It is by no means uncommon for a builder to carry out additional works that were not in your building contract. You may be thinking: “why should I pay for something I didn’t choose – I have already paid my part!” Unfortunately, there are some circumstances where the builder does have the right to make you pay for something that was not specified upfront in your contract with the builder. It is important that you (and your lawyers) look ahead and put protections in place so that those costs for “extra work” and “variations” don’t start adding up (which can go steeply north!).
Terms of the contract
If there is no specific term setting out a mechanism for payment of additional work outside the scope contemplated by the contract, this leaves you open to liability for various costs, if they are considered to be reasonably needed by the builder in order to complete your project. If it is not addressed, there may be an implied promise to pay the builder. If you reply to, say, a text message or email that asks if you agree to certain extra work to be done, this is likely to be read as your consent to costs incurred to do that work.
On top of this, there is also something called “unjust enrichment”. This is a protection for builders, which means that if a builder incurs an expense, at your benefit, they cannot wear it. Given this is not a general right, it can be avoided if you contract very clearly around it. But where that is not done, you cannot benefit from work that a builder does at their own expense. This can add up to become very costly, unless the builder has signed away this protection in their contract with you.
When a dispute arises – how to reach resolution
The best approach to resolving building disputes is to avoid them happening in the first place. This can be done with water-tight contracts that are well-drafted with clear payment terms, schedules, and dispute resolution procedures. The key provision to avoid nasty extra costs will be conditions that set the scene for any variations, and specifying who is to wear what costs for those variations.
If, however, a dispute does arise, it can be resolved via alternative dispute resolution mechanisms or formal resolution via the court system. If the contract itself is open to interpretation, a court will look to the Home Building Act 1989 (NSW) for guidance.
At Jenkins Legal & Advisory, we can help you with both sides of a dispute – protecting you from them to begin with, and helping keep loss to a minimum if a builder does send you an unexpected invoice in the mail. For more information, please contact Jenkins Legal & Advisory on (02) 4929 2000 or email office@jenkinslegal.com.au.
This article is not legal advice and the views and comments are of a general nature only. This article is not to be relied upon in substitution for detailed legal advice.
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