How long do you have to give a recalcitrant contractor to get their act together, before you are allowed to give up and get someone else to finish your project? The issue of termination is fraught with pitfalls, but cases can help you understand your rights.
Cheating on a client
If you are a micro-enterprise or sole trader, you may be tempted to split your time between a profitable project and a loss-making one. But this leads to all sort of trouble complying with your obligations.
A contractor, working on other jobs partly to fund completion of a loss-making project, found itself in all sorts of a pickle:
- it never provided a completion programme and failed to apply for any extensions of time
- it failed to carry out any appreciable work on site
- it needed money from other jobs to buy materials for the other project
- it used materials bought with the client’s money on other jobs
- it was ‘disinclined to complete it at anything other than its own pace and subject to its own financial situation’.
The court had to consider which acts were sufficient to count as a repudiatory breach under English common law ie acts sufficient to effectively declare the party no longer considered itself to be bound by the existing contract.
The builder’s actions (or lack of them) were consistent with “clearly showing an intention to abandon and altogether refuse to perform the work.” Abandoning the works is a repudiatory breach ie one which allows the client to accept that breach and treat any future obligations under the contract as terminated.
The court also decided that, on the facts, the builder’s failure to proceed regularly and diligently was a repudiatory breach.
[Strictly speaking, the contract is not terminated, as it continues to have effect.]
What should you do?
If you are working on a loss-making project, it is clearly preferable to continue to communicate with your client and try to come to a new agreement which allows work to continue. The costs of abandoning a project can be huge.
If you are a client faced with a recalcitrant, double-timing builder, again you need to try and resolve the issues. If not, you may be faced with terminating the builder’s obligations and starting with a replacement builder. But you need to take legal advice as you must follow the contractual processes or common law on termination to the letter – getting it wrong can be extremely costly.
Case: Struthers & Anor v Davies (t/a Alastair Davies Building) & Anor  EWHC 333