Post‑contract Conduct Admissible to Prove Terms of Oral Contract (Not to Interpret It): Profit‑Share Oral Subcontracts, “Overheads”, and the Factual Substratum for Expert Quantum Evidence

1. Introduction

In BPL Contracts (Scotland) Limited (pursuer) v Beattie FRC Limited (defender), Lord Ericht in the Outer House of the Court of Session determined the disputed terms and outstanding sums under two oral construction subcontracts arising out of the Aberdeen Harbour expansion works: (1) the Crown Wall package and (2) the Pavement Slab package. The parties agreed there was a profit share, but disagreed about its scope and calculation, as well as the proper attribution of a £200,000 payment made in December 2022.

The central legal issues were:

  • Proof of terms of an oral contract (what was agreed, not how written words should be construed), including whether post‑contract conduct can be relied upon.
  • Profit share scope: whether “50/50” meant profit on the whole Crown Wall account or only the labour element; and whether “90/10” meant profit share or labour rates on Pavement Slabs.
  • Quantum mechanics: whether “profit” implied a deduction for overheads, and how to allocate labour and plant between overlapping work packages where records were imperfect.
  • Expert evidence: whether an expert’s opinion can be accepted where the factual basis was not proved in evidence or disclosed.

2. Summary of the Judgment

  • Crown Wall subcontract: The court held the oral agreement (8 March 2021) entitled the pursuer to 50% of the net profit made by the defender on the Crown Wall works under the defender’s contract with Aberdeen Harbour Board—not a share limited to labour profit. Declarator granted; the defender’s unjust enrichment counterclaim fell away.
  • Pavement Slab subcontract: The court held the pursuer was entitled to 90% of the net profit made by the defender on the Pavement Slab works. The declarator was granted with modification: deletion of the words “on 25 May 2022”, because the court found the contract was concluded by acceptance by performance when work commenced.
  • Post‑contract conduct: The court held post‑contract conduct was admissible and relevant in a dispute about the existence/terms of an oral contract (as distinct from the interpretation of a written contract).
  • Overheads: No deduction for overheads was to be made in calculating “net profit” under either oral subcontract (absent any discussion/agreement to that effect).
  • Final account deductions: Deductions agreed between the defender and Aberdeen Harbour Board reduced the defender’s actual receipts and therefore reduced the “net profit made by the defender”.
  • Expert evidence on labour/plant allocation: The court preferred the pursuer’s expert where the defender’s expert relied on undisclosed/unproved factual material; broad‑brush allocation was adopted given poor contemporaneous allocation records.
  • £200,000 payment: Found to be attributable to the Pavement Slab subcontract, supported by contemporaneous receipt and timing of Harbour Board certification.

3. Analysis

3.1 Precedents Cited

(a) Kennedy v Cordia (Services) LLP [2016] UKSC 6 — admissibility/role of expert evidence

The defender sought to exclude the pursuer’s expert (Mr Lynch), arguing he was partisan. Lord Ericht rejected the objection, holding that concerns about approach or emphasis generally go to weight rather than admissibility. The judgment treats Kennedy v Cordia (Services) LLP [2016] UKSC 6 as the controlling modern authority on the court’s gatekeeping function: the expert must be suitably qualified and provide assistance within their expertise; alleged advocacy does not automatically disqualify.

(b) Ruby Properties (Scotland) Limited v Watt [2025] CSOH 61 — “substratum” and proof of facts underpinning expert opinion

The pursuer attacked the defender’s expert (Mr Gray) on the basis that his conclusions depended on an absent factual substratum. Lord Ericht applied that critique in substance: where an expert’s methodology relies on factual datasets/emails/invoices/breakdowns that were not produced, not proved, and/or not put before the opposing expert, the court cannot safely adopt the opinion. The decision is a practical application of the Ruby Properties (Scotland) Limited v Watt [2025] CSOH 61 principle: expert opinion is only as good as the proved evidential foundation supporting it.

(c) Bairds Trustees v Bairds and Co (1877) 4R 1005 — limits of post‑contract conduct in interpretation

The defender relied on the orthodox rule that post‑contract actings cannot alter the unambiguous meaning of a contract, as expressed in Bairds Trustees v Bairds and Co (1877) 4R 1005. Lord Ericht accepted the rule in its proper domain—construction of a contract’s words—but distinguished it from the case at hand, which concerned fact‑finding about the terms of an oral contract.

3.2 Legal Reasoning

(a) A clear doctrinal distinction: “interpreting” a contract vs “establishing” its terms

A key contribution of the opinion is its structured explanation of admissibility of post‑contract conduct:

  • Interpretation (construction) focuses on the meaning of contractual words; post‑contract conduct is generally excluded.
  • Establishing terms/existence of an oral contract is a factual inquiry; post‑contract conduct may be relevant because it can illuminate what parties understood the deal to be.

On that basis, the court treated post‑contract documentation and behaviour (payment applications, invoices, receipts, project organograms) as legitimate evidential material bearing on what was agreed at the time of contracting.

(b) Crown Wall: credibility, contemporaneous documentation, and the defender’s shifting pleadings

The court preferred the pursuer’s account that “50/50” applied to the whole net profit on the defender’s Crown Wall contract (not merely labour profit). Three recurring reasoning tools stand out:

  • Contemporaneous documents outweighed later reconstructions. The court considered the Harbour Board organogram incompatible with a mere “labour‑only” role for the pursuer, pointing to managerial integration (equal-status roles and reporting lines).
  • Internal consistency and follow‑through: the pursuer’s “measured works” payment applications (requested and paid) cohered with a profit share on the measured works rather than a labour-only profit share.
  • Pleadings and credibility: the defender’s multiple changes of position (including who was present and when, and the alleged role of Iain Beattie) materially undermined reliability. The court treated late-emerging “key meetings” and “mistake” explanations as damaging to credibility.

