So, you’ve engaged a builder to create the home of your dreams – and suddenly, there’s a conflict between you and your builder about additional work that’s been completed. Are you obligated to pay the builder for it? In this article, we look at some key legal drivers to explain how this works. In the first instance, the most critical ‘go-to’ feature that will determine the situation is the contract between you and the builder. A contract that is robust and correctly developed will include a condition that sets the scene for any variations. This would mean that a builder could not be entitled to payment under the contract even if the owner benefited from that extra work. We will explain this type of Builder Dispute and others in this new series we call Builder Disputes.
In the absence of written instructions, there are some instances where the builder could recover payment.
Implied Promise To Pay
If the builder can demonstrate the existence of an implied promise that you’ll pay for the extra work they’ve undertaken, they’ll be able to recover the money from you. However, the fact you’ve accepted the extra work isn’t an implied promise – it might be in an email or a text message, for example.
A Principle Called ‘Unjust Enrichment”
This means that you can’t benefit from the work at the builder’s expense. This protects the builder’s rights when additional work is carried out outside the contract. However, it’s not a
general right – in particular, where signed contracts are in place.
‘Waiver And Estoppel’
This is a legal instrument where the builder could claim that the requirement for written orders or instructions has been waived because they have been in contact with the owner. If the builder can demonstrate that they were induced (or persuaded) to carry out the work by relying on an assumption of your simply being there, the requirement for those instructions is no longer valid. This can be a challenging defence for the builder as it’s difficult to prove.
All These Situations Are Preventable Though
Prevention is so much better than legal action. So it’s critical to ensure contractual agreements are reviewed by specialists such as CM Law, where we know what to look for. We recently acted for a client who experienced this issue. Unfortunately, their builder was withholding the occupation certificate, preventing them from moving into their completed property. The concerned owner approached us for legal advice. We reviewed the contract for them and discovered a clause that stated, ‘A variation must be in writing and signed by or on behalf of the builder and the owner’. In this instance, the variation had not been signed by the owner – leading to the conclusion that a court would not enforce the variation, and the builder would not be able to recover the money for the variations. Furthermore, the builder delayed giving the owner notice about the variations. The work was completed in October – but the notice was provided eight months later. Of course, this leaves the matter of the builder withholding the occupation certificate. We will cover the topic of Occupation Certificates in our Next article, titled Builder Disputes Part 2 occupation Certificate.
Should you find yourself in a builder dispute, please Contact Us today to see how the team at CM Lawyers can help.