Contract Dispute – Behind the Scenes

Tuesday, May 31st, 2016

Contract Dispute – Behind the Scenes

Procurement specialists, almost inevitably, will get involved in contract disputes. They will expand considerable energy seeking to find a solution to the dispute. Being informed about the other sides position is a challenge. Research for a client, led us to a 2008 legal case Jacobs UK Ltd v Skidmore Owings & Merrill LLP (2008) EWHC 2847(TCC). Skidmore, the defendant, were engaged to provide architectural, engineering and other professional services to Qatar Petroleum. Skidmore sublet some of the services to Jacob, principally those relating to quantity surveying and project management. Jacobs provided the services between the period 18th April 2006 and 24th February 2008. The terms of the contract were negotiated but failed to conclude a detailed contract. Jacobs claimed £4m by way of fees for the services provided.

Not surprisingly perhaps, relationships during the project deteriorated and culminated in Jacobs pulling out of the project. It was agreed during the case that termination of the contract was for ‘convenience’ in other words not for default. Payment was a massive issue. As Jacobs sought payment the defendants Mrs O’Connor did a ‘woops’ by wrongly sending an email to Jacobs (it should have gone to her boss) which said ‘and another fun thing to deal with. Peter (McGill) really does not want to pay these guys….’

Skidmore tabled counter claims against Jacobs, including inadequate design, cost estimating, value engineering and contracting strategy. This all goes to show the difficulties that arise on a project when things start to go wrong. Disputes need a structured, disciplined approach, with each side seeking to understand the root cause(s) of the dispute.