The Importance Of Contracts In Construction feature image

The Importance Of Contracts In Construction

When entering into business with someone for a construction project, or for that matter, any type of service, it’s important to make sure that all of the parties involved know what their responsibilities and obligations are. Having a verbal agreement might seem ok to people who don’t regularly deal in contracts, but as we see in a recent decision from the Provincial Court of Alberta, verbal agreements are subject to subjective interpretation, meaning each party might think the agreement means something different. Additionally, the parties might have different understandings of what was actually said in the agreement. This is why it is so important to have a written contract that can be referenced in the event of a disagreement.

Parties enter into verbal agreement for home renovations

The plaintiff in the matter is a contractor who was suing the defendant homeowner for $4,500. The homeowner filed a counterclaim for $3,388.

The parties originally had a contract for the amount of $46,795 plus GST, for a total of $49,134. The project included a renovation in the homeowner’s basement. The parties negotiated for a reduced fee of $46,000, but disagreed over whether that amount included GST.

There was also a claim about an electrician’s bill which was added to the final price of the project. The bull was related to the installation of two fans and a light in the house. The bill was for $680.

The homeowner’s counterclaims were related to the quality of the work performed by the contractor. He stated that the grout for the tiles in the downstairs shower were not sufficient for their purpose. The homeowner also said that there was a drain on the floor of the basement that needed to remain exposed, but that the contractor had covered it up. He sought reimbursement for the money spent correcting that, amounting to $262.50 including HST. Finally, the homeowner claimed that windowsills in the basement were not installed correctly, and as a result were starting to “bubble.”

Going through the parties’ claims

The court first addressed the matter of GST, dealing with it rather quickly, stating that neither party had brought the matter up in their original claim and that neither had paid the GST. As a result, the court found that GST was not included in the final price.

In regards to the electrician’s bill, the court relied on the evidence provided by the parties. The homeowner told the court that the contractor said the fan would cost “about $500  for supply and installation. The final bill was $126 above that, but the contractor said the word “about” in the verbal agreement justified the increased amount. The court did not agree with this, stating that the contractor was a professional and should have been aware of what those parts of the project, which were not included in the original plans, would cost.

Turning to the homeowner’s counterclaims, the court found that the plaintiff was unable to explain what the problem was with the shower tiles. Similarly, the court found that the homeowner was unable to show how the windowsill problem could be remedied, and in turn, denied that claim as well. The court did, however, agree that the homeowner should be compensated for the work done to lift up the new flooring which was covering the basement drain.

While the amount of money in dispute was not extremely large, the case provides an excellent look at how important it is to have a proper contract in place for any construction project. 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.

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At HMC Lawyers, we offer strategic legal advice. Our breadth of practice experience allows us to promptly handle almost every litigation-related legal issue that may arise, and anticipate potential roadblocks that may delay its resolution. To make an appointment with a member of our team, contact us online or call 403-269-7220

For articling student inquiries please contact Sean Jeffers at 403.261.3329 or sjeffers@hmclawyers.com

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