Starting procurement or manufacture before a subcontract is signed does not, by itself, establish a binding construction contract. In Serapid Limited v Octavius Infrastructure Limited [2026] EWHC 2695 (TCC), the court refused summary enforcement of a £416,499 adjudication award because the main contractor had a real prospect of showing that no subcontract had been concluded. The judge did not finally decide that no contract, or other right to payment, existed.
What happened?
Octavius was the main contractor for an Access for All scheme at Chalkwell railway station in Essex, involving a new footbridge and two lifts. Serapid, a specialist lift manufacturer, had previously undertaken design work under a signed first-stage subcontract. The parties subsequently negotiated an NEC3 Engineering and Construction Subcontract for the manufacture and installation of the lifts.
Draft terms, amendments and commercial issues were discussed extensively in June 2025. Although the parties appeared close to agreement, the proposed second-stage subcontract was never executed. Correspondence continued to anticipate a formal order. Serapid nevertheless began procuring and manufacturing lift equipment.
Network Rail later decided to use alternative lift technology. In November 2025 Octavius told Serapid that the lifts were no longer required. Serapid adjudicated, asserting a subcontract made on or around 6 June 2025 and seeking compensation for termination. The adjudicator concluded that a contract existed and awarded £416,499, excluding VAT, plus fees. Octavius paid the adjudicator’s fees but disputed the adjudicator’s jurisdiction and resisted paying the award.
Why did the court refuse summary enforcement?
Mr Justice Moody assessed whether Octavius had a realistic defence to the application for summary judgment. The question was not whether Octavius had already proved its case at trial; it was whether its position that no contract existed had a real prospect of success.
The court identified several difficulties with Serapid’s case. It was unclear exactly when the alleged NEC3 contract was made. Contemporaneous emails could be read as showing that both parties still expected an executed subcontract. Negotiations continued and Serapid sought to revisit its price. Starting procurement did not necessarily evidence contract formation: some procurement began before the alleged contract date, with the commercial risk of proceeding recognised internally.
Serapid also suggested that, if there was no NEC3 contract, a simpler oral agreement existed. But that was not the contract alleged in the notice of adjudication or decided by the adjudicator. The alternative had not been pleaded with clarity as to who agreed what, when, for which price or scope, and depended on disputed witness evidence.
The court held that Octavius had a real prospect of establishing that no contract existed. It therefore dismissed the summary-judgment application. It did not make a final finding about the existence of every possible contract or entitlement to payment.
Why does this matter for construction businesses?
Specialist contractors and manufacturers frequently commit to long-lead items before a final subcontract is agreed. A main contractor may want to preserve programme dates while negotiations continue over price, design responsibility, delay, termination and liability caps.
If the project changes, the supplier may assume it can recover manufacture and cancellation costs. The contractor may regard the work as undertaken at risk pending signature. Both may have documents that appear to support their position.
Contractual uncertainty is especially problematic in adjudication. The right to adjudicate, and the adjudicator’s authority to decide the dispute referred, depend on the relevant agreement and statutory or contractual machinery. A jurisdiction ruling by the adjudicator is not necessarily binding on the enforcement court.
What should project teams do now?
- Agree the early-works basis. Where work must start before the full subcontract is signed, consider a carefully drafted letter of intent or early-works order. Define the scope, maximum commitment, payment, expiry, cancellation and dispute-resolution terms.
- Be clear about when the parties are bound. If signature is required, state this clearly and keep instructions consistent. If a limited binding agreement is intended immediately, document it.
- Preserve the negotiating record. Keep tender revisions, contract mark-ups, authorisations, meeting notes, acceptance emails and instructions.
- Manage bespoke procurement risk. Address the financial consequences of changed specifications, omitted items or cancellation before placing irreversible orders.
- Identify the right contract before adjudicating. State precisely how and when it was made, which terms apply and what dispute is referred. A different contract theory raised only during enforcement may not help.
- Consider other claims separately. Failure to establish a full subcontract in summary proceedings does not necessarily resolve possible restitutionary or other remedies. Those require their own analysis.
What the judgment does not say
Unsigned contracts are not automatically unenforceable. Words and conduct can establish a binding agreement without formal signature, depending on the objective evidence and what terms are essential. Nor did this judgment decide how much Serapid should ultimately recover, if anything.
The practical lesson is to agree the legal and commercial basis for early procurement before significant expenditure is committed.
Verifiable sources
- Serapid Limited v Octavius Infrastructure Limited [2026] EWHC 2695 (TCC) — Technology and Construction Court, 22 October 2026 (primary judgment).
- Housing Grants, Construction and Regeneration Act 1996, Part II — adjudication framework.
- Civil Procedure Rules, Part 24 — summary judgment.
Need advice on a live matter?
HQ Law advises contractors, subcontractors and engineering businesses on contract formation, NEC disputes, early-works instructions, adjudication and enforcement. Early advice may be valuable where significant work has begun but the subcontract remains unsigned or disputed.
This article provides general information only and is not legal advice on any particular contract or dispute. Payment, adjudication and court deadlines can be short.