Sub-contract order given to another contractor
Problem: Your view on an issue we have would be appreciated. We have a sub-contract order for just over £18,000 to undertake roof repairs. The work should have commenced on 20th January 2020, but this start date was initially put back a week. A few days before the revised start date, we were again advised that the start date had been put back by another week. On the Thursday before this latest revised start date, we were informed that the client was placing the roof repairs that we had the order for with another contractor!
Where do we stand with this loss? Aside from juggling labour around a couple of times for the delay, are we able to claim any loss of profit? The job had been booked in since December 2019.
Thanks in anticipation
Response: Having an order given, then taken away, is not very nice; and if it is a breach of contract, you will be able to claim damages.
However, I would emphasise the ‘if’ as in ‘if it is a breach of contract’. This is because it depends whether the ‘order’ merely accepts your quotation and / or the terms placed in the order in relation to removing work from your contract. Additionally, it will also depend upon whether your client was another business (‘B2B’) or a consumer (‘B2C’), as the law for B2C contracts is much more stringent than with B2B contracts. For example, a consumer has the right to cancel a signed contract made at his or her home within 14 days of signing, but the contract is void altogether if that right was not included as a term of the signed contract.
Assuming that your client is a business, then you need to look at the wording of the order and whether there is a binding contract that has come into existence. If the order has simply been sent to accept your quotation and does not contain any terms that differ from your quotation insofar that the order could actually be said to be a counter-offer, then a binding contract would have come into existence.
If, on the other hand, the ‘order’ actually makes an offer to you (and the change from your quotation could be as a subtle as a different start date, duration or completion date), for a contract to come into existence under those circumstances, it would need an unequivocal acceptance from you. Such acceptance could be via an email which simply says ‘yes’, or commencing the work on site (which is known as ‘contract by performance’, although from your outline, this does not apply as you never started the work).
If a binding contract has come into existence, and notwithstanding any terms of the agreement that may permit removal of work or cancellation, then you would have a good cause of action for repudiatory breach of contract, whilst your claim for damages would be any cost you may have incurred pursuant to the contract (like materials), plus loss of profit. You would however need to adduce proof of your losses.
© Michael Gerard 2020
The advice provided is intended to be of a general guide only and should not be viewed as providing a definitive legal analysis.
Michael is a Solicitor, Chartered Builder & Registered Construction Adjudicator, and is a director at Michael Gerard Law Limited, a solicitors practice regulated by the SRA.