In normal circumstances a breach of contract by one party does not entitle the other party to bring the contract to an end.
There are 2 notable exceptions to this:
- where the contracting parties have agreed, whether by express words or by implication of law, that any (or a particular) breach of contract shall bring the contract to an end; or
- where the event resulting from the breach of contract has the effect of depriving the other party of substantially the whole benefit which it was the intention of the parties that it should obtain from the contract i.e. where there is a fundamental breach of contract.
In the second case the court must consider the commercial significance of the breach or breaches of contract. To amount to a fundamental breach it must go to the root of the contract.
Repudiation of the contract requires acceptance if it is to bring the contract to an end. A failure to continue to perform obligations under the contract may be sufficient notice that the innocent party has elected to treat the contract as at an end depending on the particular contractual relationship and the circumstances of the case.
Omissions or Bad Workmanship
In general, mere omissions or bad workmanship, where the work is substantially completed, does not go to the root of the contract and does not therefore amount to repudiation of the contract. As a result, you are not entitled to refuse to pay for work done on the grounds that the work, although substantially completed, is not completed in accordance with the contract in some respects. However, a deduction of the sum required to repair defects or make good any defects can be made from the sum due for the work.
However, an accumulation of breaches of contract by the builder or contractor may indicate an inability on the part of the builder or contractor to deliver the contract to a reasonable standard.
Where time is not of the essence, delay on the part of the builder/contractor does not amount to a repudiation of the contract unless it is proved that he is unable to complete the contract within a reasonable time, or it is proved that the delay is such as to deprive the innocent party of substantially the whole benefit of the contract.
In a previous building dispute case, the Court of Appeal held that the employer had no right to determine (end) the contract. The builder/contractor had agreed to demolish some houses for the employer within 42 days. This date was missed and when asked by the employer whether it would take one, two or three months to complete, the contractor said that he could not say. The contractor continued with the work and two weeks later the employer ejected him from site.
The Court held that the employer had no right to do so because he had failed to inform the contractor that he treated such a response as a refusal to carry out the work and he should not have waited two weeks. Essentially, the employer must act quickly and communicate any dissatisfaction with the contractor’s performance.
If a builder or contractor is wrongly expelled from a building site without a lawful reason and which renders completion of the contract impossible, this would amount to a repudiatory breach of contract. In such a situation the builder or contractor would be entitled to recover the agreed sums of the uncompleted works from the employer.
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