LETTER OF INTENT GOVERNS CLAIM FOR PAYMENT

Mowlem plc v Stena Line Ports Ltd [2004] EWHC 2206 (TCC)

In Mowlem plc v Stena Line Ports Ltd [2004] EWHC 2206 (TCC), 6 October 2004, Judge Richard Seymour QC held that the relationship between the parties was governed by a letter of intent which limited the contractor’s entitlement to payment to the sum of £10 million. The contractor’s claim for payment of a sum of money in excess of £10 million was accordingly rejected. While in many cases a letter of intent will not give rise to a contractual relationship between the parties, it was common ground between the parties to the litigation that the letters of intent in this case did give rise to a contract between the parties when the offer in the letter of intent was accepted by performance by the recipient of the letter. Thus the dispute between the parties related not to the existence of a contract between the parties, but rather to the terms of that contract.