[2006] EWHC 687 (TCC), 29 March 2006. B appointed E to carry out work under letters of intent, as execution of the contract documents was deferred until after the grant of full planning permission. E continued to carry out work even after the expiry of the last letter. After completing most of the work, E refused to sign the contract documents, claiming it would only continue if all work was valued on a quantum meruit basis rather than in accordance with JCT valuation rules. When B refused, E left the site without the work being completed. E argued there was no contract prior to the expiry of the letters of intent, and that the works both before and after the expiry of the last letter should therefore be valued on a quantum meruit. "Held": (1) there had been a clear intention to create legal relations, and the letters amounted to contracts. Work carried out prior to expiry of the letters of intent should be assessed in accordance with JCT valuation rules, and not on a quantum meruit; (2) work carried out after the expiry of the letters was recoverable upon a quantum meruit, but had to be assessed primarily by reference to the rates and prices for work done before that date; (3) as there was no contract when the defective work was carried out, B had no counterclaim in the proper sense; however, an adjustment was appropriate to reflect the sums paid by B to bring that work up to standard.