Problem: I am a self-employed builder and require some advice in relation to a dispute I have with a customer.
I quoted and was then instructed on quite a large job (well, large for me). An agreement was also signed.
Having started the job, the customer then began to make major revisions to the project, including wanting a new roof, construct a brick boundary wall and the addition of a detached double garage.
Under the original signed agreement we agreed stage payments, but the customer was always late in making payments, which in turn caused me cash-flow problems, especially since materials were also increasing at an alarming rate.
I had a meeting with the customer to try and sort out both the additional costs and payments, but the customer said that the job should have been much further advanced and thus he considered that he had paid more than enough at that stage.
A few days after the meeting I decided to withdraw from the project and so I sent an email to the customer stating this. The reason for withdrawing from site was not only because of the late payment, but also because the revisions now made the project completely different to the original job I had priced, and were now out of my skill set.
In response to my email, the customer stated that I was in breach of contract and requested a payment of £30,000 (the customer had made payments totalling £47,000). He also asked sight of all of the invoices for the job. I have since visited the site, and have seen that another contractor is now working on the job.
Could you advise me where I stand? The job has cost me a lot more than I have been paid and I would like to try and get this back. I am also concerned about the claim the customer has made against me.
Response: My initial thought when I read your problem, was that it was not a good idea for you to have sent the email stating that you were withdrawing from site. The reason I was concerned is because this sort of ‘knee-jerk’ reaction to a difficult client, often results in the builder putting himself in a repudiatory breach, which then entitles the client to accept and bring the obligations under the contract to an end, and to then claim damages for the wrongful repudiation.
It is not unusual for contractors to enter into agreements and then find the relationship with the client sours. However, just because a relationship sours, or the client becomes ‘difficult’, does not mean that the contractor can ‘walk away’.
However, on your matter, what may be the saving grace for you is that your customer may have wrongfully repudiated the contract before you sent your email (that stated you were withdrawing from site), and your email you sent could be viewed as accepting the repudiatory breach (although it will depend what you said in the email).
You have said that the contract provided for payment against stages, which I assume you mean milestones. If you can show that you did in fact reach the milestones and when you did, the customer was persistently late in making payment, this could be a repudiatory breach.
Additionally, you may also have a defence to the claim from the customer regarding the revisions to your original works, insofar that the revisions were not revisions but offers of work that was separate from the original works which you rejected. Alternatively, the revisions made the original work so different, that the agreement was frustrated.
Your next step is therefore, to write back to your customer and set out your defence to his claim, set out your own claim and also to set out why you were not in repudiatory breach and why your consider that your client wrongfully repudiated the contract or in the alternative, the contract was frustrated. You should then try and meet on a without prejudice basis to see if the matter can be settled without litigation. That said, your matter is rather complex and finely balanced and hence I would recommend that you instruct a solicitor before you get back to your customer.
© Michael Gerard 2021
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.