Electrix Limited v The Fletcher Construction Company Limited

A recent decision of the High Court, Electrix Limited v The Fletcher Construction Company Limited [2020] NZHC 918, will be of interest to those in the construction industry. 

The case addresses the relationship between two companies involved in construction of the new Justice Precinct in Christchurch. In particular, whether those companies successfully concluded a contract for the provision of electrical subcontracting work and, if not, how to calculate the amount payable for the work that was done.

Our key takeaways:

• There is significant risk in asking a contractor to proceed with work without a contract in place.  In the absence of a contract, the starting point for valuing that work is likely to be the cost to the contractor.
• Handle letters of intent with care. They can be a useful way to get work started and to establish certain parameters, but they need careful management.
• If you reach an agreement on any aspect of the project, short of a signed contract, record it in writing. An email is better than nothing.

A more detailed analysis of the case by Michael Taylor and Joanna Trezise will appear in the next issue of BuildLaw, and is also available here.

This article is intended only to provide a summary of the subject covered. It does not purport to be comprehensive or to provide legal advice. No person should act in reliance on any statement contained in this publication without first obtaining specific professional advice. If you require any advice or further information on the subject matter of this newsletter, please contact the partner/solicitor in the firm who normally advises you, or alternatively contact one of the partners listed below.