This question requires us to consider the agreement between Peter and Sue and Michael the builder. The agreement is not in writing, however the fact that the agreement is not in writing is not a bar to it being considered a valid contract. Contracts can be oral as well as written. In order for a there to be a valid contract there must be offer, acceptance, consideration and intention to create legal relations. An offer is statement by one party identifying the terms of an agreement by which they are prepared to be bound if accepted. Peter and Sue specify the work that they require and the price they are prepared to pay. In addition to this requirement an offer must satisfy certain requirements in order to be a valid offer; firstly it must be made to a definite person, class of people, individual or world at large. Peter and Sue make the offer directly to Michael so this is to a definite person. Secondly there is a requirement that the offer is communicated effectively to the person to whom they intend to contract with, Peter and Sue communicate their requirements to Michael and therefore this element is satisfied.
The second requirement for a valid contract is acceptance. Acceptance will occur when the offer is accepted without qualification. The acceptance must exactly match the terms of the offer. If in accepting any new requirements are made or the terms of the offer are altered then this will not be deemed to be acceptance but will be deemed to be a counter offer. In addition the acceptance must be communicated. Peter has said that he can carry out the work for that price and therefore the offer has been communicated to Peter and Sue and it matches the terms of the offer. There is therefore agreement.
The third requirement for a valid contract is consideration, it is not enough for their simply to be agreement. Consideration is where parties promise to do or give something to one another. Consideration has been described as: “some right, interest, profit or benefit accruing to one party, or some forbearance, detriment, loss or responsibility, given, suffered or undertaken by the other.” Consideration falls into two categories; executory and executed consideration. Executory consideration is where a promise to perform under the contract is given in return for a similar promise to pay. Executed consideration is consideration that has already been given. It can be seen that Peter and Sue have in part provide executed consideration by providing the £4000 with the £2000 due being executory consideration. Michael has provided executory consideration, in so far as he promises to carry out the work. Subject to the requirement that there is an intention to create legal relations being satisfied, it is at this point that there is a valid contract. The final requirement for there to be a valid contract is that there is an intention to create legal relations. In a business or commercial context (as is the case here) there is presumption that the parties do intend the agreement to be legally binding.
Assuming that a valid contract has been created two problems now arise. The first is that Michael has asked for more money than original agreed in the contract. Essentially Michael is asking for more money for work he has already done, he is therefore using the performance of something he was already bound to do under an existing contract as consideration for a new agreement. The general rule is that this cannot be done unless he can demonstrate that he has done something extra above that required under the original contract. Another circumstance in which Michael would be able to claim this additional money was if he could demonstrate that the performance of his existing contractual duty conferred a practical benefit on Peter and Sue then this will be valid consideration for which he can be rewarded.
The second problem that has arisen is that the roof light leaks is not velux and that the shower that has been installed is not a high pressure shower as they requested. Firstly we must establish whether or not the requirement to have a velux roof light and a high pressure shower are terms of the contract. In order to determine whether this representation is a term of the contract several factors can be taken into account such as; the importance that Peter and Sue attached to the representation and the level of expertise of the other party. More importance will be attached if the representation is writing – clearly in this case as the whole agreement is oral this cannot be considered a factor. Assuming that this is a term of the contract it must then be determined whether or not this is a condition or a warranty, conditions “go to the root of the contract” and warranties are ancillary terms. As there is no written agreement the court will give effect to what they believe is the intention of the party. As this has been specifically stated by Peter and Sue we will assume this to be a condition. As there has been a breach of the condition Peter and Sue will be entitled to repudiate the contract and claim for damages or they may decide to go on with the contract despite the breach and simply recover damages. The fact that the window is not a Velux may also be a breach of a statutory term .i.e. s13 of the Sale of Goods Act 1979 which requires the goods to correspond to any description given to them. In addition the fact that the window leaks may be breach of s14(2) & (3) that the goods should be of satisfactory quality and fit for the purpose stated by the buyer.
Therefore in summary it would appear that:
- There is a valid contract between Peter and Sue and Michael
- Michael is in breach of that contract and Peter and Sue are entitled to recover damages
- Michael is not entitled to receive further payment unless he can demonstrate that he did something over and above the original contractual requirements.
Beale v Taylor (1967) 1 WLR 1193
Birch v Paramount Estates (1956) 167
Carlill v Carbolic Smoke Ball Company  1 QB 256
Currie v Misa (1875) LR 10 Exch 153
Dick Bentley Productions v Harold Smith Motors  2 All ER 65
Entores v Miles Far East Corporation  2 QB 327
Hartley v Ponsonby 26 LJ QB 322
Hyde v Wrench (1840) 3 Beav 334
Partridge v Crittenden  2 ALL ER 421
Poussard v Spiers and Pond (1876) 1 QBD 410
Priest v Last  2 QB 148
Rogers v Parish (Scarborough) Ltd  QB 933
Stilk v Myrick  EWHC KB J58
Taylor v Laird (1856) 1H & N 266; 25 LJ Ex 329
Williams v Roffey Bros Ltd  1 ALL ER 512
Allan V & Riches S, (2009) “Keenan and Riches Business Law”, Pearson, 9th Edition
 An offer should be distinguished from an invitation to treat see Fisher v Bell  1 QB 394; Partridge v Crittenden  2 ALL ER 421; Carlill v Carbolic Smoke Ball Company  1 QB 256
 Taylor v Laird (1856) 1H & N 266; 25 LJ Ex 329
 Hyde v Wrench (1840) 3 Beav 334
 Entores v Miles Far East Corporation  2 QB 327
 Lush J in Currie v Misa (1875) LR 10 Exch 153
 Stilk v Myrick  EWHC KB J58
 Hartley v Ponsonby 26 LJ QB 322
 Williams v Roffey Bros Ltd  1 ALL ER 512
 Birch v Paramount Estates (1956) 167
 Dick Bentley Productions v Harold Smith Motors  2 All ER 65
 Poussard v Spiers and Pond (1876) 1 QBD 410
 Beale v Taylor (1967) 1 WLR 1193
 Rogers v Parish (Scarborough) Ltd  QB 933
 Priest v Last  2 QB 148