Cases - Tesco Stores Ltd v Costain Construction Ltd and Others

Record details

Name

Tesco Stores Ltd v Costain Construction Ltd and Others

Date

[2003]

Citation

EWHC 1487 (TCC)

Legislation

Limitation Act 1980

Keywords

Construction contract – letter of intent – design and build contract- letter of intent not including liability for design – implied terms – loss caused by defective design – whether contractor liable for design of others in absence of express obligation

Summary

In this case, a Tesco store was constructed by Costain pursuant to a letter of intent. The understanding of the parties was that the principal contract would be a design and build contract, under which Costain would take responsibility for design already carried out. However, that contract was never executed. Some time after the store was completed, a fire broke out which badly damaged the store. It was alleged that the design of the store contributed to the magnitude of the fire and therefore the extent of the loss.

Tesco therefore sued Costain under the terms of the unexecuted design and build contract. Costain defended the claim, on the basis that it was appointed pursuant to a letter of intent that did not introduce design responsibility.

Following a review of all of the correspondence between the parties in relation to the letter of intent, and subsequent attempts to conclude the contract, the court held that the relationship between the parties was governed by the letter of intent and not by the unexecuted design and build contract. The court held that all Costain agreed expressly to do was to commence the work which it was to undertake in relation to the store either directly or by sub-contractors. The 'works' which Costain was instructed to 'put in hand' by the letter of intent could only sensibly be those works which Costain was itself, directly or by sub-contractors, to undertake, rather than works of design which others had already undertaken or agreed directly with Tesco to undertake.