We often act for builders who have verbally agreed to perform extra works for owners. The majority of the time this isn’t an issue for them and they get paid for these extra works.
However, this is poor practice for a number of reasons and when a dispute arises with an owner, it leaves the builder in a difficult position to recover the cost of performing these extra works. Firstly, proving a verbal contract is much more difficult than proving one in writing. Secondly, pursuant to the Home Building Act 1989 (the Act), verbal variations are not enforceable and all variations must be agreed to in writing.
This means that if the variations are not in writing, the builder cannot bring a claim in contract and would have to bring a claim on what is known as a quantum meruit basis. Quantum meruit means “the amount he deserves” and is an action available to builders to recover the fair and reasonable value of work or services performed.
To succeed in recovering variation works on a quantum meruit basis the builder must establish the following:
- the works fell outside the requirements of the contract, specifications, and other included contract documents;
- the owner had actual knowledge of the works as they were being done;
- the owner knew that the works were outside the contract;
- the owner knew that the builder expected to be paid for the works as a variation to the contract; and
- the amount claimed for the works is fair and reasonable.
How Keystone can assist?
Keystone Lawyers specialise in construction law and regularly act for builders in disputes with home owners. If you find yourself in a dispute with the home owner, contact us to discuss your case. We are confident we can assist you.