Builder in dispute with client over late payment
LCCL was approached recently by a local builder who had taken on a project for a client who was known to him. Due to the prior knowledge between the parties there was a level of trust and so neither thought a “formal” contract was necessary as they had an understanding. The work consisted of construction of a major extension to the existing property and the builder had experience in this field so hadn’t been particularly diligent in checking all the specifications. An e-mail trail of correspondence was available along with estimates, however there was no formal contract signed by the parties. This inevitably led to misunderstandings, delays and disagreement and dispute over what was included:
- the client claiming that the work was defective and not fit for purpose
- the builder claiming that some of the work was never included in the original price and this should have been “obvious”.
This situation is unfortunately all too common in the building or construction areas. The builder claimed that the client was not sure what they wanted and did not define it accurately in a scope of work and so this led to misunderstandings; this being further complicated as subcontracted tradesmen were also involved.
So how is this viewed in English law?
Any adjudicator must try and determine what the liabilities and obligations of the parties are within the contract formed.
There is some form of contract or agreement in place as even if there was no formal contract there is an agreement to carry out work, evidenced by the conduct of the parties; by the builder carrying out some work and the client paying; at least initially.
Without a written contract in place, it becomes difficult for an adjudicator or any tribunal to determine what has been agreed, but that is the task in hand. Referring to the case of. Dacy vs IDM, where the adjudicator had to decide whether there was a contract in place even if it was a verbal contract (at a meeting made at a bus stop!) and if so when did it come into being and what that contract consisted of. The fact that Dacy had engaged subcontractors following that meeting reinforced the decision that a contract had been formed during that meeting.
When the re-design was finally agreed the project progressed, but this was not without dispute and professionals becoming involved and inevitably led to delays and disruption to the project. So the lesson to be learned is quite a simple one: – both parties need to sign a formal contract which contains expresses exactly what is required from each.
