Court confirms when doing someone else's work under a contract relieves them of their obligation to do it

When a business carried out remedial works that another was supposed to do under the contract between them, the court decided that it wasn't waiving the other business's obligations under the contract, and could still claim damages from that other business for non-performance.

A business was contractually bound to carry out remedial works at a particular site owned by another company. When it failed to do so, the owner of the site went ahead and carried them out - without first asking the other business to fulfil its obligations. The owner then claimed compensation, for breach of contract, from the business. The business claimed that the owner had waived the business's obligation to do the work (and therefore the owner had no right to compensation) by doing the work itself.

The Court of Appeal ruled that performing the other business's work for it had not waived the business's obligations. The owner could therefore claim damages for breach of contract.

If the owner had made an 'unequivocal representation' - which it could have done by conduct, as well as by words - that it would not enforce its rights against the business, then the outcome might have been different. However, while doing the business's work for it was capable of amounting to such a representation, the fact that there were other reasons (such as that the owner may have been under a "contractual misapprehension" about responsibility for the remedial works under the contract) meant it was not.

The Court also ruled that, for the representation to amount to a waiver, the business would have had to show that it had relied upon them in some way, whereas it found that the business had in fact known the owner was carrying out the works, and did not say anything.

Recommendation
Businesses should always know exactly who is responsible for carrying out which work under contracts, and should beware performing another party's obligations under a contract without making it clear that they are not waiving their right to compensation for breach of contract by doing so.

Case: Persimmon Homes (South Coast) Ltd v Hall Aggregates (South Coast) Ltd and Cemex UK Properties Ltd [2009] EWCA Civ 1108