You are a surveyor on the staff of a well-known established consultancy K Morris LLP. Your client, International Hotel Holdings plc (IHH), is the owner and operator of the ‘The Pilgrim Hotel’, a large, luxury hotel located in City of Chester, UK

Scenario

You are a surveyor on the staff of a well-known established consultancy K Morris LLP. Your client, International Hotel Holdings plc (IHH), is the owner and operator of the ‘The Pilgrim Hotel’, a large, luxury hotel located in City of Chester, UK.

Your client recently appointed a contractor known as Gray’s Contracting Limited (GCLP) to undertake a major refurbishment of The Pilgrim Hotel.

A brief pre-commencement site meeting was held to discuss the works, but no contract was formalised between IHH and GCLP. As GCLP have worked with your client previously without issue for many years, a contract was not considered to be necessary.

The contractor had progressed works to the satisfaction of your client until a recent design team meeting held midway through the project. At that meeting IHH confirmed that as GCLP had overvalued their previous application for payment, your client intends to deduct the overpayment from the contractors next payment application. At the same meeting, GCLP responded to suggest that far from overvaluing the previous payment application, your client had in fact significantly undervalued the same application.

Chartered surveyors from both organisations hold urgent talks to try to rectify the situation but fail to make progress on this issue and a wide range of other complex technical points relating to structural alterations and mechanical and electrical services. GCLP threatens to suspend all works imminently if the matters cannot be resolved swiftly due to cashflow related problems. The parties wish to settle matters and make progress with the remaining works as quickly as possible. The parties are now engaged in an ongoing dispute.

Your client cannot tolerate a significant delay to completion of the refurbishment of the hotel. IHH is under financial pressure to re-open the luxury hotel for the holiday season and has been receiving negative publicity on social media and in local press.

To move forward, your client considers that their only remaining option is to take matters to court to reach a resolution.

Task

Use your knowledge of the law of contract and dispute resolution methods to write a report that advises your client, IHH, on the enforceability of their agreement with GCLP together with the most appropriate method(s) that could be used to resolve the points in dispute between the parties.

When preparing your report you should:

1. Use legal principles to outline the elements that must be present to form a legally binding contract;
2. Use your knowledge of contract formation to critically examine whether a legally binding agreement has been formed between the parties using appropriate legal principles;
3. Examine the scenario facts to reach reasoned conclusions as to the most effective form(s) of dispute resolution available to IHH in the context of the presented scenario.

Example Answer