(c) Pavement Slabs: offer and acceptance by performance, and why “labour-rate” theory failed

The court accepted that contract formation occurred by commencement of work (acceptance by performance), making the precise content of later site meetings less determinative. On the terms, Lord Ericht preferred the pursuer’s “90% of net profit” case for several reasons:

  • Documentary support: Mr Kennedy’s email (“jocks rates attached… discounted… on Bills of Quantities/measured works”) indicated remuneration beyond labour, aligning with a broader profit-sharing conception.
  • Bargaining reality: the defender’s urgent need for labour and resources (and the Harbour Board’s time pressures) explained why unusually favourable terms could be offered to secure performance.
  • Bill of Quantities structure: the defender’s “90% of labour rates” position was difficult to reconcile because the BoQ contained composite rates, not clean “labour rates”. The purported “extraction” of labour rates was treated as complex, uncertain, and inconsistent with what parties to a simple oral deal were likely to have intended.
  • Litigation instability in the defender’s labour-rate calculations reinforced the implausibility of an agreement depending on a technically elaborate and shifting extraction exercise.

(d) “Net profit” and overheads: oral simplicity defeats later accounting complexity

On both subcontracts, the defender argued for deduction of overheads before profit-sharing. The court rejected this as inconsistent with:

  • the absence of any discussion at contracting;
  • the “handshake” nature of the agreement;
  • the impracticality of importing complex accounting analyses (including reliance on accounts produced later) into an oral bargain framed in simple terms.

The court therefore treated “net profit” as essentially: actual receipts from the employer, less costs actually incurred in performing the works—without a further overhead percentage deduction.

(e) Allocation disputes (labour/plant) and expert evidence: broad brush where records fail

Where the defender’s labour and plant were used across overlapping packages (Crown Wall and Coping; Pavement Slabs and other concrete packages), the court accepted that perfect reconstruction was impossible due to inadequate contemporaneous allocation records. It adopted a pragmatic approach:

  • Broad‑brush allocation can be appropriate where precision is unavailable.
  • The court preferred the pursuer’s expert methodology because it was transparent, based on materials in evidence, and cross‑checked (e.g., with purchase orders), whereas the defender’s expert relied on unproved datasets/emails not before the court.

(f) The £200,000 payment: contemporaneous attribution and pleading coherence

Lord Ericht attributed the £200,000 to the Pavement Slab subcontract, driven by:

  • the contemporaneous receipt describing “Pavement Slabs Works Ongoing”;
  • the timing of Harbour Board certification for Pavement Slabs shortly before payment;
  • rejection of the defender’s late-pled “Trams meeting” narrative and inconsistencies with its own counterclaim stance.

3.3 Impact

  • Evidence in oral-contract disputes: The judgment provides a clear, practice-facing statement that post‑contract conduct is admissible where the court must determine what was agreed (as opposed to construing text). This is likely to be cited in future Scottish disputes involving informal contracting and “handshake” arrangements.
  • Expert evidence discipline: The decision reinforces that parties must disclose and prove the factual material underpinning expert reports. Where the “substratum” is missing, the court may simply be unable to use the expert’s conclusions on critical quantum questions.
  • Profit-share drafting lesson: Parties who intend “profit” to mean “after overheads” (or to be computed by a specific formula) must say so. In informal arrangements, the court may default to a commonsense computation aligned with what was actually discussed and operationally applied.
  • Record-keeping and cost allocation: Contractors running multiple packages on one site should expect adverse forensic consequences if they do not maintain contemporaneous allocation records for labour and plant.

4. Complex Concepts Simplified

  • Declarator: a court order formally declaring parties’ legal rights (here: what the oral contract terms were).
  • Proof before answer: a trial (proof) where some legal issues may still remain open; the court hears evidence before finally resolving all questions.
  • Post‑contract conduct: what parties did after the contract was made (invoices, payments, project documents). Generally excluded for interpreting written words, but (per this case) can help prove what an oral deal was.
  • Net profit: in this judgment’s practical sense, what the defender actually received for the work minus the costs of doing it—without importing additional overhead deductions that were never agreed.
  • Factual substratum (for experts): the underlying facts and documents an expert relies on must be in evidence; otherwise the opinion may be unusable.
  • Acceptance by performance: a contract can be accepted not by signing or saying “I accept,” but by starting the work requested on the offered terms.

5. Conclusion

Lord Ericht’s opinion in [2026] CSOH 22 is significant for its disciplined separation of (i) interpretation of contractual language from (ii) proof of the existence and terms of an oral agreement—explicitly legitimising post‑contract conduct as evidence in the latter exercise. On the facts, the court enforced substantial profit-sharing entitlements (50% and 90% respectively), refused to imply an “overheads” deduction into simple oral bargains, and underscored that expert quantum evidence is only persuasive where its factual foundation is properly disclosed and proved. In construction disputes where parties rely on informal arrangements and imperfect records, the case is a pointed reminder that contemporaneous documents, consistent operational behaviour, and pleading coherence will often decide whose version of the “handshake deal” the court accepts.