Problem: I own a joinery business which over the years has built a reputation in producing high quality bespoke furniture. A little while back, I was approached by a couple seeking to fit out the master bedroom of their house. The bedroom had recently been added to their already substantial house, as a loft conversion, so the area was quite big and involved a lot of work and detail.
The price I submitted, including VAT, was just under £30,000, and I asked if the quotation was acceptable, for a 20% deposit. I also stated in the quotation that the lead-in time was 6 months.
The customer accepted the quotation and duly paid the deposit, at which point I prepared a cutting list and ordered all of the materials, of which the type of hardwood specified (Walnut and Ash), made purchasing very expensive.
About one month later, the customer emailed me to say that they had second thoughts and wanted to cut costs and requested me to come up with a new and simpler design, with the wood now being an oak veneer. I responded that I could come up with a new design, but I would still require a substantial amount from the original order, given that I had already completed the design work and cutting details and had purchased the materials.
The customer replied saying that there should be no costs incurred given that the installation date was still so far away, and if I have purchased the materials, this was done too early and at my risk. They have also asked for their deposit back.
What is your opinion on the matter?
Response: Your problem is going to be more of a problem for your customer.
Your customer has entered into a binding contract with your business for it to design, manufacture and install bespoke bedroom furniture for the sum of [about] £30,000, and your customer cannot then unilaterally decide post contract that they want ‘out’, without incurring costs. You therefore have a few options.
You can make a without prejudice offer to your customer that would enable the initial agreement to end on mutual terms. From your perspective, you would need to consider what you would be prepared to accept as appropriate compensation, which I suggest would at least include your time in designing and the purchase of the materials (albeit you would need to give credit if any of the materials could be used elsewhere or alternatively, offer the materials to your customer).
If your customer refuses your without prejudice offer, then you will need to consider whether your customer has wrongly repudiated the contract and if so, you can either elect to affirm the contract or accept the wrongful repudiation and claim damages (which will include all of your costs to date plus any loss of profit).
Whatever you decide, I would have thought that the deposit paid will be less than what your claim will be. You may also want to consider whether you want to accept any further orders from this customer.
© Michael Gerard 2022
The advice provided is intended to be of a general guide only and should not be viewed as providing a definitive legal analysis.
Author background
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.