The dangers in sacking a building contractor (Cathy Hawkins)
Tuesday, August 29, 2017
Many people have had the experience where a building contractor does work that is so disappointing (in terms of poor quality or the project has overrun its promised time frame) that they feel entitled to sack them and/or replace them. This happens on multi-million pound projects and simple home extensions. Surely that’s fair enough, isn’t it?
Not always. It can be a dangerous approach, recently illustrated by Imperial chemical industries v Merit Merrell. That case concerned a contract on one of the NEC forms, but it could equally have applied to other contracts or even less formal contracts. That contract provided specific arrangements of how and when a contract could be terminated. A party who simply terminated by letter, ignoring the provisions of the contract, was unable to satisfy the court that the contractor’s conduct was such that it was guilty of “repudiatory breach”. As a result the employer itself was in repudiatory breach as a result of terminating the contract without good reason!
This can in fact matter, as a sacked contractor may be able to claim the profits that they would have made on the contract.
The lesson from this case, is to think carefully and consult the contract terms (and dare I say a lawyer) before firing the trigger, lest a bad situation is made worse.
Cathy has over 25 years’ experience in the financial sector and specialises in dispute resolution and insurance law. She is a member of Cubism’s financial liabilities team and advises policyholders on complex insurance claims.