous drafts and decide if the finished article reflects what was agreed.

However, what if only one of the parties made a mistake and other always intended that the contract should say exactly what it does say? Can the contract be rectified to let the mistaken party off the hook? Isn’t it not just their own silly fault? Shouldn’t they simply have checked the contract properly before they signed it (or their quotation before they sent it)?

This is what the law calls a “unilateral mistake” and is what happened in the recent case of Traditional Structures Ltd –v- HW Construction Ltd.

In this case, HW Construction Ltd were tendering for the construction of a business development centre in Sutton Coldfield and invited Traditional Structures Ltd to submit a quotation for “steelwork and roof cladding” on the project as part of its tender. Traditional Structures sent a quotation by fax and by post. The final two lines on the third page of the quotation (as could be seen from the copy that Traditional kept on file) should have read:

Steelwork…………………………………………………..£37,573.43 + VAT
Claddings…………………………………………………..£32,365.83 + VAT

However, the last line (for some unexplained clerical reason) was missed off the quotation that went out by fax and post.

HW were awarded the job and accepted Traditional’s quotation. Later variations caused Traditional to revise their quotation and to provide updated figures to HW. HW immediately accused them of adding in a new figure for “claddings” that hadn’t been there before. HW said they’d tendered on the basis of Traditional’s original quotation and refused to pay more than the figure of £37,573.43, as adjusted to account for the variations. Traditional applied to court for rectification of the contract to add back in the figure for cladding that had been left out.

Traditional accepted that the mistake had been theirs alone and that HW hadn’t been mistaken when they’d accepted the quotation. However, they asked the court to apply previous case law on the point and to grant rectification for unilateral mistake.

Grant J, in the TCC in Birmingham, said that, in order to succeed in its application, Traditional would have to show (1) that HW knew that they’d made a mistake and (2) that HW’s conduct in failing to point out the mistake was “dishonest” or “unconscionable”.

The judge decided that HW must have known, indeed did know, that Traditional had missed off the figure for cladding and that their failure to bring this to Traditional’s attention before accepting the quotation was conduct which ventured into territory where the court is entitled to intervene. The court ordered rectification of the contract by the addition of the missing figure.

This was an example of a contractor trying to take advantage of an obvious mistake in a sub-contractor’s quotation and ending up having to pay the costs of a court case. The judge was particularly unimpressed by the fact that a director of HW told Traditional, when the point was first raised, that their competitors had quoted at only just above the lower figure. This, the judge decided, was a lie and demonstrated that HW were not above dishonesty in their dealings with Traditional.

Consistent with our policy when giving comment and advice on a non-specific basis, we cannot assume legal responsibility for the accuracy of any particular statement. In the case of specific problems we recommend that professional advice be sought.

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