A messy contract divorce

How patient are you? Frankly, I am not sure if my home was in chaos and my son was about to sit important exams, that I’d be very patient at all!

But that doesn’t mean I would be contractually ‘in the right’.

This lesson comes from a relatively simple refurbishment project, which started off on the wrong foot when the client didn’t get her preferred standard form contract signed.

Conscious uncoupling

Although this phrase was derided when it was used to describe celebrities ending their marriage, it clearly expresses what really ought to happen on a construction project when the contractual relationship breaks down irretrievably.

On this project, the contractor was running 6 weeks late. The client said it had effectively ‘given up’ on the works. The contractor maintained that it was ‘ready, willing and able to complete the works’ but it couldn’t as the client refused access to her property.

Because there was no detailed contract, there was no process for ending the contract early. Both parties were relying on ‘repudiatory breach’. This means that they were accusing the other of acting or expressing themself in a way which showed they did not mean to continue with the contract any more. Not only does one party have to ‘give up’ on the contract, the other party has to accept that position.

The possible evidence for giving up on the contract were:

  1. Delay: but delay is not repudiatory unless the contractor has shown that (a) it will not or cannot continue or (b) the delay is so bad it has deprived the client of substantially the whole benefit of the contract. Except for temporary constructions, it is rare for (b) to apply. The contractor admitted it was late but many of the causes were the client’s acts such as design changes, scope changes, failure to provide instructions on items. The court held that the delay of 6 weeks was not enough to be in repudiatory breach.
  2. Failure to permit works: the client repeatedly failed to allow the contractor to return to site and continue with the works or confirm her willingness for it to return to her property. This was a repudiatory breach, as the contractor could not continue with that permission and access.

So the client was at fault, and this entitled the contractor – who had been wrongfully deprived of the right to complete the works – to recover the loss of future profits.

Of course, having a right to recover those profits is not much use if you fail to prove how much they would have been, but that part of this sorry saga will have to wait…

What should you do?

Be very careful.

When your contractual relationships break down, it is better to step back and get some impartial advice. What starts as their ‘fault’ might boomerang back and become yours, with costly consequences.

Case: Cartwright Pond Ltd v Wild [2021] EWHC 1600

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