Defining what you want
A recent case emphasises the importance of defining accurately the buyer's requirements and what the supplier intends to provide to meet them.
A recent case emphasises the importance of defining accurately the buyer's requirements and what the supplier intends to provide to meet them.
A recent case gives a good (and helpfully brief) lesson in why it is a good idea to make sure that, in a services contract, you take the time to define clearly what services are to be provided for the price.
The case is Industrial Services (Telford) Ltd v Charles Ransford & Son Ltd (2005) EWLA Civ and was heard in the Court of Appeal. The facts (very briefly) were:
- There was a contract between the parties for the clearing and cleaning of some chemical treatment tanks by Industrial Services.
- Industrial Services gave a quote to Charles Ransford to provide all necessary services to remove "all celcure contaminated waste material" at a price of £4,845.
- It became apparent to Charles Ransford that Industrial Services had made a mistake in giving the quote, and Charles Ransford explained to Industrial Services in correspondence that it thought that several visits would be necessary to clear the tanks and that there was "3 per cent residual liquid" within the tanks.
- Industrial Services carried out the work but, while doing so, instead of having to clear away about 70,000 litres of liquid and sludge (3 per cent of tank capacity), about 200,000 litres had to be cleared and removed from the area.
- Industrial Services requested payment for the additional work required. Charles Ransford said that the contract had been on a fixed price basis and so declined to pay the extra money.
The High Court, and subsequently the Court of Appeal, both found in favour of Industrial Services. Both decided that it was clear that Industrial Services was going to have to dispose of any residue in the tanks and the most natural meaning of "3 per cent residual liquid" was that it was the residue left in the tanks and not, as it turned out, a 3 per cent chemical concentration of the total amount of residue left in them. Accordingly, it was decided that Industrial Services had, in effect, only quoted for a small proportion of the work to be undertaken and was entitled to be paid for the extra work.
