the final account, a varied payment plan and the provision of a warranty. It therefore fell within the scope of s.104(5) of the Act, which states: ‘Where an agreement relates to construction operations and other matters, this Part applies to it only so far as it relates to construction operations.’ As the dispute related to one of the ‘other matters’ and not to the ‘construction operations’, it was not subject to Part II and there was no right of adjudication under the settlement agreement.
Did the settlement agreement preserve the right of adjudication under the Contract?
The settlement agreement contained no adjudication clause and neither did it preserve any such rights under the Contract. The question was whether it was a stand-alone agreement (as RNE contended) or a variation of the Contract (as Eco argued). The Judge reviewed the provisions of the settlement agreement and had regard to the adjudication and arbitration provisions of the Contract, noting the difference in the wording of the two alternative dispute resolution (ADR) provisions. In the case of the former, it applied to any dispute ‘under the contract’, while the latter applied to any dispute ‘arising out of or in connection with’ the Contract. It was not necessary to take the broad view that the adjudication provision was to be regarded as being as wide as the arbitration provision nor to have regard to commercial logic in construing the use of the provision. The question was whether the dispute could be said to be one under a variation of the original Contract, as Eco contended.
The Judge concluded that the settlement agreement was a variation of the Contract because:
1. The Contract contained a mechanism for the termination by the employer on the grounds of the contractor’s default; 2. Termination required a default notice and termination notice which, under the settlement agreement, were deemed to have been given and accepted in accordance with the JCT terms; 3. The settlement agreement went on to vary the original mechanism for determining the final sum due and that it was ‘in full and final settlement of the final account in relation to the project and the JCT contract, and all claims that may have existed prior to and after this agreement’.
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