Parties Involved In Construction Project Can’t Agree On Whether A Contract Exists
April 22, 2021
When multiple parties are involved in a construction project, it is critical for all involved to be clear about expectations and responsibilities. Anything not clearly spelled out could be cause for contract disputes. In a recent decision from the Provincial Court of Alberta, a plaintiff sought payment for work provided while the defendant denies there was ever a binding and enforceable contract in place.
Water wells require third party to implement fix
The issue arose after the defendant installed pumps in 13 water wells. Officials with the town they were installed in became concerned about the installation of the pumps after they failed to produce the desired yields. One of the pumps was eventually pulled from the well. Debris, which would have to be removed, was found inside the pump.
The defendant and the town discussed the situation, and the town determined there may be a need to bring in another contractor. The defendant did not agree that there was anything wrong with the work they did, but agreed that the town could bring in their preferred contractor to look at and clean the 11 remaining wells.
Plaintiff agrees to work
The plaintiff company agreed to do the work and provided the town with its rates. The town approved of the rates without consulting with the defendants. No fixed price was agreed upon.
The plaintiff looked at the wells and found debris in all of the pumps. Some of the debris was plastic caps left there by the defendant company. Four months after the work started, the defendant asked the plaintiff for cost information on the basis that they would be splitting the cost with the town. The plaintiff provided all invoices to date. In total, $71,0000 was invoiced to the town (who paid it) and $40,60875 was invoiced to the defendants, who did not pay.
Was an oral contract made?
The court began its analysis by stating that there was no written contract among the parties, but that a verbal contract may be inferred from the words and conduct of the parties.
In all cases, there are certain requirements needed for a contract. These are that an offer is provided and accepted and that the terms are either certain or can be determined with a reasonable degree of certainty.
Certainty itself has three hallmarks, described by the court as parties, subject matter, and price. In this case, the plaintiff had the onus of proving these essential elements were in place.
While the work to be done was well established, there was less certainty around what was to be paid for by the town, and what was to be paid for by the defendant. However, the court did find that the defendant did know that they would be responsible for the portion of the work that required blowing out debris would be covered by them.
However, the court also found that the defendant should only be responsible to pay an amount that they could have reasonably expected to pay, and after looking at what was provided in a quote earlier, determined that amount to be about half of what was being requested by the plaintiffs, and awarded them $23,510 inclusive of GST.
At HMC Lawyers, our team of skilled lawyers knows that construction disputes and project delays can have massive impacts on your financial bottom-line. We work closely with our clients to understand their business and personal needs and identify the best potential outcome, then work diligently to resolve matters quickly and with certainty. To speak with one of our lawyers about a construction contract or delay claim, contact us online or call 1-800-480-3534. We represent construction clients in Calgary, throughout Alberta, and across Western Canada.