Problem: Is client breaching contract when they terminate construction work
I am a carpentry contractor. Earlier this year I emailed my rates over to a new client to build their new house, which was accepted. I completed the first fix but then had to leave the site on a temporary basis to allow for other trades to perform.
When I visited the site a couple of weeks ago, the site was still not quite ready for my return. However, the client has since said that their budget was being stretched and can I lower my rates, to which I declined. They have now emailed me saying that they have spent more than they had planned and now need me to cut back as they cannot afford my rates, and may have to look for a cheaper option by employing another carpentry contractor.
Is the client breaching the contract? There was no formal contract in place, only an exchange of emails. Your comments would be welcome with an idea of costs if I decide to sue for breach of contract please.
Response: If you enter a contract you are under obligation to carry out that work
Firstly, you will need to establish precisely what your company or firm has been contracted for. If you have merely forwarded over a schedule of rates, how will you show that the contract was for carrying out a set quantity of building work?
If you are able to adduce the necessary level of evidence to show that you have entered into a contract with the employer for a specific amount of work, then the general rule is that you are under an obligation to carry out that construction work and the employer is not allowed to take away any work from the contract and give it to a third party.
If the employer does take away any of your contract work to give it to a third party, that would be a repudiatory breach of contract which would entitle you to accept the wrongful repudiation, bring your employment under the contract to an end and pursue the employer for damages.
The damages that you could claim in such circumstances are a loss of profit on the work that was taken away from you. You would, of course, need to demonstrate what that profit would have been but for the breach.
Regarding costs, you would have to discuss this with a solicitor. However, be careful as if your claim was less than £10,000, then your claim would fall into the small claims track and even if you won your case, save in very limited circumstances, your legal costs would not be recovered, hence you would have to consider whether you wished to engage a solicitor or do it yourself, or perhaps a mixture of both.
© Michael Gerard 2016
The advice provided is intended to be of a general guide only and should not be viewed as providing a definitive legal analysis.