The judgments

The issue at trial was the nature of the agreement between the parties. Each of the three courts which determined the issue came to a different conclusion. The trial of the preliminary issues ordered by the High Court required the judge to determine what, if any, was the contract between the parties. Mr Justice Christopher Clarke in the Technology and Construction Court found that the letter of intent formed a contract between the parties for its agreed duration. That contract came to an end on a date agreed between the parties in May. Thereafter the relationship between the parties was again one of contract with the terms of the contract derived from post-May email exchanges between the parties. He determined that certain clauses, most notably the MF/1 conditions, were not incorporated into the contract because there was no exchange of signed contracts.

In the Court of Appeal, the complexity of the fact pattern and the application of law to it is illustrated by the fact that RTS changed its line of argument as to whether a contract existed between the parties. Its new position was that there was no contract. The Court of Appeal accepted this argument and held that no contractual relationship between the parties came into existence after the expiration of the letter of intent agreement. The Court of Appeal found that the parties had 'to all intents and purposes' agreed upon the applicability of the MF/1 conditions to their relationship but that the failure of the parties to comply with clause 48 as regards signature and exchange prevented not only the MF/1 conditions becoming part of the contract but any contract at all coming into existence. For clause 48 not to have this effect there needed to be an express waiver of it by the parties. It followed that if there was no contract in place there was no obligation for RTS to pay damages for breach.

In the Supreme Court, it was decided that a contract had come into being after the letter of intent had expired and that the MF/I standard terms were incorporated in it. The Supreme Court supported the position of the Court of Appeal that the parties had agreed the MF/1 conditions. However, a different view was taken of clause 48 since it was felt that waiver of the term was possible to infer from the communications between the parties and their actions. It was argued that the variation in August was recognized by both parties and was not seen as being in any way subject to contract. As a result, the parties were in a contractual relationship with each other. It was found that a contract came into being after the parties realized that the letter of intent had expired and once they had discussed terms prior to the variation in August.

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