Payment of contractor for building works

Payment of contractor for building works

by George Coucounis

“He is entitled to the amount agreed or, in the absence of an agreement, to a reasonable fee”

Very often, minor building works are assigned to builders in order to carry out repairs, constructions or extensions in houses or other buildings, even to build them. The builder or the contractor, before undertaking to execute the building works, visits and inspects the place, prepares a list for the works to be done and makes an offer to the owner according to which the builder’s fee is agreed, including work and materials. During the execution of the works, the owner usually assigns extra works to the builder for which no fee was agreed. Another factor which is omitted to be agreed is the time of the execution of the works, even though the time is essential. When the builder executes the works properly and there are no defects, the owner is happy and makes the payments without any problems. However, the situation is not always the same; the builder may not appear at the work despite the fact that the building works are in progress or when there is a delay in their execution, or even when defects and bad workmanship is observed. The same can happen when the owner omits to pay the builder and the latter has no alternative but to leave the works incomplete.

Normally, the issues which are raised in a dispute between the owner and the builder are the following: (a) what the agreement between the parties provides, (b) what work has been executed, (c) who is to be blamed for breach of the agreement, (d) what damages can be claimed, and (e) what the reasonable cost for the extra work is. In the case of minor building works, the agreement may be partly in writing and partly verbal. If the agreement is made in writing, it should be as precise and complete as possible to avoid the need for verbal evidence for its meaning. With regard to the mode of payment, the builder is usually paid according to the progress of the work and he may also ask for a pre-payment to purchase materials or for preparatory works. In case the time is not defined in the agreement, there is an implied term that the agreement must be executed within reasonable time. If there is a delay, any extra works asked by the owner are taken into account to justify the time spent.

The omission on behalf of the owner to pay the builder, despite his promises, although the builder has given him reasonable notice to pay, makes him responsible for breach of the agreement. In such a case, the builder is entitled to terminate the agreement and leave the works incomplete. When the owner demonstrates his intention not to pay the builder, the latter has the right to leave the premises without being responsible for any loss or damage to the owner thereby. On the other hand, when the builder has completed the works and there is a balance owed to him, he is entitled to claim it from the owner as an agreed balance as well as the costs for any extra works he executed. The compensation that a builder is entitled in the event the work is left incomplete due to the owner’s fault normally includes the cost for the works executed plus the profit the builder lost from the incomplete works. The case law provides that in the absence of an expressed agreement, the builder is entitled to a reasonable fee for his work done.

In the event of faulty or incomplete works or defects, the owner is entitled to deduct their cost from the agreed amount. The builder’s claim must be precise and state in detail the work executed, whether it has been agreed or it is extra work as well as its cost. Therefore, the builder should write down the works executed daily so that his account to be precise and correct. Moreover, the builder should ask the owner to sign the account when the works are executed, independently of the time his fee is due and payable. By doing so, there will be no misunderstanding or dispute between the parties, who know their rights and obligations and avoid any Court proceedings. The builder should also care to be registered and have a valid license for the category of the building works so that his agreement with the owner not to be considered illegal and void and to be able to claim the money due to him.