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Streetwise Answers

Hi Streetwise: We did not finish a job for a company as we were getting messed about, so when they called and asked us to attend the following week we said that we couldn't as we were on another job.

Three weeks later we received a letter saying we were in breach of contract and that we would have to cover any additional charges for alternative subcontractors to carry out the remaining works.

They estimated that it would be £5,000 to complete the works, they have now said that it actually cost £17,000 to complete and we now owe them £12,000!

The original contract value was £16,000 so we cannot understand how they can say it cost a further £17,000.

We do have a contract/order from them but we never had to sign a copy and return.

Please advise what we can do?

Your question raises a number of contractual issues.

First, lets get rid of the "we haven't signed the contract" issue. If you have been sent a written contract prior to starting the work, and you haven't rejected it, then the likelihood is that you have accepted its terms by conduct i.e. starting the work. There are limited circumstances where that general principle will not apply.

Secondly, irrespective of whether or not there is a proper contract in place, once you start the work there is a "contractual" relationship between you and the other party. Exactly what the terms of that relationship are, requires detailed investigation. Unfortunately, formation of contract has to be analysed on the very specific circumstances of each individual case.

Thirdly, and whatever the contractual arrangements, it is rarely a good idea to walk off site or refuse to carry on with the work. If the job is delayed or disrupted, or there are variations, the remedy is to make a claim for the additional costs involved, either by way of the contract terms or by way of common law and /or implied terms.

Fourth, the completion of the works could indeed have cost what they say it has, albeit that is unlikely and has yet to be proved. However, there are any number of reasons why it could have cost them more than your original price, not least being the possibility that you under estimated the work required.

Lastly, and here is the key to your way forward, there is a significant difference between them saying it has cost £17,000 to finish this job, as a reason not to pay you any more money, and them saying it has cost us £17,000 and therefore you owe us £12,000 which we intend to collect as a debt!

In both cases their claims, are exactly that, and the burden of proof falls on them. In other words they have to prove that these are reasonable costs reasonably incurred.

It will be easy for them to use your breach of contract to resist paying you on the basis that they have incurred more by way of additional costs than they owe you.

However, they will need to think carefully before starting an action against you to recover what they say they are owed.

If you require any further assistance please do not hesitate to give us a call.

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