Standard form construction contracts of all complexities allow the parties to populate their names in writing. Many construction contracts, however – particularly residential construction contracts – are formed by an exchange of correspondence or orally. Any resulting uncertainty can make any dispute even more costly and time-consuming.

Lumley v Foster and others [2022] EWHC 54 (TCC) demonstrates the importance of naming the parties in a written agreement. This article discusses the decision in Lumley v Foster and practical points arising from the decision.

Lumley v Foster: the relevant facts

The case concerns a contract to carry out construction work at a residential property in Barnet, London (the “Project”) owned by Diane Lumley.

On 21 June 2016, Ms Lumley met Nicholas Foster to discuss the Project (the “Meeting”). Mr Foster arrived at the Meeting in a car bearing “Foster and Co” livery. During the Meeting, Mr Foster spoke about the “Foster and Co” brand and told Ms Lumley that he would personally deal with the Project and that she could trust him to do so. At no time during the Meeting did Mr Foster mention Foster and Co Construction Ltd (“FCCL”).

The Meeting concluded with the parties verbally agreeing that Mr Foster would undertake the Project for £100,000 (the “Contract”). Mr Foster then undertook the Project.

In October 2020, Ms Lumley issued a claim alleging that (in the judge’s words) the Project was carried out in a “seriously sub-standard” manner and that her property was “scarcely habitable”. The claim form named six defendants: 1) Foster and Co Group Ltd (which was subsequently dissolved in June 2021), 2) Mr Foster, 3) Joana Foster (Mr Foster’s wife), 4) Foster and Co Developments Ltd, 5) FCCL (which ceased trading in October 2016 and was according to Mr Foster in liquidation) and 6) Foster and Co Ltd.

The defence asserted that the Contract was between Ms Lumley and FCCL only. The court noted that, if this was correct, it would render Ms Lumley’s claim “worthless” as FCCL was in liquidation. The court, therefore, ordered a hearing to ascertain who the parties to the Contract were before the claim continued.

Lumley v Foster: legal principles

The court said that the test to determine who the parties to the Contract were is an objective one: what would a reasonable person, furnished with the relevant information, conclude?

Further, the court said that, where it could not be ascertained who the employing party was at the time a contract was formed, the court could look at the events leading up to formation.

The court also noted the presumption that a person enters a contract personally (and not as an agent of a company) unless she or he makes it clear they are an agent.

Lumley v Foster: the court’s decision

The court said that the central question to be answered was, viewed objectively, did Ms Lumley contract with Mr Foster personally or a company (including FCCL).

The court noted:

• Mr Foster's personal representations and the lack of a mention of any company at the meeting; and 
• that no reasonable steps were taken to distil the Contract into writing after the meeting.

Practical points arising from Lumley v Foster

The decision in Lumley v Foster highlights many practical points for parties to construction contracts, particularly for residential projects.

Homeowners are advised to verify who the contractor is before entering into any contract, including carrying out credit checks and reviewing information on Companies House if the contractor is a limited company.

The parties should distil their agreement into writing and ensure that the parties are correctly named. The agreement could take the form of a standard form construction contract – for example, the JCT Homeowner contract - or bespoke terms.

If a party is not correctly named, there is a risk that: that party may be accepting personal liability (as in Lumley v Foster); contractual notices (for example, termination notices or notices of adjudication) may not be valid; and that any disputes are more costly and timely.