Davis Contractors Ltd v Fareham Urban District Council

Legal Case Brief

Davis Contractors Ltd v Fareham Urban District Council [1956] AC 696; [1956] 3 WLR 37; [1956] 2 All ER 145; 54 LGR 289; (1956) 100 SJ 378;

CONTRACT, IMPOSSIBILITY TO PERFORM A CONTRACT ON TIME, DELAY NOT DUE TO FAULT OF EITHER PARTY, LABOUR SHORTAGE, FRUSTRATION OF A CONTRACT, TENDER, INCORPORATION IN A CONTRACT, QUANTUM MERUIT

Facts

The appellants tendered for a contract with the respondents to build 28 houses for 8 months. The tender was accompanied by a letter which stated that the tender was subject to adequate supplies of materials and labour when required to carry out the work within the time specified. Later, the appellants entered into a contract with the respondents to build the houses at a fixed price, subject to certain adjustments. The contract incorporated a number of preliminary documents, listed in a clause. The tender was specified to be one of them, but the letter was not.

Due mainly to the lack of skilled labour, the work took 22, instead of 8 months. The appellants were paid the fixed price, plus the stipulated increases and adjustments. However, they claimed that they were entitled to more money on the basis of quantum meruit. The appellants also argued that the price in the contract was not binding either because it was subject to an overriding condition contained in the letter, or due to the delay in the performance of the contract due to the shortage of labour which frustrated the contract.

Issues

(1) Are the appellants entitled to more money on the basis of quantum meruit?

(2) Was the contract overridden by the letter in the tender?

(3) Was the contract frustrated due the shortage of labour that caused a long delay in the performance of the contract?

Decision/Outcome

The appeal was dismissed.

The appellants are not entitled to be paid more money on the basis of quantum meruit as:

(1) The letter in the tender and the condition which it stipulated were not incorporated in the contract.

(2) The fact that the two parties expected that the work could be finished within eight months did not result in the contract being frustrated when it turned out that it could not be performed within the specified time.